Mr. Ramsey - Fellow Canadian Here. Love your show. The caller is incorrect. Unlike employment income which is 100% taxable, 50% of the capital GAIN is taxable, up to $250,000. Beyond $250,000, 66.7% of the GAIN is taxable. The income tax rate is NOT 66.6% on capital gains. For a business owner to not understand this at a basic level, is puzzling....
At what tax rate is this 50% taxable income taxed? And what about the 66%. Just another foreigner trying to get accurate information. Thanks in advance.
For any business, the $250k limit does not apply. The inclusion rate is 66% from the first dollar. I agree that the caller is incorrect. If the business made $100k, $66k is not the tax but the amount that is taxed.
No, that’s actually not fully correct either: Capital gains isn’t taxed at 66.7%. It’s the capital gains inclusion (into your income) that is at 66.7%. Basically in Canada, we don’t have a separate tax rate for capital gains like in the USA. In Canada cap gains are treated as income the year you sell the item and then added onto your income that year. You pay tax at your tax rate. In Ontario, the highest tax rate is reached at annual income of ~220k/yr income (153k USD based on today’s ex rate). Highest tax bracket in ON is 54% (federal + provincial). Yes our government has no problems taking more than half and then spending it on arrive scam apps and green slush funds to enrich politicians. Assuming the whole thing is cap gain inclusion 66.7% and highest tax rate, you’re giving government 54%. The 50% on first 250k rule only applies to individuals. If it’s a corp the 66.7% starts right away which is what it seems like for this guy. Another note is that government hasn’t fully ratified this into law yet. The CRA (Canadian IRS equivalent) is treating it like law, but because in Canada there’s no functioning government, it’s possible this law won’t come into effect. If it does it’s retroactive to June 25,2024. The normal capital gain inclusion rate is 50%, meaning only 50 % or cap gains is treated as income. At the highest tax rate you’re looking at 27% tax this is much higher than the USA 20%, but for the average person, it’ll work out to 15% which is not too different.
@@bubbajones4522 i was pissed off first upon hearing the caller's claim on canada's capital gain tax. Then i googled it and yah he doesnt know what is he talking about.
Dude, no sh*t. He's calling Dave Ramsey for help. He should talk to a Canadian tax accountant instead, or at least someone familiar with Canadian taxes.
@@chinchunsu4414 it is 66% . Any exception is nothing. The property value increase on everything in Canada due to currency debasement and immigration have made everything sky rocket. Most family businesses have the owner carrying life insurance just to pay the tax bill if something happens. It's killing family businesses.
Yikes. I think this guy should hire an accountant. The current Canadian law on capital gains is 50% is tax free, the other 50% is taxed at the income tax rate. Which is more like 30%, which really means it's more acts like a 15%-20% on the whole amount depending on the tax bracket. If the capital gains is over $250,000 then 66% of the amount over 250K is taxed at income tax rate instead of 50%. But of course - what do I know?! I'm just a photographer. 🤷🏼♂ Not to mention, this new law won't get passed.
I was gonna say the same thing. However, they said the law isn't a law yet and probably never will be, but currently CRA is going through with it anyway. Hopefully when Trudeau and his government is fully gone it goes back to how it was before
Without mentioning the Lifetime Capital Gains Exemption which it seems would apply as he wants to sell a business if I understood that right which would also reduce the tax bill. Hope he reads the comments from this video!
It was 50% its now 66%. Sonif he has $100,000 in capital gains, he will be taxed on gains of 66,000. Lets take for granted that is near the top bracket of taxes, that would mean. $34,000 in taxes.
@@yves8639yes, 66000 is taxable as income but 34000 would be over 50 percent income tax rate. That doesn't exist, the max rate is 33 percent. So more like 21k in taxes owed on 100k of capital gains assuming an income of over 253k.
Exactly, the CRA is currently following through with the 65% capital gains tax without even having it passed… We’ve been living in a communist regime for a while now… I pray every day that it will all be over soon!
Other commenters have correctly identified the "inclusion" issue, BUT THERE IS ALSO A $1,250,000 SMALL BUSINESS/FARM LIFETIME CAPITAL GAINS TAX EXEMPTION PER PERSON IN CANADA. Really surprised that the Ramsey team didn't catch all this before putting it out there (these episodes are pre-recorded). Hopefully they take this one down. Love, love, love, all the other EntreLeader content you are putting out, keep at it folks.
