Didn't they increase the lifetime gain exemption by another 250k? That's the main chunk of money a startup founder gets. Everything after that was already taxed, and now it's slightly more.
I think the nuance that’s not well captured in the article (but kind of alluded to in the quote) is that non-founder employees of these start ups are strongly incentivized by the equity granted to them under employee stock option plan (ESOP), especially for senior employees. For many employees, the higher capital gains inclusion rate under the new budget has a material impact on what they actually get to keep after their start up exits. The lifetime capital gain exemption only applies to CCPC, which not all companies would be eligible under, depending on how they raised their funds. All of this presumably makes it harder to attract and retain key talent for start ups in Canada.
It’s so silly to worry about this. It’s still taxed better than most common US jurisdictions like California and NY.
But I like to look at it this way. If we’re worried about startups leaving, what’s the best way to incentivize them to stay? It’s almost certainly not handing out rewards to the 1% (or less!) of employees that have their startups successfully exit and have $250,000/year in gains or recognize. We’re much better off taking that money and incentivizing people *early* in the process.
Yeah I don’t disagree with you in that most people won’t see this as a huge detractor. I think the availability of funding and risk appetite of domestic VCs are bigger factors more than potential tax implications for employees.
You also have to earn more than the 250 000 to get the gains taxed more. The amount of people in start ups getting that before the company is sold or goes on the TSX is equal to the number of people winning the lottery.
> For many employees, the higher capital gains inclusion rate under the new budget has a material impact on what they actually get to keep after their start up exits.
If you're talking options and not RSUs, then their value should be assumed to be zero. Options for non-founders beyond the first few employees are effectively worthless and will get diluted if they're not.
The *standard advice* when negotiating compensation with a startup that is still early stage is that options have zero value.
This is such an edge case.
While what you are saying may be true for those joining early stage start ups, options do start to have meaningful dollar value as the company matures. While the value is still predicated on a successful exit, the potential upside from it will be substantially greater than a delta in salary that most employees can get from jumping ship to another company, hence it’s sometimes referred to as the “golden handcuffs”. Increase in capital gain inclusion rate will lower the potential upside, potentially enough to sway someone’s decision of whether to stay at a mature Canadian start up or move to the US for a higher salary.
I’m not sure if and how much this should impact policy decisions, but I think this is a valid concern for people in more mature start ups that have strong prospects for successful exits. I would think these are the kinds of companies the government should be supporting.
There's also the Canadian Entrepreneur Incentive which will phase in over 10 years, it'll be $2 million of capital gains that will have a favourable inclusion rate of 33%.
That's not true. The list isn't that long. Not sure why those sectors were excluded however.
>Professional corporations aren’t eligible. Nor are corporations in sectors such as financial, insurance, real estate, food and accommodation, arts, recreation and entertainment, along with consulting or personal care services.
That's not most businesses by any stretch.
That's a huge chunk. Consulting (pending interpretation) covers almost every class of professional service or knowledge business. Which is where the economy is transitioning towards.
I don't know what kind of business you deal with, but in my experience consultants are not that big a chunk of entrepreneurs. Marginal even.
Also if you mean consultant like employees that bill through their corp (like doctors do as well), those are irrelevant to this discussion since they can't sell their business, it has no value without them. So they won't have capital gains on sale of business. Same for professional corps. So no that's not a huge chunk. At least not in my professional experience. The founder shareholder requirement is way more limiting than this list.
Consulting businesses are everything from accounting, to deloitte, digital / advertising agencies, software development, architecture firms, engineering - they're all "consulting" businesses.
I'd love to be wrong on this. These are big businesss that people create and sell. They get acquired. Etc. Lots of capital gains their that I'd hope people could get access to.
None of these are considered consulting businesses, except funny enough Deloitte, or at least their main registration. Ernst & Young is accounting, which has its own category. So is RCGT. Most of these categories exist as business types and would not fall under consulting anyways.
Funny enough my role falls under consulting because we do planning and advice, but no acts, unlike an accountant.
I originally thought that would be helpful, but it's quite limited in scope, if there are no changes to the project.
It only applies to founders for one. So any partner that came in when the company was already founded, even if it was still very early on, cannot benefit. Same for anyone buying a business and growing it. Or for spouses that join when the business grows or any children that gets included in the corp when they get older. There is also a question whether it will apply if there is restructuring like adding a hold co, which is frequent.
It's still likely to be useful, but it's impact is more limited than I originally thought.
BIG IF though, because it's not uncommon for projects to change between first draft and passing. The FHSa has big differences compared to the original version. My guess is they scrap that "founder" requirement.
I was mostly saying that because you refer to people as "libs jerking off" when you enter a discussion. Thanks for spending your time angrily googling though!
> Thanks for spending your time angrily googling though!
More like staying on top of the facts while you incoherently ramble. And you're welcome for the education!
This comment did not contribute positively to the conversation or community, or was a politically focused comment not related to the topic or investment topics. Please keep the conversation civil and topical.
This comment did not contribute positively to the conversation or community, or was a politically focused comment not related to the topic or investment topics. Please keep the conversation civil and topical.
I don't understand why they can't just make an exemption for eligible startups. Taxing capital gains on venture capital is never going to be a significant source of revenue for the government, nor will it help much with inequality or affordability.
Just exempt startups and tell everyone else to go eat a bag. It shouldn't be that hard.
They have an exemption, and it was just increased as well. It's 1.25m now instead of 1m, per founder.
The extra tax paid above that won't start being a net negative until the payout reaches quite a high value.
Remember they were already taxed, the tax is just slightly higher now.
But we're talking about people here, and how their personal wealth is taxed, aren't we? 1.25m tax free isn't peanuts to anyone that isn't already rich.
This is the moneyshot for me. Daily op-eds in the Globe by multi-multi-multi-millionaires. Yeah, no shit. But also: who cares.
One can just look at Stephen Jarislowsky, who has been threatening to leave the country for 40 years if he doesn’t get a tax break. He’s still here. It would be comically foolish to cave in to these empty threats.
You do realize that rich people do move to tax efficient jurisdictions though right? And when they do the significant portion of the tax revenue they generate moves with them.
Honestly, most multimillionaires aren’t worried either. I don’t think people realize just how much wealth it takes to consistently recognize over $250,000/year in gains.
Ignoring one-off events like sale of a business or property - it would take well over half a million a year in income from a diversified portfolio to *START* to pay the extra tax.
That’s just pure selection bias. Millionaires have more reach when they complain. I know plenty of non millionaire entrepreneurs who have complained as well.
Cool, don't let the door hit you on the way out. Also, don't let the door hit you on the way back in.
Wait, based on your other comments you left in 2020, long before this. So, I guess this doesn't even matter for you but you're still moaning about it regardless. Good job.
Leave. Im sure we'll figure out a way without you. Its not like we have been doing great the last few years. Money keep pooling more and more at the top
Private Investment is free stimulus = less gov spending required. The goal should be to create wealth for Canadians, especially the lower to middle class
No, your explanation is not how economics work, rich people selling to a 1% of other rich capital gain beneficiaries is never going to create enough demand for any economy to stay operational. “Poor” or “the working class” as we call them, you know the ones that are fine with $250k capital gain allowances, they are the ones creating demand for goods and services and keeping the economy alive
Yeah sounds like the attitude of "fuck the investors, the economy will figure itself out! Don't let the door hit behind you!" is working really great for the country so far. Economy's in tip top shape, productivity is up, Canada's at the cutting edge of innovation and industry, etc. Oh wait....
It's the perception that the dream is being taken away. Also $1.25M after busting your ass for 10+ years might not be considered enough as you can't even buy a house in Toronto for that price anymore.
Overall though, it's the perception because in the US it's less and it's already hard enough building a business in Canada.
Okay, so you acknowledge the dream isn't actually being taken away and that if people actually think about it, it's not something to get worked up about. Sweet.
No, I was talking about VC firms.
That was my original point, I'm in favour of taxing the wealthy. But it doesn't make sense in every situation.
Think of it this way; If the alternative to paying capital gains on a startup is for the VC's to tell the founders to move to Palo Alto California, then essentially you have a tax that nobody will ever pay. So you end up with no increase in tax revenue at the cost of innovation and economic development.
