Capital Gains Changes: The June 25 Implementation Date Explained

Key takeaways

• The higher capital gains inclusion rate was proposed to apply to dispositions on or after June 25, 2025
• Parliament prorogued before the formal legislation was passed — creating a period of administrative uncertainty
• The CRA initially directed taxpayers to report 2025 gains under the proposed two-thirds rate
• Following the 2025 election and government change, CRA reversed course and administered the 50% rate for 2025
• The 2026 budget formally legislated the current two-rate structure

Few tax changes in recent Canadian history created as much confusion as the capital gains inclusion rate increase proposed in the 2024 federal budget and its subsequent legislative history. For taxpayers who disposed of capital property in 2025, understanding which rules applied requires tracing the administrative history carefully.

The original June 25, 2025 implementation

Budget 2024 proposed that the higher two-thirds inclusion rate would apply to capital gains realized on or after June 25, 2025. The measure was implemented by a Ways and Means Motion — which has legal effect when passed by the House — and the CRA directed taxpayers and tax preparers to use the proposed rules immediately.

This created the unusual situation of a tax rule in effect by administrative practice and parliamentary resolution, but not yet enacted as statute law. Tax lawyers noted that while this procedure is legitimate in Canada's parliamentary tradition, it placed taxpayers at risk if the legislation was ultimately not passed.

Prorogation and the legislative gap

Parliament prorogued in January 2025 before the formal capital gains legislation was enacted. This voided the bill on the order paper but did not automatically invalidate the CRA's administrative practice. The CRA continued to direct taxpayers to report gains under the proposed two-thirds rate for the 2024 tax year returns filed in spring 2025.

Tax professionals were split on whether to recommend clients follow the CRA's administrative position or argue that only 50% was legally required. Most large firms advised following the CRA position to avoid interest and penalties, while noting the legal question remained open.

The government reversal

Following the 2025 federal election and change of government, the new Finance Minister announced that the government would not proceed with the two-thirds rate as a uniform measure. Instead, the CRA issued guidance that the 50% inclusion rate would apply to all 2025 capital gains for individuals — effectively retroactively.

Taxpayers who had already filed 2024 T1 returns using the two-thirds rate for gains above $250,000 were told they could file an adjustment (T1-ADJ) to recover the over-reported tax. The deadline for such adjustments was the regular ten-year period for reassessments, but the CRA prioritized processing them.

What this means for 2025 and 2026 filings

For the 2025 tax year: the 50% inclusion rate applies to all individual capital gains, regardless of amount. Corporations and most trusts were subject to the CRA's initial two-thirds administrative position for 2024 and were not given the same retroactive relief — a distinction that generated significant professional debate.

The 2026 federal budget formally legislated the two-rate structure now in effect: 50% for individuals on the first $250,000 of net annual gains; two-thirds above that threshold; two-thirds for corporations and most trusts on all gains. This is now enacted statute law, resolving the prior uncertainty.