Dead right^. This comment needs to be higher. Family member sold their business for $1.6 mill CAD 2018, exempt of all taxes for the first $1.25 mill CAD
@@brandontrotman5864 And if you put your spouse down as an owner of the business, you get to use both individuals exemption for a total of 2.5 mil tax free.
66% inclusion rate sucks but i dont know how people get this far without knowing things like the difference between inclusion rate and actual tax rate. Tax rates about 50% in high brackets mean the final tax rate is about 33% which still sucks compared to 25%. This guy can also use some lifetime cap gain exemption of 1M on a restaurant sale
yes those numbers are good estimates, if you profit 200k its taxed about 25% and then everything more about 33% based on those inclusion rates and recent changes also seems unwise to sell off the restaurant when he seems to enjoy it just to pay down some low cost debt
DAVE!! CPA here from Ontario. Capital gains tax is NOT 66%. It is 66% TAXABLE. It used to be 50% taxable. So he would pay tax on 66% of the amount in capital gains (i.e. taxable capital gains). Also if the callers company meets certain definitions if he sells the shares there is a lifetime capital gains exemption. Canadian tax is terrible but not THAT terrible. If you are the caller please don’t hesitate to contact me and I can set you up with an expert. Love your show. My family’s on baby step 2. We own a small business. Keep up the great work.
The caller is misinformed: In Canada as of June 25, 2024, the capital gains "inclusion rate" changed from 50% to 66.67% for corporations and trusts, as well as for individuals with capital gains of more than $250,000. For capital gains less than $250,000, the inclusion rate remains at 50% This means that 50-67% of the gain amount is "taxable" based on that rule not that you pay 50-67% in taxes on the gain amount
That's not how capital gains tax works in Canada. What the person said is wrong. First $250K is 50% meaning 50% of the gain is added to your taxable income which is taxed at your marginal tax rate. After $250K its 66%. This means that for every $1 capital gain after $250K, 67 cents is added to your taxable income. You would then multiply that by your marginal tax bracket rate. Here's an example. If you made a capital gains tax of $100,000, 50% of that would be added to your taxable income. You would then need to pay taxes on the $50,000. If your provincial and federal marginal tax rate combined is 30% as example, then you would pay $15,000 in taxes. That effectively works out to be 15% ($15,000/$100,000). On the flip side, if the capital gain was $300,000 then 50% of $250,000 is added to the taxable income which works out to be $125,000. For the remaining $50,000, 67% would be added to your taxable income meaning $33,333 would be added to your taxable income. In total the taxable income would be $158,333 ($125K + $33.333K). Assuming a higher tax rate at like 40% due to higher income, the amount of taxes owed would be about $63,333. This means that the tax rate would be about 21% ($63,333/$300,000).
That is NOT how capital gains tax works in Canada. 50% of any GAIN is taxed as income up to a gain of $250000, and 66% of it over that amount. So If he bought the restaurant for $100k, sold it for $350k, it would be like he had an additional $125k of income that would be taxed as normal income.
Bro owns 2 successful businesses, and has no clue how capital gains works? Inclusion rates aren't tax rates.. I hope Dave looked this up later and realized he was talking to a dumbass.
You do realize that he won't sell it tomorrow. By the time it does sell the law will have passed thanks to the incompetent left winged liberals that continue to tax and waste.
Hello; the caller is misinformed! Capital gains in Canada is that the first 50 percent is tax free, the last 50 percent is added to your taxable income. The 66 percent proposal did not get voted on before parliament was dissolved. The proposal was any capital gains over $250,000 would have 66 percent of that entered into your taxable income. Any of the taxable capital gains can be reinvested for possible tax credits. Also, the first $400,000 of a lifetime taxable capital gain is tax free. Call a Canadian accountant. Which this caller should have done.
The caller is incorrect. They are *included* at a 50% rate. A gain of $100k only shows up as taxable income of $50k on your taxes. If the gain in a single year exceeds $500k then it is included at a 66% rate (i.e. a gain of $100k shows up on you taxable income as $66k).
