Canada Needs to Rethink Capital Gains Tax
November 7, 2014 Taxation in Canada
OTTAWA – Canada needs to either remove, lower or reform its capital gains tax system in order to be internationally competitive and to boost its own economic growth.
On November 6th the Canada based independent think-tank Fraser Institute issued a new statement claiming that reducing the burden of capital gains tax in Canada is a vital key to unlocking greater growth and economic development in the country.
The experts of the Fraser Institute proposed that there are three legislative changes available which would reduce the burden of capital gains tax, and to remove the disproportionate barrier it raises against investment.
In the report, it was argued that the capital gains tax could be removed entirely, as it accounts for only 1.1 percent of the national tax take, and such an action would free up significant amounts of investable capital which is currently being held in place by investors.
Alternatively, the rate of the capital gains tax could be lowered to allow Canada to be more competitive on an international scale, as, currently, it is the 14th highest among the countries of the OECD.
The authors of the report also suggested that the government could introduce a capital gains rollover system, whereby capital gains tax would not be charged on profits, if the arising funds are reinvested into a new project within a set time period.