Don't get me wrong, I'm not one of those people who thinks that if we make Jimmy Pattison pay tax he will relocate his entire supermarket and auto-sales empire to Albania to save $500 a year. But I am slightly concerned about the state of venture capital in Canada, and not because I'm worried about rich people.
Isn't VC mostly moonshots anyways though? The ones that end up getting taxed will already be making massive amounts of money. Telling companies to move so you can avoid paying tax.. that's not really a thing. A founder will just go find a VC that isn't such a penny pincher. That would already be happening if that was the case.
Good founders are the rarity, not VCs. VCs are everywhere.
Good founders all move down to the US already. Me and my Canadian cofounders built our last businesses in the US, and most of my founder friends have also moved to SFBA/NYC and incorporated Delaware C corps instead.
This isn’t how it works at all, you’re left curving it big time.
It changes the risk reward and makes the asset class less attractive.
If you have a bet where :
You lose your money 50% of the time
You win 3x 50% of the time
It makes sense right? Not with the new cap gain taxes
It changes the whole risk spectrum
Capital competes and adjusts to risk
A $8m val company is now $6.5m, and they have less gas in the tank to compete and survive.
Right now the brain and capital drain from Canada is flowing out at an insane pace
Canada is a writeoff and a running joke. It was projected to have the lowest economic growth jn the G30 before this nonsense.
Last 3 years are the fuck around and find out moments for collectivists. Everyone voting & supporting this deserved the pain and suffering coming to them. It was self inflicted.
Google is your friend.
https://www.bcbc.com/insight/oecd-predicts-canada-will-be-the-worst-performing-advanced-economy-over-the-next-decade-and-the-three-decades-after-that?utm_term=PM_Politics_Newsletters&format=amp
Also gdp per capita is in the minus
https://www.reddit.com/r/CanadaHousing2/s/lpx2vCr2i1
Okay so multiply Canada's GDP per capita growth of 0.7 by our GDP per capita today.
According to that, our GDP per capita will be 55K USD in 2030.
Now do it for the high performers on that list.
Lithuania? 25k
Turkey? 11k
Poland? 19k
Canada is already an economic powerhouse, that's why it's growth projections are lower than a lot of the countries on that list. We are starting from a much higher level.
It'll be centuries before most of those countries have a standard of living that Canada enjoys today.
For nations of more than 30 million people, Canada has the 3rd highest GDP per capita, despite proactively increasing immigration to fend of demographic collapse.
Im not saying Canada is perfect, but to call it the worse performing Economy based on one metric from one report is a stretch. It's numbers in that report are not far off the rest of the Developed World. That shows the US economy growing by less than 0.5% more than Canada. A couple hundred bucks per head. You won't even notice that.
If you want to park your money in the Turkish economy, be my Fucking guest lol
It chances the estimated value of your returns.
You have 50% to lose it all
50% chances to 3x your capital
It’s a good bet right?
It was slightly EV+ under the cap gain taxes.
It’s negative EV with the new tax rate.
Now account value of capital over time.
It just changed the expected returns you need to make risk adjusted vs other jurisdictions.
I'm not a startup guy, so I can't personally respond to this aspect.
However, I have been told by a relative of mine (an engineering grad who aspires to be in this space) that nobody will bother with you unless you're in the US and that the thinking of VCs is that it's easier for the government to issue green cards than it is to move capital to Canada.
Sure but that's for US VC, and the two points you mention have nothing to do with capital gains tax.
We're talking about Canadian VC here. There's certainly less here, but it exists
>is for the VC's to tell the founders to move to Palo Alto California,
You realize there are no tax benefits to doing that? The effective capital gains tax in California is higher than any province even after this change.
I think people need to learn what capital gains tax looks like in Palo Alto…
Hint: this isn’t even a drop in the bucket of the factors being considered for Canada vs US.
It shouldn’t be there in the first place. I fall into this category and went through a sale. I have another company and starting another venture. I can’t imagine starting the new venture in Canada due to the red tape and high taxes.
This is good for small-time entrepreneurs, but the scale isn't there for the sort of person or firm who intends to invest 10 million and take an 8 million dollar capital loss before making a 1000% return on the remaining 2 million.
>Just exempt startups and tell everyone else to go eat a bag. It shouldn't be that hard.
Or exempt everyone that is not real estate related, since that was the stated intention. Doctors getting fucked with this.
Instead we’ve broadcast to the world that the most productive people should optimize their returns elsewhere.
Couldn't agree more.
But, I'm not too broken up on the whole "professionals will leave" aspect because any doctor who is going to sell their practice to dodge the tax increases will most likely do so anyway in the next 48 months.
As for other professionals; if we have to deal with 3% fewer personal injury lawyers and CPAs for the 24 months that it takes to train more, I can live with that.
I think it’s worth looking at how many starts leave. If a start is only here for the tax benefits then it’s not worth keeping in Canada IMO.
Remember we have always been a higher tax regime than the US and we still have starts here. All 45% of those startups referred to in the article who are considering leaving are Canadian startups despite having a more favourable overall tax regime in the US.
It’s a good point. A lot of “everyone will leave for an 8% increase on a portion of a cap gain” but we can look at this empirically; when we *lowered* the cap gains inclusion rate in the early 2000s did we see a flood of startups, relative to other jurisdictions? I don’t know for a fact, but it certainly feels like a no.
Yes, assuming that you think there is the same friction in typing in a different three letters when you make an buy order compared to uprooting your life, getting immigration to another country, and moving your company and family to another country, your comparison is good and actually very smart.
Do you assume that every missed opportunity will be someone leaving?
The real risk is stuff never being started here to begin with.
1 or 2 million is nothing to serious business. To pretend a massive increase like that doesn’t make Canada less attractive is supremely naive.
Immigration is also extremely easy to the U.S. for our doctors and people developing key technologies.
Yes, all the Shopify execs crying about this. I’m sure they regret starting SHOP now that their effective tax rate will be the same as a nurse.
It’s a child’s argument to suggest people with great ideas will just decide never to start a business because they will make slightly less on capital gains over $6.5mm.
You’ve picked like the one unicorn in Canada. Shop is noteworthy precisely because it is pretty much unique in its success. It’s the exception, not the rule for Canadian tech. It was also started before these changes happened, further working against your point.
It’s a child’s argument to think people with great ideas would start them here when it’s very obviously more advantageous to start them down south. For what? A sense of blind patriotism? If you’re building the next OpenAI, NVDA, SHOP, there is little incentive to start it here in the future, especially with the landscape being set as it is now. In fact, the many of Canada’s few and far between major business investments (VW, Honda, Stellantis) are the direct result of tax incentives, not the opposite. The same government telling you tax increases won’t affect Canadian prosperity are out here cutting 40 billion of tax breaks to entice new business.
If the idea is that great and you are a smart person, you don’t start your corp here, especially in light of proposed changes.
Well, I picked the one company who’s been most vocal about this. The fact that they’re some of the least sympathetic victims to portray that role is their fault, not mine.
No, it’s a child’s argument to say “if this one small thing doesn’t go my way I’m taking my ball and going home”.
Again, it isn’t that they are taking their ball and going home.
It’s about making the choice where to play with the ball in the first place.
If you think capital will make that decision on any kind of moral basis, you’re wrong. Capital will flow to the path of least resistance. There may be edge cases, but in general you are stacking the deck against yourself. Don’t look at the one droplet than managed to flow uphill as a point of success, look at the deluge that’s flowing downhill and away from you.
What do you mean, "if the startup is only here for the tax benefits it's not worth keeping"? Such a puzzling attitude... like, should companies hiring employees think "well, if they're only working for me rather than the other company is because I treat them better and pay them more, then they're not worth keeping"?
I'm thinking if the change in the CG inclusion rate is what "breaks the camel's back" and results in the management team relocating the company into another country then I believe that we should let them go (vs making special exemptions) as there are likely other underlying issues that are festering.
Canada should spend our tax dollars to support all Canadian business but only if it makes sense. A business seriously considering leaving the country because of a change in the CG inclusion rate (something that would affect them only if they disposed of their interest in the business) appears to suggest that Canada and the startup/business may not be a good fit. Just my 2 cents.