@@nemiw4429 Canada is ranked #25 Highest-Taxed Countries out of 172 countries. living in Canada is expensive, Food is more expensive than US, house is expensive. You can't even get to see a doctor without waiting for months or years because private clinic is illegal in most of Canada
There is a good chance this caller would pay no tax on the first $1.25M gain using his lifetime capital gains exemption in Canada. The fact that Dave did not say get a competent accountant instead of believing a clueless caller who is clearly not financially literate is beyond me.
As an accountant i see one of the biggest suffocaters in a small business is the insane utility prices. If you have a $100 natural gas bill the delivery fees will be about another $50 and Trudeaus carbon tax or carbon levy can be an additional $110. Add this to electrcity, fuel, delivery charges, theres no surprise small business in Canada is dying.
It is terrible! We had a business in one city where the utilities in the winter were $1000 a month. We have since moved to another location where it is $250. The hit from that first location is still hurting us though. It was a big hit being stuck in a three year lease on a place where we could barely break even. Small businesses were supposed to get a carbon tax rebate. We never did.
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This video and the comments are very wrong. You are not giving up 66% of that income, you are TAXED on 66% of it. It's called the "inclusion rate". If you make a capital gain of 100k, the taxable capital gain is 66k, of which your tax bracket will apply to it. The other 34% is non taxable. You are NOT losing 66% of that capital gain. And yes the 66% rate only applies to gains over 250k, so the inclusion rate on anything below that is 50% only.
@@jonreed5431 Because their tax rates do not change based on the type of income. So you have to change the income. In countries like the US you have a bunch of different tax rates depending on how you earned the income. Not sure why you think one is weirder than the other.
@@Ag3ntStrength the 250k is for individuals but if he owns multiple restaurants, I would assume he has a corporation owning them at which point the inclusion rate starts at $0.
@@jonreed5431 Because it is added to your income not kept separately. If you sell a cabin and have no income you pay a lot less than if you sell 10 of them and are already making a lot. US also has different rates. California taxes it as normal income and has the most capital gains in the world.
@@jonreed5431 Your guess is as good as mine, I'm thinking the government did it this way as part of the negotiation between the different parties of the coalition to make it more palatable as a tax bill.
There's a couple things that a lot of people who are correcting the caller are themselves wrong or probably wrong about. The caller is almost certainly incorporated so that "first $250k" people keep mentioning wouldn't apply as it doesn't apply to businesses. Now onto the other part technically the inclusion rate is still 50% as the increase never passed into law, (the federal government has been frozen for months now. The CRA (Canada Revenue Agency, our version of the IRS) has taken it upon themselves to start using the 66% inclusion rate even though it was never passed into law. So the caller should be taxed on 50% (but will be at 66%) of his profits at income tax bracket rates (our income tax brackets work the same here in Canada as they do in the USA). So if he invested $100k into the business, and sold it for $300k he'd have a profit of $200k. He then will be taxed ON 66% of that or $132k (the other $58k is tax free). The 132k will be added to his current year's income where he will pay tax on the amount according to tax brackets. In the end he will be taxed about 40% of his income between federal and provincial taxes. So on his $200k profit he will keep roughly $137k (the 58k tax free from earlier and the remain 79k after being taxed on the rest).
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American in Canada here.. I just want to point out how it's even worse than that. The bill to increase it to 66.66% was removed from the government's agenda while still only a bill and then the government froze because they refused to hand over documents to the police. So the bill never became law, AND YET STILL their version of the IRS is collecting the tax. The Canadian Taxpayers Federation just started a lawsuit against them for it.
The caller is NOT accurate on tax rates of capital gains. The first $250,000 - only 50% is taxed at the marginal income tax rate. If caller was in a high marginal tax rate of 40%, then the capital gains of the first $250,000: $250,000 * 50% * 40% = $50,000 in taxes owed. It used to be like this for all cap gains, now any cap gains over $250,000 is taxed at 66% (still multiplied by the marginal tax rate).
The caller possibly exergerated his own worth. You don't run a business for 25 years without understanding the tax implications of it's disposition or transition. Its a deceptive call. Secondly, I wonder if Dave Ramsey's team remotely tried to crosscheck such information that left him so outraged. As an education and leadership training provider with audience in Canada, the team could check the facts in 3 minutes and know that the caller was ignorant or insincere. Dear Mr. Ramsey, we your Canadian audience would appreciate a session posted to correct this. 66% tax is not true.
