March 22, 2025 – Prime Minister Mark Carney’s office announced Friday that Canada will cancel the controversial capital gains tax increase, putting an end to a widely criticized measure that had sparked concern across industries.
The government will maintain its plan to increase the lifetime capital gains exemption to C$1.25 million, allowing greater tax-free gains on the sale of small business shares, farms, and fishing properties.
This rollback is part of a broader effort by Canada’s new prime minister to eliminate unpopular policies introduced under former Liberal leader Justin Trudeau. Carney’s efforts have led to a recovery in polling numbers, with the Liberal Party now running even—or slightly ahead—of the opposition Conservatives.
“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,” said Carney in a statement.
The original proposal, announced in April of last year, aimed to raise the capital gains inclusion rate from 50% to 66.7% for individuals and businesses with annual capital gains exceeding C$250,000. Though scheduled to take effect on June 25, the policy was never legislated.
With an election likely on the horizon, the move signals a pro-growth pivot from the Carney administration—aimed squarely at investors, entrepreneurs, and small business owners.