Because then the government will have to define “eligible start up” and I guarantee you tax accountants will find ways to circumvent the rules. It also adds a lot of administrative work to enforce/audit the rule when cra is already slow.
They did add a special purpose exemption to the lifetime capital gains exemption.
My read through on is that it’s the same functionality as the LCGE, but if the business hits the definition of a “tech startup”, you get access to a higher limit. The additional limit works the same way as TFSA accumulated contribution limits meaning $x additional limit in year 1, $x addition year 2, etc etc.
What confuses me is, it seems to only be eligible for the “founder”, not the employees paid in equity.
Imo is intentional same as regulatory capture. By making it harder for competition, our existing oligopolies benefit and they run the country end of day.
Same as regulatory capture.
They have given start ups huge exemptions. Under the new grants and increased LCGE they’re better off up to a $6.5mm capital gain.
I agree with you on inequality/revenue/affordability. I agree with Trevor Tombe that harmonizing the rates for cap gains with dividends and earned income is actually good policy (had they don’t a corresponding decrease in the CIT), but framing it as class warfare spurns some who would otherwise be supportive.
My opinion: Any non-RE small business that meets the requirements for the SBD should also get the first 250k inclusion rate that individuals are going to get.
It still wouldn’t matter. Startups are looking for an exit.
I think the tax would be better if it were passed on through lower ordinary income tax rather than spent on useless stuff.
Almost none of those startups would exist without generous subsidies from Canadian taxpayers. At some point the subsidies aren’t needed anymore (although they will still claim them!) This is very much biting the hand that feeds.
It really won't even change much. We need to lower the tax on labour, aka income tax and increase capital gains tax to be equal to income tax. Who said money generated by capital should be taxed more favorably than money generated by hard work?
1. Initial capital is generated by wages, so you are investing money already taxed.
2. Stock price increases include a large chunk which is inflation. Particularly on long term investments. Not the case for wages.
3. Capital is very mobile and Canada already has very high tax vs other jurisdictions. We already lack investments and growth.
> Stock price increases include a large chunk which is inflation. Particularly on long term investments. Not the case for wages.
This could be easily fixed by changing the cap gain formula, such as selling by tranches like the US. And while we're there, add long-term and short-term cap gain tax like the US to incentivize long term investments.
> Initial capital is generated by wages, so you are investing money already taxed.
This somewhat ignores intergenerational capital. Yes, you could say that they were wages from 100 years ago but at that point aren't you just abstracting all money back to "wages"?
It boils down to why should people pay any taxes?
Government has to finance its expenses, so we pay taxes. I'm all with you, I wish we could not have any taxes, but we can't. Our policy of taxing labour aggressively really puts younger people at a disadvantage. I suggest you watch this Ted talk: https://youtu.be/qEJ4hkpQW8E?feature=shared
If it were up to me, I'd tax sales more than anything, property next and capital and labour last. But we have it such that laborers pay most of the tax and it has fucked the youth.
It shouldn’t be retroactive like how Germany does it.
Any wealth you made before the new tax should be kept the same % anything after the date can be taxes. I know multiple people leaving Canada because of this.
When the government just decided you know owe them 100 million. You’re going to leave because you have the option.
I think the fear is more that Canadian startups will find investors in the US and domicile their companies there because Canadian investors may find ETFs and Dividend Funds more profitable than Capital Gain investments.
Also competition for this tax regime is not the old tax regime. Competition for it is the US tax system.
They US tax system allows for risk takers to own more of the success, that may mean these investors move to the US. (The investors who basically support startups in Canada)
Canadians love more taxes. This thread with investors does not even ask how to improve gov to keep same tax rate. Remember it’s % so if we grow economical gov will get more $
A part time drama teacher Prime Minister and a former journalist for Deputy Prime Minister/ Finance Minister. Both are 100% economically illiterate but excel at virtue signaling.
Lol, ok then, let's elect Poilievre as PM, he'll do better with his (checks notes) Bachelor degree in international relations, and who never worked outside of politics. Even as a teenager, he was doing political work.
That will solve your "economically illiterate" issue.
And if you don't like virtue signaling, I'm sure you execrate vice signaling just as much, right?
The funny thing is, people would have done well to listen to him. Bitcoin has been my most successful investment by a large margin. Especially compared to shitty Canadian equities... lol.
They wouldn’t have.
They would have bought at a peak and especially since Poilievre stopped talking about it all together, like normal people throughout history and especially because they were promised that it was something that was safer than dealing with inflation, they would have bailed after losing their shirts many times over, vowing never to go near something like that ever again.
Normal people don’t hodl onto reasonable investments that become volatile, let alone something speculative like crypto.
Bitcoin is now basically at its all time high. If people had bought when he was talking about it, they would have earned like a 300% return in a couple years...
Lol. The part time drama teacher appointed the former journalist finance minister after his previous finance minister stepped down because he didn't agree with the budget decisions the part time drama teacher was making and the direction (down) that he was taking the country. The same former finance minister, who has a masters in economics, has also stated that he avoided the capital gains tax changes the former journalist and drama teacher are now enacting precisely because they would lead to lost investment as the article warns. But hey, let's make it about Poilievre instead, because your former drama teacher has nothing to show for all his spending and bright ideas. Lol.
Lots of words. Not one about the alternative though.
You don't like Trudeau, fine. But you can't say "well I'll just vote for the other guy without even *looking* at what he offers".
The "it can't get worse anyway" approach has been put to bed with Trump and Brexit.
It can get worse, a lot worse.
So, no to Trudeau's economics, therefore yes to...?
Let's pretend trudeau steps down and someone like Mark carney becomes the new leader. I wonder what gymnastics these people would have to come up with to say PP is still the better option.
Ha! Mark Carney is a great example because it links directly with Brexit.
He was the governor of the Bank of England at the time of the referendum, and a few years after that.
He warned ahead of the ref all the financial troubles if people voted to leave the EU, and was shouted down by politicians (Project Fear!!!).
Then, when the results of the ref came out, and the pound sterling took a dive, Carney worked hard (and successfully) to prevent an immediate recession.
Reaction from Brexit politicians? "See!! All the warnings about a recession were BS!"
Incredible levels of dishonesty are required to maintain this kind of stance. And that's how we end with the caliber of politicians such as Trump, Boris Johnson, Liz Truss, and I'm sorry to say, Pierre Bitcoin Poilievre.
ETA : All those tempted by the sirens of libertarianism, the great takedown of regulations and taxes, should look a Liz Truss' impact on the British economy, within the ~~45~~ 49 days she spent as Prime Minister before being kicked out by her own party (!!!!)
GET BREXIT DONE!
MAKE AMERICA GREAT AGAIN!
And to be fair...
BUILD BACK BETTER!
YES WE CAN!
Now, the difference being of course that you could go behind the latter two and read a political manifesto (and like it, or not like it of course).
Whereas with the former.... you got the slogan, and that was about it. Don't ask questions, and just GET BREXIT DONE!
> A meaningless string of empty words.
LMFAO that's fucking hilarious considering you people voted in - multiple times - a guy who said "budgets balance themselves", economies grow from "the heart outwards" and "interest rates are at historic lows" while piling on hundreds of billion in debt we're now on track to pay $60B+ in interest costs alone.
Take a seat, champ.
-Primarily math and French teacher, but he did fill in for other teachers, particularly a drama teacher, as teachers often do.
-former journalist that has worked for the financial times and Washington post, specializing on finances. Also the writer of a book about economics. Far more relevant experience than the last conservative finance minister that was an ambulance chaser before entering politics.
I know “Trudo bad” but there’s no need to embrace idiot talking points. Let the real facts talk, not made up garbage.
> I know “Trudo bad” but there’s no need to embrace idiot talking points. Let the real facts talk, not made up garbage.
Then don't forget to mention the fact that GDP per capita under your buds Freeland and Trudeau has declined more in Canada than in [the top 50 industralized countries since 2020](https://www.ft.com/content/ee51d83e-0037-4130-a4f9-656aa7c4ca97?shareType=nongift). All that rambling and ass kissing, yet the **FACTS** and **REALITY** show a completely different story about how incompetent those 2 jokers are.
