After GST Cut on Homes Under $1M, Carney Cancels Capital Gains Tax Hike

In a major policy reversal, Prime Minister Mark Carney announced that his government will cancel the proposed hikein the capital gains inclusion rate. The decision, revealed in a post on X (formerly Twitter), aims to incentivize builders, innovators, and entrepreneurs to grow their businesses in Canada, fostering job creation and economic expansion.

Carney’s tweet read: “My government is cancelling the capital gains tax hike. We’re going to incentivize builders, innovators, and entrepreneurs to grow their businesses right here in Canada and create more good-paying jobs. It’s time to build the strongest economy in the G7.”

My government is cancelling the capital gains tax hike. We’re going to incentivize builders, innovators, and entrepreneurs to grow their businesses right here in Canada and create more good-paying jobs.

It’s time to build the strongest economy in the G7.

— Mark Carney (@MarkJCarney) March 21, 2025

“Canada is a country of builders. Cancelling the hike in capital gains tax will catalyze investment across our communities and incentivize builders, innovators, and entrepreneurs to grow their businesses in Canada, creating more higher paying jobs. It’s time to build one Canadian economy – the strongest economy in the G7,” Carney stated.

In addition to scrapping the tax hike, Carney confirmed that his government will maintain the increase in the Lifetime Capital Gains Exemption limit to $1.25 million on the sale of small business shares, as well as farming and fishing properties. This measure is expected to provide further financial relief and encourage entrepreneurial growth.

The government plans to introduce legislation to formally implement the exemption increase in the near future.

This announcement comes just a day after Carney introduced another significant policy change: eliminating the GST on homes priced under $1 million for first-time buyers. The tax cut is aimed at making homeownership more affordable and stimulating new housing construction. The Prime Minister emphasized that the GST exemption could save Canadians up to $50,000 on a new home purchase.

The capital gains tax increase, initially proposed under former Prime Minister Justin Trudeau, was intended to raise the taxable portion of realized capital gains from 50% to 66%. However, it faced strong opposition from business leaders and investors, who argued it would discourage entrepreneurship and slow down economic growth.

By cancelling the increase, Carney is signaling a pro-business stance aimed at strengthening Canada’s economic competitiveness. This move comes as Carney’s government positions itself for a potential snap election, with the Prime Minister emphasizing a vision of building a “stronger, G7-leading economy.”