Conservative Party of Canada (CPC) Leader Pierre Poilievre has rolled out a proposal to defer capital gains taxes in what he calls a bid to spur domestic investment.
The Conservatives said they would extend the policy if it leads to a “major economic boom.”
Poilievre said that if elected, the capital gains tax on asset sales, such as for stock or property, would be deferred until after the end of 2026 if the proceeds are reinvested in Canada. Capital gains taxes for those investments in Canadian businesses would be deferred, too, until investors cash out or invest it outside of the country.
“Canadians will have a powerful incentive to sell foreign investments and reinvest the proceeds, creating jobs in Canada,” Poilievre said. “Because the break does not go to anyone moving money out of the country, investors will be strongly discouraged from moving money out of Canada. Instead, they will bring it home to build, invent, create, and hire here in Canada.”
The tax break would go into effect July 1 and end on December 31, 2026, with a price tag of $10.5 billion, the CPC said. But the Conservatives said they would extend the policy if it leads to a “major economic boom.” The party did not provide details on how this impact would be measured.
The Council of Canadian Innovators (CCI), an organization representing Canada’s scale-ups, said the CPC’s proposed policy is in line with its mandate of driving Canadian domestic investment and supporting business growth.
RELATED: An election primer on what Canadian innovators need
“At CCI, we have long advocated for policies that enhance access to capital for high-potential Canadian firms—whether through improved non-dilutive funding, streamlined tax credits, or investment incentives that keep capital working inside Canada,” CCI president Benjamin Bergen said in a statement.
The Canadian Venture Capital Association (CVCA) CEO Kim Furlong called Poilievre’s focus on economic policy “very encouraging.”
“Policies that unlock capital and encourage private investment will help strengthen Canada’s competitive position and drive economic growth,” Furlong wrote in an email to BetaKit.
Graeme Moffat, a senior fellow at the Munk School of Global Affairs and Public Policy at the University of Toronto, said this policy is an “explicit acknowledgment” of Canada’s failure to invest in productivity. According to the Fraser Institute, a free-market-oriented think tank, Canada’s corporate investment since 2014 in intellectual property and technology has slowed, as has its productivity compared to the United States (US).
Moffat said the policy would theoretically boost investment in key areas, such as venture capital (VC), technology, and labour upskilling.
VC investor Matt Roberts said that the “devil is in the details” when it comes to this policy, as some of the reinvested funds could be funnelled towards companies that do not drive the goal of growing the economy, such as real estate.
“It’s a good policy but I’d like to know which companies would be eligible and how long the lockup for your reinvestment would be,” Roberts told BetaKit.
Moffat told BetaKit that a CPC government would have to be “very careful and very clever” to avoid benefiting “monopolistic” industries that do not contribute as much to productivity gains.
RELATED: Liberals’ capital gains tax hike is dead, lifetime exemption limit increase to stay
“Because so many key market sectors are dominated by oligopolies, it’s hard to incentivize Canadian companies to invest as much as they would need to realize productivity gains,” Moffat said.
Moffat said that under the proposed policy, Canadians could reinvest capital gains into productive pursuits, such as new technology and intellectual property, or instead store money in investment vehicles tax-free. For example, reinvesting capital gains into a real estate investment trust (REIT), which profits from rising housing prices, would be incentivized under the new policy.
“There are all kinds of ways this capital gains exemption proposal could pervert Canadian markets for the worse, rather than incentivizing the kind of investment we need to get out of our funk,” Moffat said. “So the devil really is in the details, and it’s not easy to get it right.”
“It’s hard to incentivize Canadian companies to invest as much as they would need to realize productivity gains.”
Graeme Moffat
“Sophisticated financial institutions and operators will find ways to get this money,” Moffat continued.
Capital gains taxes have been the subject of much debate since the Liberals proposed a controversial capital gains tax inclusion rate hike as part of Budget 2024. After nearly a year of backlash to the policy, the increase was cancelled by Prime Minister Mark Carney soon after he took office.
However, Carney said he would maintain the planned increase to the Lifetime Capital Gains Exemption limit to $1.25 million on the sale of small business shares and farming and fishing property. The prime minister said the government would introduce legislation to facilitate this “in due course.”
Poilievre’s proposal comes as he and Liberal leader Mark Carney face off in a snap election campaign set against the backdrop of a trade war with the US. US President Donald Trump has said he would impose further tariffs on Canadian imports as soon as Wednesday, on top of existing 25-percent duties on steel and aluminum.
Feature image courtesy Pierre Poilievre via Facebook.