This is factually inaccurate, and if this Canadian businessman has such a poor understanding of the taxes he is facing it's no wonder he is struggling... It is a 66% INCLUSION rate on capital gains above $250k/y, otherwise it is 50% inclusion rate. This included gain is then taxed at your marginal rate. As a business he may face the entire 66% inclusion rate depending on how he is structured, but regardless - it is NOT a 66% tax on gains, it is that 66% of your gain is subject to tax - the other 34% is tax-free. It is also likely he will pay no tax as there is a ~$1M lifetime capital gains tax exemption on individuals who sell elligible Canadian businesses. This guy needs to do his homework...
@ Its amazing all the ppl who have zero idea what they spew lol yes even a 50% inclusion rate is dumb it should be 25% or zero but we live in communist canada
@@JamesBurdon-gu5yu Incorrect. He he claiming the tax rate is 66%, which is factually incorrect. Capital gains taxes in Canada do not work like that. The number he is referring to is the INCLUSION RATE, or the fraction of capital gains that get lumped in with regular income and taxed at ordinary income tax rates. The law proposing this boost in the inclusion rate from 50% to 66% for gains >250k was also never passed by the government, meaning that bill is dead now with parliament prorogued. So no, that law is never getting passed. As an example using the 50% inclusion rate: If you realized a capital gain of $10,000 you apply the 50% inclusion rate, which means $5,000 is added to your income and taxed at your marginal rate. Another way to conceptualize this is that taxes on capital gains are always exactly half of what the taxes would be on regular income.
This is great advice. I will definitely apply it to our family business in Bolivia. I wish I could do the same with my home chores in Canada and get some extra free time.... LoL
If caller has unused contribution room in RRSP / spousal RRSP (Canadian variant of 401K) he can use the proceeds of the restaurant sale to reduce his income from a tax perspective. Possibly ending up in a lower tax bracket for the year. But what do I know. I am just an IT guy 🙂
In Ontario, capital gains are taxed as part of your income. However, only 50% of the capital gain is taxable. This means that if you sell an asset (like stocks or property) and make a gain, you only need to report half of that gain as income for tax purposes. For example, if you make a $10,000 capital gain, only $5,000 is added to your taxable income. Federal tax rates range from 15% to 33%, depending on your income. • Ontario provincial tax rates range from 5.05% to 13.16%. So, if you fall into a higher income bracket, you’ll pay more in taxes on the taxable portion of your capital gains. Would you like to know more about how to calculate your exact tax liability or specific tax brackets?
Two Major things to consider 1. That changes everything is 66.7% is the inclusion rate not the average tax rate on the capital gain and 2. The Lifetime Capital Gains Exemption for Canadian…. This caller did not provide info about his capital gains liability on either business but he should speak with a tax professional about this because he may not need to pay nearly as much tax as he believes…. This could be life changing for him and allow him to get back time with his family….
The caller is totally incorrect, I am a retired Canadian CFP and the CG tax is not close to that. He needs an accountant, a lawyer, a certified business valuator and financial planner to map out his future, to help him decide what to do with his balance sheet and income requirements. Under current proposed tax law, which has not yet been passed by Parliament, the first $250,000 capital gain is taxed at 50% of your marginal tax rate. If both he and his wife own the restaurants, then it can be split equally, if owned personally. So he and his wife could keep close to 75% of the capital gains. Second, if his business is under corporate ownership, and he finds a buyer willing to buy his shares that is completely exempt from capital gains over $1MM CAD. That is highly unlikely for an operating business like a restaurant. The buyer will maybe pay a small amount to take over the business, but if there is no property and he is leasing the space there is very little to sell. Dentists, vets, pharmacists and optometrists for example can all get that free exemption for a qualified sale of small business corporation shares because they are selling their client base with recurring revenues and use the share structure to pay tax at the corporate rate and keep retained earnings in their holding companies or ProCorps. This caller is very BADLY INFORMED, he needs to pay for PROFESSIONAL advice.
