this post was submitted on 14 Jun 2024

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Who’s telling the truth about the capital gains tax? | About That (www.youtube.com)

submitted 3 months ago by [email protected] to c/[email protected]

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[–] [email protected] 38 points 3 months ago (1 children)

Rich kid Pierre Poilievre who got his pension early at age 31 and had his dental care covered.

Doesn’t want you to have the same things even if you worked longer hours and for more years.

[–] [email protected] 9 points 3 months ago (1 children)

Seriously, the guy it tone deaf. Only reason he became popular is because of people who got fucked by the housing market. Now he sides with people claiming capital gains > 250k in a year? Really?

[–] [email protected] 2 points 3 months ago

Hopefully this video will resonate with some people. It's really well explained.

[–] [email protected] 13 points 3 months ago

Rich people telling poor people they can be put in charge of taking care of everyone's money

[–] SamuelRJankis 5 points 3 months ago

Given the backstory behind why doctors structured their assets that way I think it's fair and also just makes a lot of the stupid talking points go away to give them a exemption. In itself I believe they should have just switched investment properties to income tax which would be a lot more politically digestible although Trudeau commented why he won't do that a few weeks ago.

[–] [email protected] 0 points 3 months ago

Here is an alternative Piped link(s):

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Piped is a privacy-respecting open-source alternative frontend to YouTube.

I'm open-source; check me out at GitHub.

[+] Bye -25 points 3 months ago (3 children)

USA neighbor here,

66% is insane, like if I saved up $500k to retire, I’d like to be selling some every year, like 5% (actually a little more but this is for easy numbers). That would get me $25,000 per year, then I’d pay capital gains tax on that and have about $20k left over. A modest retirement, could move to somewhere inexpensive and retire on that.

A 60% capital gains tax means I would have to save 1.5 million dollars to achieve that same retirement.

[–] [email protected] 16 points 3 months ago (3 children)

First, the bump to 66% only happens after 250k that year so $25k would not trigger the extra 16% eligibility. So standard 50% CG only would be applied. $12.5k taxed at your rate means the min rate which may be something like 20% (this number is a wild guess) so say $2500 paid to the gov. Not as bad as it sounds.

[–] [email protected] 9 points 3 months ago (1 children)

Don't forget that the $25k wouldn't all be gains in the first place. If the investment had increased in value by 25%, it would be 20k base and only 5k gains; if it had increased by 100% it would be an even split. We're talking about taxing a part of a part of the sale value.

[–] [email protected] 5 points 3 months ago

Once you get this far down the thread you realize how complicated it actually is and why most people have no sweet clue how it works.

[–] Bye 7 points 3 months ago (1 children)

Thanks for the info, that makes perfect sense. Seems like a good idea to tax people making tons and tons of money at a high rate then!

[–] [email protected] 3 points 3 months ago

IF it was forced to be in the 66% CG bracket $16.5k would be taxed at the previously posited 20% resulting in $3300 paid to government so it is a respectable jump in tax owed for those being subjected to it.

[–] [email protected] 5 points 3 months ago

A better way to think of it is <$250k 50% of the profit is tax-free. >$250k only 34% of it is tax exempt.

[–] brlemworld 13 points 3 months ago* (last edited 3 months ago) (3 children)

No, if you saved up $500k you would pay $0 in taxes because that's not capital gains. If you happened to hit the jackpot and win on the stock market with your ~~investments~~ bets to the tune of $500k in gains, then you would pay $333k in taxes from your stock market lottery winnings.

[–] [email protected] 19 points 3 months ago (1 children)

No, you would not pay $333k in taxes. You would add $333k to your taxable income for the year, and then pay regular tax rates on your total income.

If you made $500k in capital gains and had no other income that year, then by extremely rough estimation (I'm too lazy to pull out a calculator to get the exact figure) you would only be paying somewhere in the ballpark of $60k in federal taxes, then another $20k-$30k based on what province you live in. All things considered, that's like a 17% effective rate, which is too damn low if you ask me.

And that's only on amounts greater than $250k. So anyone this change actually affects is going to be fine. The people complaining about it are straight up lying.

[–] [email protected] 3 points 3 months ago

There’s also methods to potentially shelter some of that too. If a person has RRSP room and doesn’t actually need the whole amount available you can use that to delay paying the tax and hopefully reduce the rate paid. You can also make some investments within a TFSA, which means no taxes owed on the growth. Both of those options have caps on contributions so they’re a great for low-moderate income earners to minimize their taxes, while higher income earners can only shelter a portion of their income.

[–] Bye 3 points 3 months ago

If you save money for retirement you’re ideally selling gains off of that money. Like you have 500k invested in something safe like bonds, it’s making maybe 5% a year, so you live off of that 5% in early retirement and a bit more than that in late retirement. Then you have money leftover when you die, so your heirs can have it.

[–] [email protected] 2 points 3 months ago (1 children)

Winnings aren’t taxed in Canada

[–] [email protected] 4 points 3 months ago

You're correct but they're not taking about lotto/gambling winnings

[–] [email protected] 6 points 3 months ago* (last edited 3 months ago)

Do you realize that 67% does not refer to the tax rate, but rather the amount of capital gains that are taxed as income? Meaning that the remaining 33% are always completely tax free?

Example: you sell an investment property for $2,000,000 which you had previously bought for $1,000,000. Your annual salary is $75,000.

In this example, of the $1,000,000 capital gain, 50% of the first $250,000 ($125k) is taxable and 67% of the remaining $750,000 ($500k) is taxable. So, add $625k to your salaried income of $75k and your total taxable income is $700,000.

The total income tax you would pay after the proposed increase (assuming you live in Ontario) is $342,103, which is $320,405 more than you would have normally paid on your salary of $75,000. Therefore, your effective tax rate on the $1M capital gain is roughly 32%, not the 60% you mentioned in your comment.