The federal government has delayed its capital gains tax increase until January 1, 2026.

Ottawa introduced the increase in April 2024, announcing plans to implement it on June 25, 2024. As a result, many commercial real estate investors rushed to sell assets prior to that deadline.

But the government did not approve related legislation before the increase took effect, because Parliament was prorogued in early January. So the increase did not kick in as expected.

Finance Minister Dominic LeBlanc announced the delay at a news conference in Ottawa on Friday.

“Given the current context, our government felt that it was the responsible thing to do,” he said in a statement. “I look forward to further conversations with Canadians on how we can ensure Canada’s fiscal policy encourages robust and sustained economic activity in every region of our country.”

The government made the move to provide more certainty heading into the income tax-filing period, said LeBlanc. The Canada Revenue Agency has said that it would collect the higher tax anyway and, if necessary, provide a refund depending on what happened with the proposed law.

Ottawa now plans to introduce the legislation in due course.

But there is no guarantee that it will be introduced. Opposition parties have vowed to bring the beleaguered Liberal government down through a non-confidence motion once Parliament resumes and force an election.

An election will be held by October regardless of what they do, because the Liberals’ term is expiring. The Conservatives have a large lead in the polls, and party leader Pierre Poilievre has vowed to scrap the tax if he becomes prime minister.

Pictured: Industrial property in Vancouver that was listed and sold because the capital gain tax increase was scheduled to take effect.

Image: Courtesy of Goodman Commercial