Canadian capital gains is NOT 66.666% rate. Capital gains up to $250K in one year are 1/2 tax free with the balance brought into your income. Capital gains over $250K have 2/3 of those gains brought into income with the balance tax free. The tax rate is whatever your marginal rate is. Wasted time talking to a dummy restaurant owner. LOL
I’m a Canadian. A lot of people are correcting the caller. I say both scenarios are terrible. We are now looking at setting up a new business stateside because of things like this. Just saying. 🇺🇸
The Tax rate is not 66.667% that is the INCLUSION RATE. Only 66and 2/3rds of the Cap Gains are included for taxable which would be a max of approximately 33-35% Tax. If the business is incorporated its less. Its works similar to the 80% inclusion rate for Social security in the US.
There is no special capital gains tax rate in Canada. Gains are taxed as ordinary income. The 66.67% referred to by the caller is the portion of the gain subject to tax. The remaining third of the gain amount is excluded from tax
The caller is incorrect. The inclusion rate (what is added to your income in the taxation year which you take the profits) is 50% for the first 250% and 66% for the remaining. He said he could sell for $200,000. Not all 200k would be capital gains as he could deduct the expenses incurred to launch the business. However: as an example. If he had a capital gain of $350,000 the first 250k would result in an inclusion of $125,000 to his income for income tax purposes in that year, and the remaining 100 k would add another $66,000 of taxable income. That means he would add $181,000 to his taxable income for that year. He claims he has a 10 million dollar income, doubtful that is net - probably it is his gross sales - however, If he had 1 million dollars of income before the sale he would pay 47.4% or $473.820, and if you added the 181k taxable from the sale to his total income (1,181,000) he would pay 47.9% or $565,945. $350,000 capital gains: $169,000 is not included $181,000 is included and taxable for 47.9% = $86,699 $94,301 balance after taxes applied - therefore: He pays 86,699 and keeps 263,301 from the sale.
This guy is confused on tax rates in Canada. The 66% is the inclusion rate, not the tax rate. For individuals it's for gains over $250,000, however it is likely held by a corporation in which it starts from $0 (which is the biggest baloney in Canada and drives down business investment). Therefore if he sold his restaurant for $1M dollars, his corporation that owns it would be taxed on $666,000 of it. The Canada Revenue Agency will take it's cut based on this, but since this tax rate technically is not fully implemented due to the Canadian Government being in shambles, there is a chance in the back end that he would get a refund of some of that tax bill back with a pittance in interest when the Conservative government comes in and axes that tax change.
The highest possible capital gains tax in Ontario is 35.69%. this is because the highest marginal income tax rate is 53.53% and capital gains are taxed at 2/3 that rate at the highest.
Well, for a guy who lives in Canada, dude knows jack shit on how taxes work. He needs to talk to an accountant if he's that clueless. It's not 66% tax. It's 66% of any capital gain ABOVE 250K is TAXABLE. Below 250K, 50% of that gain is taxable. At a tax rate that depends on the province and his current income.
As a Canadian business owner, this caller doesn’t understand the capital gains law. We still pay way too much but you don’t pay 66% on the entire amount.
Important detail left out. The 66% capital gains tax is for funds above $250,000. For capital gains below that amount 50% of the gains are taxable as income.
Capital gains are not taxed at 66% of 50% in Canada. Nobody pays that much tax here. The 50%/66% rates are INCLUSION RATES - meaning 50% of any capital gain from 0-250,000 is subject to taxation, and 66% of any capital gain over $250,000 is subject to taxation. The taxes you pay on those inclusions is based on your marginal tax rate.
No, they are *included* at a 50% rate. A gain of $100k only shows up as taxable income of $50k on your taxes. If the gain in a single year exceeds $500k then it is included at a 66% rate (i.e. a gain of $100k shows up on you taxable income as $66k). But the new 66% rule is unlikely to survive anyway, because we are likely to get an election before it comes into force.
Canadian here my parents bought land in the 80's now worth 20 million but if they pass it down to the 2 kids or grandkids the government takes 66% they can't take care of the property anymore yet will loose so much. It would take all the savings of both kids and parents plus a loan and selling some just to save the main farm.
Nope. Very simple reason why our taxes are fine. Here's why...giving birth to a child here is free. Giving birth to a child in the US without coverage is on average $11,000. Open heart surgery here is also free. Open heart surgery in the US is on average $1.5M. Thanks.
