Performance figures for each account are calculated using time weighted rate of returns on a daily basis. The Composite returns are calculated based on the asset-weighted monthly composite constituents based on beginning of month asset mix and include the reinvestment of all earnings as of the payment date. Composite returns are as follows:

John Nicola Answers Your Tax Questions: Increase in Capital Gains Inclusion Rate

Watch Canadian Tax Insights: How High Net Worth Investors Should Navigate Today’s Taxation Environment here.

In his webinar on November 2, 2021, CEO & Chairman, John Nicola, provided exclusive insight into Canada’s taxation environment and explained how to optimize your tax planning strategy in light of current regulations and took the time to answer viewer questions. Each week, we will publish his answers to your questions.

You have talked about a potential increase in the Capital Gains Inclusion rate. Should I crystallize gains now before the next Federal Budget?


John’s Response:

There’s a lot of political desire, especially given that the Liberals have a minority government and effectively they need the NDP’s support to pass anything. It all comes down to how much hardball the NDP wants to play in terms of this particular tax question.

The challenge is that Biden lost his ability to bring the tax rate anywhere near what they had intended, so it’s not that easy for candidates to say: “In the U.S., they pay 28 or 29 percent on capital gains, and we’re going to charge 40 or 42 percent, which is the effective tax rate if we bring to 75 percent inclusion.” So, that’s going to make it more difficult for that decision to take place. I would say, talking to tax specialists elsewhere, it’s mixed. Half of them feel that it’s not going to occur, whereas the other half feel it may occur. The problem for clients is that they have to make a decision, do they sell some assets now because they’re worried about tax rates going up? Personally, I’m not going to do that. Most of the assets we try to hold for clients are long-held, and there’s a real cost to selling assets and triggering tax now, even if the tax rate were to go up. Therefore, each situation should be looked at in areas that matter to them.

Let’s say an individual could trigger the tax now and at the same time they were interested in adding to their donor-advised fund, in that case, they can make that tax disappear entirely. I would say that anybody considering selling an asset now to avoid what they think is going to happen, should come up with a tax plan for doing so, and given it’s the end of the year, I wouldn’t be doing any transactions until the early part of the new year.


This material contains the current opinions of the author and such opinions are subject to change without notice. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Nicola Wealth is registered as a Portfolio Manager, Exempt Market Dealer and Investment Fund Manager with the required provincial securities commissions.