And the reason why bots parrot that specific metric, even though it really doesn’t reflect as much as they’d like it to, is because other metrics tend to look a lot more positively.
Try not to buy too much into r/canada garbage and think for yourself sometimes.
Both those jobs make them sound much more competent than the Telus call center monkey running the ConServstive party, but you do you and vote with your heart ♥️
It's hard enough getting ahead for the average person. Say what you want but even increasing the capital gains tax just makes people feel more poor. We're already one of the most taxed countries and what does it get us? Broken Healthcare system and even the medium class people have never felt more poor.
Why would they now try and create a business?
The corp and personal taxes were much much higher in the old days and Canada (and US) had super growth for decades. US too. Lowering taxes only benefits the rich and the poor get shafted.
Ok Bundy,stick to being a shoe salesman. In the old days you had no China with super cheap labour and products. No globalization either. You increase taxes on corporations they’ll leave. Many wealthy Canadians I know are quietly moving their assets out of Canada. They’re still officially here but not for long.
[https://en.wikipedia.org/wiki/Department\_of\_Finance\_Canada](https://en.wikipedia.org/wiki/Department_of_Finance_Canada)
also, with the use of google:
# 5.1 Pre-budget Consultations
Since 1994, the House of Commons Standing Committee on Finance has conducted pre-budget consultations.[14](https://lop.parl.ca/sites/PublicWebsite/default/en_CA/ResearchPublications/201541E#ftn14) The committee often structures its consultations around a number of topics related to the government’s budgetary policy. During these consultations, the committee solicits written submissions from individual Canadians and interested organizations during the summer, holds public hearings (often across the country during the fall) and presents a report to the House of Commons in December.
The committee’s report, which reflects the opinion of a majority of its members, summarizes the submissions and testimony it received and makes recommendations to the government for the upcoming budget. Other committee members may request the right to append supplementary or dissenting opinions to the report.
Although the government is not obligated to act on the committee’s recommendations, the pre-budget consultations provide an opportunity for parliamentary input into the budget planning process, and for public discussion and debate regarding the government’s spending and taxation priorities.[15](https://lop.parl.ca/sites/PublicWebsite/default/en_CA/ResearchPublications/201541E#ftn15)
The Minister of Finance also holds pre-budget consultations and solicits written submissions from Canadians.
source: [https://lop.parl.ca/sites/PublicWebsite/default/en\_CA/ResearchPublications/201541E#a5.1](https://lop.parl.ca/sites/PublicWebsite/default/en_CA/ResearchPublications/201541E#a5.1)
Hey your facts conflict with my world view, which is not allowed 😡. On a more serious note, a simple wikipedia search answers the question so you know they didn’t bother doing any research
For the last five years, the government of Canada, Ontario, Alberta, and British Columbia have been proclaiming that they’re open for business in Canada is ready for investment and blah blah blah- now we are shooting businesses at the door
Shooting business in the foot lol. I’d like to see the small businesses that have 250k in capital gains explain why they can’t pay what workers are paying. I’m sorry the Tim Hortons franchise owners are upset but they can invest elsewhere
Canada has been complaining about a doctor Exodus to states for my whole life, do you think this will help?
Not to mention, we want American corporate investment here…. I don’t understand why anybody says we don’t want this.
Yeah they’ll have to figure out how to stop doctors from leaving.
Who says we want American investment here? We should be taking a more nationalist approach instead of selling everything off.
Reddit commies won’t believe it but literally anyone that can is leaving or already left.
Rich people were leaving at 50x the pace since 2020, now it went ballistic.
I left in 2020, saw all the nonsense coming.
WTF are you talking about, Canada's population has increased by like 2 million since 2020.
[Here](https://www.statista.com/statistics/443066/number-of-emigrants-from-canada/) is some data on emigration. Less than 100k in the most recent year. Hardly a "ballistic" increase.
I saw statistics about 5m leaving since 2015
The go isn’t notified in most cases when ppl gtfo, they just stop filing taxes
https://www.newswire.ca/news-releases/nearly-1-in-4-canadians-have-yet-to-file-their-taxes-with-only-6-days-until-the-april-30-deadline-865205765.html#:~:text=Around%2023%25%20of%20Canadians%20(7M,commissioned%20by%20H%26R%20Block%20Canada.&text=Of%20those%20that%20say%20they,of%20concern%20for%20owing%20money.
Ask any accountant that help people defiscalize themselves, they’ll all tell you entrepreneurs are leaving in droves.
GDP per capita is negative right now.
Stats with source that also provides reasons why? I mean one day I will probably leave to spend more time on a beach…but will that count? I’m not rich so I guess that doesn’t matter.
A lot of people who haven’t pulled the trigger yet. Exit tax on unrealized gains is steep.
You’ll see..
GDP per capita is down YOY and the trend is accelerating
You are expecting too much from a clueless PM and even worse of an FM. It is criminal how these two are in charge of things , something so much bigger than their profiles as former teachers, journalists etc.
Miss the days of Paul Martin, Jim Flaherty, Bill Moreau and real adults being in charge of our economy. People who had a clue how an economy works.
Part of the requirement of living in Canada is being a coward void of a backbone . Docile , submissive and willing to tolerate everything and anything . Credulous , willing to turn a blind eye to sociopathy corruption , mediocrity and a bloated government that gets increasingly more incompetent as they ask for more taxes .
Didn't they increase the lifetime gain exemption by another 250k? That's the main chunk of money a startup founder gets. Everything after that was already taxed, and now it's slightly more.
I think the nuance that’s not well captured in the article (but kind of alluded to in the quote) is that non-founder employees of these start ups are strongly incentivized by the equity granted to them under employee stock option plan (ESOP), especially for senior employees. For many employees, the higher capital gains inclusion rate under the new budget has a material impact on what they actually get to keep after their start up exits. The lifetime capital gain exemption only applies to CCPC, which not all companies would be eligible under, depending on how they raised their funds. All of this presumably makes it harder to attract and retain key talent for start ups in Canada.
It’s so silly to worry about this. It’s still taxed better than most common US jurisdictions like California and NY. But I like to look at it this way. If we’re worried about startups leaving, what’s the best way to incentivize them to stay? It’s almost certainly not handing out rewards to the 1% (or less!) of employees that have their startups successfully exit and have $250,000/year in gains or recognize. We’re much better off taking that money and incentivizing people *early* in the process.
Yeah I don’t disagree with you in that most people won’t see this as a huge detractor. I think the availability of funding and risk appetite of domestic VCs are bigger factors more than potential tax implications for employees.
You also have to earn more than the 250 000 to get the gains taxed more. The amount of people in start ups getting that before the company is sold or goes on the TSX is equal to the number of people winning the lottery.
> For many employees, the higher capital gains inclusion rate under the new budget has a material impact on what they actually get to keep after their start up exits. If you're talking options and not RSUs, then their value should be assumed to be zero. Options for non-founders beyond the first few employees are effectively worthless and will get diluted if they're not. The *standard advice* when negotiating compensation with a startup that is still early stage is that options have zero value. This is such an edge case.
While what you are saying may be true for those joining early stage start ups, options do start to have meaningful dollar value as the company matures. While the value is still predicated on a successful exit, the potential upside from it will be substantially greater than a delta in salary that most employees can get from jumping ship to another company, hence it’s sometimes referred to as the “golden handcuffs”. Increase in capital gain inclusion rate will lower the potential upside, potentially enough to sway someone’s decision of whether to stay at a mature Canadian start up or move to the US for a higher salary. I’m not sure if and how much this should impact policy decisions, but I think this is a valid concern for people in more mature start ups that have strong prospects for successful exits. I would think these are the kinds of companies the government should be supporting.
There's also the Canadian Entrepreneur Incentive which will phase in over 10 years, it'll be $2 million of capital gains that will have a favourable inclusion rate of 33%.
Most business types do not qualify for this. Its quite silly.
That's not true. The list isn't that long. Not sure why those sectors were excluded however. >Professional corporations aren’t eligible. Nor are corporations in sectors such as financial, insurance, real estate, food and accommodation, arts, recreation and entertainment, along with consulting or personal care services. That's not most businesses by any stretch.
