A law firm acting on behalf of a B.C. company is seeking an injunction stopping the Canada Revenue Agency from enforcing a proposed capital gains tax hike that has yet to pass in Parliament.
Thorsteinssons LLP says the challenge it filed in Federal Court last week on behalf of Pelco Holdings Inc. aims to stop the government agency from administering the change as if it is law.
The proposal outlined in the Liberal’s spring budget seeks to raise the portion of capital gains on which companies pay tax to two-thirds from one-half. The policy would also apply to individuals with capital gains earnings above $250,000.
The rule change has yet to pass in Parliament, which is prorogued until March 24, but the CRA has said it must act as though it will take effect unless Parliament resumes and the government signals it will no longer proceed.
Rather than follow the proposal, the law firm says its client wants the Federal Court to order the CRA to administer the law as in its current state, which taxes capital gains at an inclusion rate of one-half.
Pelco Holdings says failure to stick to the existing inclusion rate could place taxpayers in an untenable position because they must decide whether to comply with the law or the revenue agency.
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