No, they’re fine. Canadians have better social welfare system in place and are currently running a budget deficit of about $50billion. As an American, I’d say our taxes are too low and our healthcare system is a mess.
Tax on that would approximately be 33% on the gain if the business is doing well. Canadian government convoluted the system to make it hard to understand and give their rich friends ways around it.
Because it isn't true what he said. He doesn't understand how the law works. A corporation is taxed on 66% of the capital gains. the tax rate is not 66%. so if you have a capital gains of 100,000 dollars you are taxed on 66,000 dollars at around roughly 25%. But with Trudeau resigning it doesn't seem like this will actually go through after all and corporations will remain at the previous 50% of capital gains being taxed.
Not Canadian, but the reason is because that's not how it works. It's not 66% capital gains tax, it's 66% of a gain over 250K being classed as taxable income. It's massively different and much much less.
you think? in portugal lets say you have a restaurant each meal you sell yo u pay 23% VAT then u still have the corporte tax 28% and then if you want to take the money out is capital gains tax again 28% ( not counting small taxes ) amazing socialism
The caller is incorrect. If he sells his business, he does not pay 67% tax; he pays Tax on 50% of what he gained, meaning 50% of that money is tax-free. For example, if he sold his business for 100k and he made no other money that year he would have to pay tax on 50k. The personal tax rate on 50k usually ends up being between 10-20% depending on the allowable deductions.
Caller is completely wrong. He is talking about the INCLUSION rate, not the tax rate. It used to be 50% inclusion rate, meaning half the gain is taxable. It just gets added to your personal income tax and is taxed at your marginal tax rate (we don't have specific rates for specific forms of income in Canada). It's all income tax. Now the inclusion rate is 2/3 (although the law is in limbo and may not ultimately receive Royal Assent). Anyway, it doesn't matter because he will have a personal capital gains exemption of up to $250K. But the correct math would be roughly 50% tax bracket combined provincial and federal * 66% of whatever the gain is less $250K (lifetime limit).
I thought Justin Trudeau's legacy would have been "The prime minister that lost Alberta", but now I believe it will be "The prime minister that lost Canada". 51st state is voming sooner than we can imagine.
Yes, the Canadian government believes that if you invest all of your after-tax dollars, all of your time, and all of your energy, that they deserve at least one third of what you've created when you decide to sell it. And what have they done to grow the company? You've paid taxes on the income from the business, as well as taxes for local property etc. So how does the government believe that they have any claim whatsoever to anything that has been created by the business owner, when they had no hand in it?
It’s not a 66% tax rate, it’s a 66% INCLUSION rate, and this is only for capital gains in excess of $250.000. This means that if you have a $1,000,000 capital gain, 666,667 is the amount of taxable income included in your tax return. You then pay tax on this amount at your personal tax bracket (~50%) on this amount. So actually 0.33 cents on the dollar.
the gains increase wasn’t even passed to law, it passed the vote as a bill, but the bill was killed when parliament was prorogued (which the Liberal government is being sued over). CRA is just collecting taxes, illegally based on the gains increase anyway, which is why CRA is being sued. illegally in that it’s not law to pay taxes at that rate. unless Trudeau recalls parliament and the bill happens to pass into law (unlikely since the government will be voted down well before then anyway), the gains increase will not become law if trudeau does not recall parliament, the bill will remain dead and therefore not law. that’s my understanding of the situation. i’m not a lawyer
Even easier solution than wading through Canadian tax law would be to hire someone to help lighten his work load. It sounds like his restaurants are doing well, so use some profit to hire help to improve his situation, especially at the restaurant with the paid for property.
The callers understanding is incorrect. The capital gains tax was increased from 50% to 66%, but that’s not the tax rate, that’s the portion of the capital gain that is subject to your personal tax rate. This is also only on gains above $250k. This is for large stock gains or business gains. Not the everyday Joe. (51% tax on 66% of a million dollar gain is like 340k, so 34%.)
Yes, the tax system in Canada is different. If for example you earned $300,000 Capital Gains from the sale of property, $150,000 ($300,000 *50%) of the Capital Gains is Taxable. Because you earned over $250,000 of Capital Gains, you will pay $100,000 ($150,000 * [2/3]) to the Government of Canada. In Canada, the higher income you make, the more tax you pay.