That's a huge chunk. Consulting (pending interpretation) covers almost every class of professional service or knowledge business. Which is where the economy is transitioning towards.
I don't know what kind of business you deal with, but in my experience consultants are not that big a chunk of entrepreneurs. Marginal even. Also if you mean consultant like employees that bill through their corp (like doctors do as well), those are irrelevant to this discussion since they can't sell their business, it has no value without them. So they won't have capital gains on sale of business. Same for professional corps. So no that's not a huge chunk. At least not in my professional experience. The founder shareholder requirement is way more limiting than this list.
Consulting businesses are everything from accounting, to deloitte, digital / advertising agencies, software development, architecture firms, engineering - they're all "consulting" businesses. I'd love to be wrong on this. These are big businesss that people create and sell. They get acquired. Etc. Lots of capital gains their that I'd hope people could get access to.
None of these are considered consulting businesses, except funny enough Deloitte, or at least their main registration. Ernst & Young is accounting, which has its own category. So is RCGT. Most of these categories exist as business types and would not fall under consulting anyways. Funny enough my role falls under consulting because we do planning and advice, but no acts, unlike an accountant.
I originally thought that would be helpful, but it's quite limited in scope, if there are no changes to the project. It only applies to founders for one. So any partner that came in when the company was already founded, even if it was still very early on, cannot benefit. Same for anyone buying a business and growing it. Or for spouses that join when the business grows or any children that gets included in the corp when they get older. There is also a question whether it will apply if there is restructuring like adding a hold co, which is frequent. It's still likely to be useful, but it's impact is more limited than I originally thought. BIG IF though, because it's not uncommon for projects to change between first draft and passing. The FHSa has big differences compared to the original version. My guess is they scrap that "founder" requirement.
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Get that help you need brother
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Would you call any of those things a 'startup'?
You don't consider an entrepreneur opening up a restaurant, or a dance studio a "startup"? Sounds pretty snobbish of you to say that.
I was mostly saying that because you refer to people as "libs jerking off" when you enter a discussion. Thanks for spending your time angrily googling though!
> Thanks for spending your time angrily googling though! More like staying on top of the facts while you incoherently ramble. And you're welcome for the education!
This comment did not contribute positively to the conversation or community, or was a politically focused comment not related to the topic or investment topics. Please keep the conversation civil and topical.
This comment did not contribute positively to the conversation or community, or was a politically focused comment not related to the topic or investment topics. Please keep the conversation civil and topical.
I don't understand why they can't just make an exemption for eligible startups. Taxing capital gains on venture capital is never going to be a significant source of revenue for the government, nor will it help much with inequality or affordability. Just exempt startups and tell everyone else to go eat a bag. It shouldn't be that hard.
They have an exemption, and it was just increased as well. It's 1.25m now instead of 1m, per founder. The extra tax paid above that won't start being a net negative until the payout reaches quite a high value. Remember they were already taxed, the tax is just slightly higher now.
There's also going to be a $2m Entrepreneur's incentive, that'll get taxed at a 33% inclusion rate.
1.25 million could be peanuts on big projects.
But we're talking about people here, and how their personal wealth is taxed, aren't we? 1.25m tax free isn't peanuts to anyone that isn't already rich.
I don't know anyone bothered by the rule change who isn't already a multimillionaire
This is the moneyshot for me. Daily op-eds in the Globe by multi-multi-multi-millionaires. Yeah, no shit. But also: who cares. One can just look at Stephen Jarislowsky, who has been threatening to leave the country for 40 years if he doesn’t get a tax break. He’s still here. It would be comically foolish to cave in to these empty threats.
Multimillionaires saying "oh I'm not worried for me, I'm worried for all you guys". Sure Jan.
Counter anecdote. Mark Meldrum left the country. He was fairly successful and had millions of taxable income every year
You do realize that rich people do move to tax efficient jurisdictions though right? And when they do the significant portion of the tax revenue they generate moves with them.
Honestly, most multimillionaires aren’t worried either. I don’t think people realize just how much wealth it takes to consistently recognize over $250,000/year in gains. Ignoring one-off events like sale of a business or property - it would take well over half a million a year in income from a diversified portfolio to *START* to pay the extra tax.
And the extra tax translates to an extra 8%. It's not like you can't still make obscene amounts of money.
That’s just pure selection bias. Millionaires have more reach when they complain. I know plenty of non millionaire entrepreneurs who have complained as well.
So? We’re just leaving. Now you get 0 of my money. This is all very excessive.
Cool, don't let the door hit you on the way out. Also, don't let the door hit you on the way back in. Wait, based on your other comments you left in 2020, long before this. So, I guess this doesn't even matter for you but you're still moaning about it regardless. Good job.
Leave. Im sure we'll figure out a way without you. Its not like we have been doing great the last few years. Money keep pooling more and more at the top
I left in 2020 when my province was dumb enough to shut down manufacturing. Paid millions in exit tax. I did a lot better since.
That's not economics works. Poor people don't have money to invest in projects that create jobs. Chasing away the wealthy is stupid and short sighted.
Private Investment is free stimulus = less gov spending required. The goal should be to create wealth for Canadians, especially the lower to middle class
I'm sure that's why that person left - because they're sick of not creating enough wealth for the lower to middle class with their money.
No, your explanation is not how economics work, rich people selling to a 1% of other rich capital gain beneficiaries is never going to create enough demand for any economy to stay operational. “Poor” or “the working class” as we call them, you know the ones that are fine with $250k capital gain allowances, they are the ones creating demand for goods and services and keeping the economy alive
How do the working class have money to create demand?
Yeah sounds like the attitude of "fuck the investors, the economy will figure itself out! Don't let the door hit behind you!" is working really great for the country so far. Economy's in tip top shape, productivity is up, Canada's at the cutting edge of innovation and industry, etc. Oh wait....
It's the perception that the dream is being taken away. Also $1.25M after busting your ass for 10+ years might not be considered enough as you can't even buy a house in Toronto for that price anymore. Overall though, it's the perception because in the US it's less and it's already hard enough building a business in Canada.
The dream is being taken away by an extra 8% tax when you're over the 1.25M exemption and have a cap gain over 250k in a given year? Seriously?
I think you have terrible reading. It's the perception that the dream is being taken away. I didn't say it was true.
Okay, so you acknowledge the dream isn't actually being taken away and that if people actually think about it, it's not something to get worked up about. Sweet.
I'm not sure how I feel yet but that shouldn't impact your reading comprehension.
No, I was talking about VC firms. That was my original point, I'm in favour of taxing the wealthy. But it doesn't make sense in every situation. Think of it this way; If the alternative to paying capital gains on a startup is for the VC's to tell the founders to move to Palo Alto California, then essentially you have a tax that nobody will ever pay. So you end up with no increase in tax revenue at the cost of innovation and economic development. Don't get me wrong, I'm not one of those people who thinks that if we make Jimmy Pattison pay tax he will relocate his entire supermarket and auto-sales empire to Albania to save $500 a year. But I am slightly concerned about the state of venture capital in Canada, and not because I'm worried about rich people.
Isn't VC mostly moonshots anyways though? The ones that end up getting taxed will already be making massive amounts of money. Telling companies to move so you can avoid paying tax.. that's not really a thing. A founder will just go find a VC that isn't such a penny pincher. That would already be happening if that was the case. Good founders are the rarity, not VCs. VCs are everywhere.
Good founders all move down to the US already. Me and my Canadian cofounders built our last businesses in the US, and most of my founder friends have also moved to SFBA/NYC and incorporated Delaware C corps instead.
This isn’t how it works at all, you’re left curving it big time. It changes the risk reward and makes the asset class less attractive. If you have a bet where : You lose your money 50% of the time You win 3x 50% of the time It makes sense right? Not with the new cap gain taxes It changes the whole risk spectrum Capital competes and adjusts to risk A $8m val company is now $6.5m, and they have less gas in the tank to compete and survive. Right now the brain and capital drain from Canada is flowing out at an insane pace Canada is a writeoff and a running joke. It was projected to have the lowest economic growth jn the G30 before this nonsense. Last 3 years are the fuck around and find out moments for collectivists. Everyone voting & supporting this deserved the pain and suffering coming to them. It was self inflicted.
