Introduction
In the 2024 federal budget, the Government of Canada proposed increasing the capital gains inclusion rate from 1/2 to 2/3 for corporations and trusts, and for individuals on capital gains above $250,000 annually. The proposal generated significant attention from incorporated professionals — particularly physicians, dentists, and lawyers whose professional corporations hold significant investment portfolios with unrealised capital gains.
The proposal's subsequent legislative and political history has been complicated. This article explains where things stood as of early 2026 and what incorporated professionals should be monitoring.
What Was Proposed
The 2024 budget proposed that, effective June 25, 2024:
For corporations and trusts: The capital gains inclusion rate would increase from 50% to 66.67% (2/3) on all capital gains. A corporation realising a $300,000 capital gain would include $200,000 in income (at 2/3) rather than $150,000 (at 1/2).
For individuals: The inclusion rate would increase to 2/3 only on capital gains above $250,000 per year. Gains below $250,000 annually would continue to be included at 50%.
The corporate rate increase was the more immediately impactful change for incorporated professionals, because there is no $250,000 threshold for corporations — all corporate capital gains would be subject to the 2/3 inclusion rate.
The Political and Legislative Developments
The inclusion rate legislation was introduced but faced a complicated legislative path. The minority government environment, subsequent changes in federal leadership, and the dissolution of Parliament created uncertainty about whether the full legislative package would be enacted as originally proposed.
As of early 2026, incorporated professionals and their advisors should confirm with current CRA guidance and their CPA whether the proposed changes have been enacted, modified, or withdrawn — as the legislative situation was still evolving at the time of this article's preparation.
The key advice: Do not assume the inclusion rate has remained at 50% for corporations. Confirm the current rate with your CPA before realising large capital gains inside your corporation or making tax planning decisions that depend on the inclusion rate.
What the Change Means If Enacted at 2/3
For a corporation realising $300,000 of capital gains in a year:
At 50% inclusion: $150,000 taxable, corporate tax at passive rate ≈ $75,255, non-taxable portion to CDA = $150,000.
At 2/3 inclusion: $200,000 taxable, corporate tax at passive rate ≈ $100,340, non-taxable portion to CDA = $100,000.
The additional corporate tax on the same $300,000 gain is approximately $25,085. The CDA balance generated is also lower — $100,000 instead of $150,000.
Planning Considerations Under Uncertainty
Where the inclusion rate is uncertain, planning decisions involving large capital gains inside the corporation should be deferred or structured to allow flexibility. Realising gains before enactment (if the effective date is clear) or after if the proposal is withdrawn is only possible if the timing of the realisation is within the corporation's control.
Investment portfolio rebalancing decisions — selling appreciated assets to realign allocations — should be reviewed against the current inclusion rate with the CPA.
The LCGE Interaction
The Lifetime Capital Gains Exemption was also proposed to be increased in the 2024 budget — to $1.25 million (indexed). Whether the LCGE increase and the inclusion rate increase were enacted together, separately, or not at all requires confirmation with current CRA publications.
When to Speak With a CPA
Any decision involving realising significant capital gains inside a professional corporation — selling investments, selling practice assets, structuring a business sale — should be reviewed with a CPA who is current on the inclusion rate status. The tax cost of getting this wrong in either direction is significant.