OTTAWA, Jan 7 (Reuters) – Prime Minister Justin Trudeau's government will continue to impose a revised capital gains tax, the Finance Ministry said on Tuesday, after the proposed measure fell into limbo when Trudeau suspended Parliament.
Trudeau said Monday he would resign as leader of the Liberal Party and as prime minister once his party finds a replacement, and suspended Parliament until March 24.
Parliament was scheduled to open after the winter break in late January, and the delay is creating uncertainty over more than a dozen bills, including the capital gains tax, analysts said.
The government had proposed in April to increase the share of capital gains subject to tax to two-thirds from two-thirds, from half for companies and for individuals with capital gains above C$250,000 ($174,605.39).
The measure was never adopted by parliament, but the government has been collecting the extra tax since June.
“In the event that Parliament is prorogued or dissolved, the CRA (Canada Revenue Agency) will generally continue to apply the proposed legislation in accordance with established guidelines,” the Treasury Department said in a statement.
“If Parliament resumes, and no bill is passed in the House of Commons, and the government indicates its intention not to proceed with the proposed measures, the CRA will cease to implement them,” the report said.
The Treasury Department did not say whether it would have to refund previously collected taxes if the bill is ultimately rejected.
The government planned to use the tax revenue in part to build more affordable housing. It had expected to raise nearly $19.4 billion over five years in 2024-2025.
Economists have said that if the bill is not passed, it could hurt the government's budget targets – which had already been exceeded in December by C$20 billion for the year ending in March. ($1 = 1.4318 Canadian dollars) (Reporting by Promit Mukherjee in Ottawa, Ed White in Calgary and Anna Mehler Paperny, Divya Rajagopal in Toronto; Writing by Promit Mukherjee, Editing by Deepa Babington)