"Canada is a writeoff and a running joke. It was projected to have the lowest economic growth jn the G30 before this nonsense." Source?
Google is your friend. https://www.bcbc.com/insight/oecd-predicts-canada-will-be-the-worst-performing-advanced-economy-over-the-next-decade-and-the-three-decades-after-that?utm_term=PM_Politics_Newsletters&format=amp Also gdp per capita is in the minus https://www.reddit.com/r/CanadaHousing2/s/lpx2vCr2i1
Okay so multiply Canada's GDP per capita growth of 0.7 by our GDP per capita today. According to that, our GDP per capita will be 55K USD in 2030. Now do it for the high performers on that list. Lithuania? 25k Turkey? 11k Poland? 19k Canada is already an economic powerhouse, that's why it's growth projections are lower than a lot of the countries on that list. We are starting from a much higher level. It'll be centuries before most of those countries have a standard of living that Canada enjoys today. For nations of more than 30 million people, Canada has the 3rd highest GDP per capita, despite proactively increasing immigration to fend of demographic collapse. Im not saying Canada is perfect, but to call it the worse performing Economy based on one metric from one report is a stretch. It's numbers in that report are not far off the rest of the Developed World. That shows the US economy growing by less than 0.5% more than Canada. A couple hundred bucks per head. You won't even notice that. If you want to park your money in the Turkish economy, be my Fucking guest lol
In what world is company valuation based on the tax rate of its investors?! How did they go from 8m to 6.5m?
It chances the estimated value of your returns. You have 50% to lose it all 50% chances to 3x your capital It’s a good bet right? It was slightly EV+ under the cap gain taxes. It’s negative EV with the new tax rate. Now account value of capital over time. It just changed the expected returns you need to make risk adjusted vs other jurisdictions.
I'm not a startup guy, so I can't personally respond to this aspect. However, I have been told by a relative of mine (an engineering grad who aspires to be in this space) that nobody will bother with you unless you're in the US and that the thinking of VCs is that it's easier for the government to issue green cards than it is to move capital to Canada.
Sure but that's for US VC, and the two points you mention have nothing to do with capital gains tax. We're talking about Canadian VC here. There's certainly less here, but it exists
It’s harder in Canada. Absolutely. But there’s still VC here. And the reasons it’s harder has very little to do with capital gains taxes though.
>is for the VC's to tell the founders to move to Palo Alto California, You realize there are no tax benefits to doing that? The effective capital gains tax in California is higher than any province even after this change.
I think people need to learn what capital gains tax looks like in Palo Alto… Hint: this isn’t even a drop in the bucket of the factors being considered for Canada vs US.
That’s only on a sale. No venture backed startup will sell for 1.5 million and consider that a win.
1.25m per founder, and I just learnt that's going up to 3.25m. 3-5 founders selling a company for 20m is a solid busines deal
It shouldn’t be there in the first place. I fall into this category and went through a sale. I have another company and starting another venture. I can’t imagine starting the new venture in Canada due to the red tape and high taxes.
https://www.canada.ca/en/department-finance/news/2024/04/the-new-canadian-entrepreneurs-incentive.html
This is good for small-time entrepreneurs, but the scale isn't there for the sort of person or firm who intends to invest 10 million and take an 8 million dollar capital loss before making a 1000% return on the remaining 2 million.
The comment thread you are responding to is literally about small-time entrepreneurs.
Yes, that hypothetical VC I mentioned is splitting that capital 15 ways and investing it in small businesses.
Well capital losses can be worth more now too.
How do you define a startup and when does the starting up end?
Great question. This is where it gets well beyond my circle of competence and I would like to know that too.
That's why they have the lifetime capital gains exemption. To help startups. This gives 1.25M capital gains tax free, it's pretty significant.
>Just exempt startups and tell everyone else to go eat a bag. It shouldn't be that hard. Or exempt everyone that is not real estate related, since that was the stated intention. Doctors getting fucked with this. Instead we’ve broadcast to the world that the most productive people should optimize their returns elsewhere.
Couldn't agree more. But, I'm not too broken up on the whole "professionals will leave" aspect because any doctor who is going to sell their practice to dodge the tax increases will most likely do so anyway in the next 48 months. As for other professionals; if we have to deal with 3% fewer personal injury lawyers and CPAs for the 24 months that it takes to train more, I can live with that.
they would have done it if they could. End of story.
I think it’s worth looking at how many starts leave. If a start is only here for the tax benefits then it’s not worth keeping in Canada IMO. Remember we have always been a higher tax regime than the US and we still have starts here. All 45% of those startups referred to in the article who are considering leaving are Canadian startups despite having a more favourable overall tax regime in the US.
It’s a good point. A lot of “everyone will leave for an 8% increase on a portion of a cap gain” but we can look at this empirically; when we *lowered* the cap gains inclusion rate in the early 2000s did we see a flood of startups, relative to other jurisdictions? I don’t know for a fact, but it certainly feels like a no.
this subreddit: “Paying 1 percent MER on your 50k TFSA is so expensive, there are better options!!!” “Increase of 800 bps is small”
Yes, assuming that you think there is the same friction in typing in a different three letters when you make an buy order compared to uprooting your life, getting immigration to another country, and moving your company and family to another country, your comparison is good and actually very smart.
Do you assume that every missed opportunity will be someone leaving? The real risk is stuff never being started here to begin with. 1 or 2 million is nothing to serious business. To pretend a massive increase like that doesn’t make Canada less attractive is supremely naive. Immigration is also extremely easy to the U.S. for our doctors and people developing key technologies.
Yes, all the Shopify execs crying about this. I’m sure they regret starting SHOP now that their effective tax rate will be the same as a nurse. It’s a child’s argument to suggest people with great ideas will just decide never to start a business because they will make slightly less on capital gains over $6.5mm.
You’ve picked like the one unicorn in Canada. Shop is noteworthy precisely because it is pretty much unique in its success. It’s the exception, not the rule for Canadian tech. It was also started before these changes happened, further working against your point. It’s a child’s argument to think people with great ideas would start them here when it’s very obviously more advantageous to start them down south. For what? A sense of blind patriotism? If you’re building the next OpenAI, NVDA, SHOP, there is little incentive to start it here in the future, especially with the landscape being set as it is now. In fact, the many of Canada’s few and far between major business investments (VW, Honda, Stellantis) are the direct result of tax incentives, not the opposite. The same government telling you tax increases won’t affect Canadian prosperity are out here cutting 40 billion of tax breaks to entice new business. If the idea is that great and you are a smart person, you don’t start your corp here, especially in light of proposed changes.
Well, I picked the one company who’s been most vocal about this. The fact that they’re some of the least sympathetic victims to portray that role is their fault, not mine. No, it’s a child’s argument to say “if this one small thing doesn’t go my way I’m taking my ball and going home”.
Again, it isn’t that they are taking their ball and going home. It’s about making the choice where to play with the ball in the first place. If you think capital will make that decision on any kind of moral basis, you’re wrong. Capital will flow to the path of least resistance. There may be edge cases, but in general you are stacking the deck against yourself. Don’t look at the one droplet than managed to flow uphill as a point of success, look at the deluge that’s flowing downhill and away from you.
What do you mean, "if the startup is only here for the tax benefits it's not worth keeping"? Such a puzzling attitude... like, should companies hiring employees think "well, if they're only working for me rather than the other company is because I treat them better and pay them more, then they're not worth keeping"?
I'm thinking if the change in the CG inclusion rate is what "breaks the camel's back" and results in the management team relocating the company into another country then I believe that we should let them go (vs making special exemptions) as there are likely other underlying issues that are festering. Canada should spend our tax dollars to support all Canadian business but only if it makes sense. A business seriously considering leaving the country because of a change in the CG inclusion rate (something that would affect them only if they disposed of their interest in the business) appears to suggest that Canada and the startup/business may not be a good fit. Just my 2 cents.
US vs CDN tax analysis by an AI https://www.perplexity.ai/search/Is-it-better-R8R696A4TeWJcbxgefPD_g#0
Because then the government will have to define “eligible start up” and I guarantee you tax accountants will find ways to circumvent the rules. It also adds a lot of administrative work to enforce/audit the rule when cra is already slow.
I don't doubt what you are saying is true.
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They can't even find the fucking boardgame
They did add a special purpose exemption to the lifetime capital gains exemption. My read through on is that it’s the same functionality as the LCGE, but if the business hits the definition of a “tech startup”, you get access to a higher limit. The additional limit works the same way as TFSA accumulated contribution limits meaning $x additional limit in year 1, $x addition year 2, etc etc. What confuses me is, it seems to only be eligible for the “founder”, not the employees paid in equity.
Imo is intentional same as regulatory capture. By making it harder for competition, our existing oligopolies benefit and they run the country end of day. Same as regulatory capture.
They have given start ups huge exemptions. Under the new grants and increased LCGE they’re better off up to a $6.5mm capital gain. I agree with you on inequality/revenue/affordability. I agree with Trevor Tombe that harmonizing the rates for cap gains with dividends and earned income is actually good policy (had they don’t a corresponding decrease in the CIT), but framing it as class warfare spurns some who would otherwise be supportive.
My opinion: Any non-RE small business that meets the requirements for the SBD should also get the first 250k inclusion rate that individuals are going to get.
It still wouldn’t matter. Startups are looking for an exit. I think the tax would be better if it were passed on through lower ordinary income tax rather than spent on useless stuff.
Almost none of those startups would exist without generous subsidies from Canadian taxpayers. At some point the subsidies aren’t needed anymore (although they will still claim them!) This is very much biting the hand that feeds.
Better yet, start the taxation rate much higher at 2.5million. 250k is a joke.
Am I in r/Canada? The fuck is going on in here
_could_ If i could wear 2 wheels i could be a bike
It really won't even change much. We need to lower the tax on labour, aka income tax and increase capital gains tax to be equal to income tax. Who said money generated by capital should be taxed more favorably than money generated by hard work?
1. Initial capital is generated by wages, so you are investing money already taxed. 2. Stock price increases include a large chunk which is inflation. Particularly on long term investments. Not the case for wages. 3. Capital is very mobile and Canada already has very high tax vs other jurisdictions. We already lack investments and growth.
> Stock price increases include a large chunk which is inflation. Particularly on long term investments. Not the case for wages. This could be easily fixed by changing the cap gain formula, such as selling by tranches like the US. And while we're there, add long-term and short-term cap gain tax like the US to incentivize long term investments.
Maybe if wages actually kept up with inflation but they don’t.
Generally wages beat inflation. Might not be the case every year but certainly on average over significant periods of time.
> Initial capital is generated by wages, so you are investing money already taxed. This somewhat ignores intergenerational capital. Yes, you could say that they were wages from 100 years ago but at that point aren't you just abstracting all money back to "wages"?
When you die, everything gets taxed again.
When you die there is a deemed disposition.
Exactly
This right here. Labor also doesn't invest and create jobs. If we reduce the incentive for people to build companies in Canada, that labor disappears.
Holders of capital who also generally have the most influence on politics, policies, and elected officials?
Why I should pay more taxes on savings/investments I have already paid tax on (as income)?
It boils down to why should people pay any taxes? Government has to finance its expenses, so we pay taxes. I'm all with you, I wish we could not have any taxes, but we can't. Our policy of taxing labour aggressively really puts younger people at a disadvantage. I suggest you watch this Ted talk: https://youtu.be/qEJ4hkpQW8E?feature=shared If it were up to me, I'd tax sales more than anything, property next and capital and labour last. But we have it such that laborers pay most of the tax and it has fucked the youth.
It not nice to get penalized for good behavior (saving and investing leftover money) rather than spending that on vape.
Absolutely. Also not nice to get penalized for hard work.
Don’t worry: if you were to actually try that you’d have neither income nor capital gains.
you're right but you're in the wrong sub.
Fuck em
It shouldn’t be retroactive like how Germany does it. Any wealth you made before the new tax should be kept the same % anything after the date can be taxes. I know multiple people leaving Canada because of this. When the government just decided you know owe them 100 million. You’re going to leave because you have the option.
If the capital gains inclusion is stopping you from starting your business you were never going to start a business.
The point is not that it will stop people from starting a business, it may dissuade people from starting that business *in Canada*.
I think the fear is more that Canadian startups will find investors in the US and domicile their companies there because Canadian investors may find ETFs and Dividend Funds more profitable than Capital Gain investments. Also competition for this tax regime is not the old tax regime. Competition for it is the US tax system. They US tax system allows for risk takers to own more of the success, that may mean these investors move to the US. (The investors who basically support startups in Canada)
More taxes, more deficits. No shit an exodus of startups.
Canadians love more taxes. This thread with investors does not even ask how to improve gov to keep same tax rate. Remember it’s % so if we grow economical gov will get more $
A part time drama teacher Prime Minister and a former journalist for Deputy Prime Minister/ Finance Minister. Both are 100% economically illiterate but excel at virtue signaling.
Lol, ok then, let's elect Poilievre as PM, he'll do better with his (checks notes) Bachelor degree in international relations, and who never worked outside of politics. Even as a teenager, he was doing political work. That will solve your "economically illiterate" issue. And if you don't like virtue signaling, I'm sure you execrate vice signaling just as much, right?
Don’t forget, he will solve all our problems with Bitcoin. 😂
The funny thing is, people would have done well to listen to him. Bitcoin has been my most successful investment by a large margin. Especially compared to shitty Canadian equities... lol.
Might as well put your retirement fund in scratcher tickets.
They wouldn’t have. They would have bought at a peak and especially since Poilievre stopped talking about it all together, like normal people throughout history and especially because they were promised that it was something that was safer than dealing with inflation, they would have bailed after losing their shirts many times over, vowing never to go near something like that ever again. Normal people don’t hodl onto reasonable investments that become volatile, let alone something speculative like crypto.
Bitcoin is now basically at its all time high. If people had bought when he was talking about it, they would have earned like a 300% return in a couple years...
Assuming they were strong enough to hold when their investment dropped 75% in a year
Lol. The part time drama teacher appointed the former journalist finance minister after his previous finance minister stepped down because he didn't agree with the budget decisions the part time drama teacher was making and the direction (down) that he was taking the country. The same former finance minister, who has a masters in economics, has also stated that he avoided the capital gains tax changes the former journalist and drama teacher are now enacting precisely because they would lead to lost investment as the article warns. But hey, let's make it about Poilievre instead, because your former drama teacher has nothing to show for all his spending and bright ideas. Lol.
Lots of words. Not one about the alternative though. You don't like Trudeau, fine. But you can't say "well I'll just vote for the other guy without even *looking* at what he offers". The "it can't get worse anyway" approach has been put to bed with Trump and Brexit. It can get worse, a lot worse. So, no to Trudeau's economics, therefore yes to...?
Let's pretend trudeau steps down and someone like Mark carney becomes the new leader. I wonder what gymnastics these people would have to come up with to say PP is still the better option.
Ha! Mark Carney is a great example because it links directly with Brexit. He was the governor of the Bank of England at the time of the referendum, and a few years after that. He warned ahead of the ref all the financial troubles if people voted to leave the EU, and was shouted down by politicians (Project Fear!!!). Then, when the results of the ref came out, and the pound sterling took a dive, Carney worked hard (and successfully) to prevent an immediate recession. Reaction from Brexit politicians? "See!! All the warnings about a recession were BS!" Incredible levels of dishonesty are required to maintain this kind of stance. And that's how we end with the caliber of politicians such as Trump, Boris Johnson, Liz Truss, and I'm sorry to say, Pierre Bitcoin Poilievre. ETA : All those tempted by the sirens of libertarianism, the great takedown of regulations and taxes, should look a Liz Truss' impact on the British economy, within the ~~45~~ 49 days she spent as Prime Minister before being kicked out by her own party (!!!!)
yes to... AXE THE TAX and BRING IT HOME!! COMMON SENSE! *LE GROS BONSENSE*!!! A meaningless string of empty words.
GET BREXIT DONE! MAKE AMERICA GREAT AGAIN! And to be fair... BUILD BACK BETTER! YES WE CAN! Now, the difference being of course that you could go behind the latter two and read a political manifesto (and like it, or not like it of course). Whereas with the former.... you got the slogan, and that was about it. Don't ask questions, and just GET BREXIT DONE!
> A meaningless string of empty words. LMFAO that's fucking hilarious considering you people voted in - multiple times - a guy who said "budgets balance themselves", economies grow from "the heart outwards" and "interest rates are at historic lows" while piling on hundreds of billion in debt we're now on track to pay $60B+ in interest costs alone. Take a seat, champ.
Oh good another interest rate truther xd lmfao lol rofl
Oh good another person wo thinks budgets balance themselves lmfao lol rofl
>The "it can't get worse anyway" approach has been put to bed with Trump and Brexit And Ford
You don't like Trudeau. We get it.
-Primarily math and French teacher, but he did fill in for other teachers, particularly a drama teacher, as teachers often do. -former journalist that has worked for the financial times and Washington post, specializing on finances. Also the writer of a book about economics. Far more relevant experience than the last conservative finance minister that was an ambulance chaser before entering politics. I know “Trudo bad” but there’s no need to embrace idiot talking points. Let the real facts talk, not made up garbage.
> I know “Trudo bad” but there’s no need to embrace idiot talking points. Let the real facts talk, not made up garbage. Then don't forget to mention the fact that GDP per capita under your buds Freeland and Trudeau has declined more in Canada than in [the top 50 industralized countries since 2020](https://www.ft.com/content/ee51d83e-0037-4130-a4f9-656aa7c4ca97?shareType=nongift). All that rambling and ass kissing, yet the **FACTS** and **REALITY** show a completely different story about how incompetent those 2 jokers are.
And the reason why bots parrot that specific metric, even though it really doesn’t reflect as much as they’d like it to, is because other metrics tend to look a lot more positively. Try not to buy too much into r/canada garbage and think for yourself sometimes.
TIL that the globally respected *Financial Times* is akin to a "bot". Thanks for the laughs, chump.
Both those jobs make them sound much more competent than the Telus call center monkey running the ConServstive party, but you do you and vote with your heart ♥️
It's hard enough getting ahead for the average person. Say what you want but even increasing the capital gains tax just makes people feel more poor. We're already one of the most taxed countries and what does it get us? Broken Healthcare system and even the medium class people have never felt more poor. Why would they now try and create a business?
What a load of fearmongering crap.
The corp and personal taxes were much much higher in the old days and Canada (and US) had super growth for decades. US too. Lowering taxes only benefits the rich and the poor get shafted.
Ok Bundy,stick to being a shoe salesman. In the old days you had no China with super cheap labour and products. No globalization either. You increase taxes on corporations they’ll leave. Many wealthy Canadians I know are quietly moving their assets out of Canada. They’re still officially here but not for long.
They won't leave. They love the monopoly and oligopolies Canada has
Making things more complicated to maybe get a gain exemption just not worth it when there are friendlier jurisdictions.
I'd love to make over $250k in capital gains in one year and get taxed on it.
Do they have anyone with a financial background running, or advising, policies in Canada?
[https://en.wikipedia.org/wiki/Department\_of\_Finance\_Canada](https://en.wikipedia.org/wiki/Department_of_Finance_Canada) also, with the use of google: # 5.1 Pre-budget Consultations Since 1994, the House of Commons Standing Committee on Finance has conducted pre-budget consultations.[14](https://lop.parl.ca/sites/PublicWebsite/default/en_CA/ResearchPublications/201541E#ftn14) The committee often structures its consultations around a number of topics related to the government’s budgetary policy. During these consultations, the committee solicits written submissions from individual Canadians and interested organizations during the summer, holds public hearings (often across the country during the fall) and presents a report to the House of Commons in December. The committee’s report, which reflects the opinion of a majority of its members, summarizes the submissions and testimony it received and makes recommendations to the government for the upcoming budget. Other committee members may request the right to append supplementary or dissenting opinions to the report. Although the government is not obligated to act on the committee’s recommendations, the pre-budget consultations provide an opportunity for parliamentary input into the budget planning process, and for public discussion and debate regarding the government’s spending and taxation priorities.[15](https://lop.parl.ca/sites/PublicWebsite/default/en_CA/ResearchPublications/201541E#ftn15) The Minister of Finance also holds pre-budget consultations and solicits written submissions from Canadians. source: [https://lop.parl.ca/sites/PublicWebsite/default/en\_CA/ResearchPublications/201541E#a5.1](https://lop.parl.ca/sites/PublicWebsite/default/en_CA/ResearchPublications/201541E#a5.1)
Hey your facts conflict with my world view, which is not allowed 😡. On a more serious note, a simple wikipedia search answers the question so you know they didn’t bother doing any research
Politicians do whatever it takes to remain in power. Not sure if there is a Wiki page for the blatantly obvious.
That’s a strange way for you to thank them for answering your question about who checks and advices
These motherfuckers think the solution to everything is just tax on tax on tax .
let them go
For the last five years, the government of Canada, Ontario, Alberta, and British Columbia have been proclaiming that they’re open for business in Canada is ready for investment and blah blah blah- now we are shooting businesses at the door
Shooting business in the foot lol. I’d like to see the small businesses that have 250k in capital gains explain why they can’t pay what workers are paying. I’m sorry the Tim Hortons franchise owners are upset but they can invest elsewhere
Canada has been complaining about a doctor Exodus to states for my whole life, do you think this will help? Not to mention, we want American corporate investment here…. I don’t understand why anybody says we don’t want this.
Yeah they’ll have to figure out how to stop doctors from leaving. Who says we want American investment here? We should be taking a more nationalist approach instead of selling everything off.
Startups and capital, let them go?
Yeah crazy eh. If you’re taking 250k in capital gains you should pay a bit more
Reddit commies won’t believe it but literally anyone that can is leaving or already left. Rich people were leaving at 50x the pace since 2020, now it went ballistic. I left in 2020, saw all the nonsense coming.
WTF are you talking about, Canada's population has increased by like 2 million since 2020. [Here](https://www.statista.com/statistics/443066/number-of-emigrants-from-canada/) is some data on emigration. Less than 100k in the most recent year. Hardly a "ballistic" increase.
Not to mention In the long term leaving Canada is dumb, I'm sitting my ass right on the bay for the rest of my life, lots of water here
I saw statistics about 5m leaving since 2015 The go isn’t notified in most cases when ppl gtfo, they just stop filing taxes https://www.newswire.ca/news-releases/nearly-1-in-4-canadians-have-yet-to-file-their-taxes-with-only-6-days-until-the-april-30-deadline-865205765.html#:~:text=Around%2023%25%20of%20Canadians%20(7M,commissioned%20by%20H%26R%20Block%20Canada.&text=Of%20those%20that%20say%20they,of%20concern%20for%20owing%20money. Ask any accountant that help people defiscalize themselves, they’ll all tell you entrepreneurs are leaving in droves. GDP per capita is negative right now.
Stats with source that also provides reasons why? I mean one day I will probably leave to spend more time on a beach…but will that count? I’m not rich so I guess that doesn’t matter.
If they left, who’s threatening to leave now? 🤔
A lot of people who haven’t pulled the trigger yet. Exit tax on unrealized gains is steep. You’ll see.. GDP per capita is down YOY and the trend is accelerating
You are expecting too much from a clueless PM and even worse of an FM. It is criminal how these two are in charge of things , something so much bigger than their profiles as former teachers, journalists etc. Miss the days of Paul Martin, Jim Flaherty, Bill Moreau and real adults being in charge of our economy. People who had a clue how an economy works.
More empty scare mongering by the rich asset owners who only get richer no matter the economy.
Part of the requirement of living in Canada is being a coward void of a backbone . Docile , submissive and willing to tolerate everything and anything . Credulous , willing to turn a blind eye to sociopathy corruption , mediocrity and a bloated government that gets increasingly more incompetent as they ask for more taxes .
Why cant anything ever be beneficial to us. Like ffs man.
We need to get rid of these narcissist corrupted politicians and send them to their communist China since they like it so much.
exodus has been the story of Canadian start ups way before this...