No wonder why he works 60+ hours a week, he clearly does not understand the how it works. CG tax is not 66%, in short Canada's capital gains tax uses tax brackets.
The CRA has stated that even with Parliament prorogued and that change not coming into effect, they will proceed as if it is law. It's their prerogative
While I’m on a roll here, just to let you know that common law marriages are recognized in Canada the same as legal marriage. I’ve lived common law for 33 years and we own our residence jointly.
The caller is wrong. Canadian capital gains tax is different to USA where the profit made from the capital gains is added to income and taxed at whatever slab the total amount is like its income tax. On top of that not 100% of your capital gains is taxed, only 66% is taxed, you dont pay tax on the other 33%. Example if you made $100, you pay 13% of $66 as income tax and you dont pay anything for the rest.
Not sure if anybody has replied, but the first million in a share sale on an ontario business is tax free. Yep you read that right capital gains exempt if he sells it as a going concern. That’s a nice chunk of cash for a small time entrepreneur
As a Canadian I can honestly say that the vast majority of of “Can’t Breathe”. This exactly why businesses are not investing in Canada and also why we need a change in Government. We need to remove the socialist nightmare that is Justin Trudeau immediately.
Sad to say that the business owner was incorrect in his statement regarding capital gains tax. In Canada, you are taxed on 50% of your capital gains up to $250,000 and 66% there after. So if you sold a business for $300,000, you deduct any expenses you might have had to buy that business in the first place and after you have the remaining balance, then 50% of that would be added to your yearly income and taxed according to your tax bracket for that year. So the guy would probably pay somewhere in the neighborhood of 30-40k in taxes that year, not 66% of all his capital gains. I would suggest that the fellow hire an accountant to help him out because he is struggling to understand the capital gains tax.
Joe from Ontario should talk to a tax accountant. It's not 66% tax on capital gains. The new increase taxes 66% of gains over $250k. So roughly 50% of the 66% gain is the tax amount. About 33%. Under $250k capital gains only 50% of gains are taxed. So closer to 25% in actual tax.
As many other people comment, the caller did not know financial taxes of his own country. Personal Capital gain is 50% up to 250 000 (but this has been delay I think) then after that this is 66.6% This Gain in Capital is added to your Revenu and then gouverment take the taxes related to your scale, Example if you have 0 revenu, but you have 500 000 gain in capital, than mean you have 333 000 revenu, at that level you pay 51% revenu tax, so on this example 500 000 gain is tax 170 000. If you have 100 000 gain and 21 0000 other revenu. 50% of 100 000 will be added to your revenu so 71 000, With that Canada take around 28% (Sorry for not been precise, those rules change each year. It's the princple that count) For business, any capital gain is always 50% no matter what, no threshold. but same principle, half of your capital cain is consider a revenu and then Revenu are taxed. To add on the beatu of all this , if you report a Lost in Capital in the previous 5 year it can be deduct of your actual gain. *Note: I am not a fiscalist on accountable, so might me wrong on some detail, but pretty sure about the big picture. ** Edited : I forget to say. Also you don't sell the restaurant, you sell the business, the incorporation. By doing so in Canada every person have a 1 time 989 000 dollars credit for capital gain on Sellon business. If he and his wife go the restaurant into a trust, they can match their credit. If he has kids, same things. At some point you create a structure that allow fiscally to pay to taxes on your business. He should get help from a professional fiscalist to organise that. There 3 condition to have access to that credit and the Fiscalist will be able to organise that for him.
Fellow Canadian here...while it soulds like the caller is confused...the Liberal government has caused signficant damage to our economy over last 10 years. The top marginal rate (income greater than $150k USD) is 53-54% for the major provinces. There is a reason our productivity is terrible. Essentially the country is developed due to the infastucture built > 10 yrs ago...but deveoping based on a failing health system...soaring uses of food banks...and tent cities that have popped up everywhere. The Liberal leader in waiting, Mark Carney, will be more of the same.
The caller needs to change a tax accountant. Only half of capital gain is taxable. This amount is to be included into your personal income. Also, if you sell one business and purchase another one then the capital gain is deferred and rolled into the second property.
66%, I don't think so, In Alberta, General Corporate Rate: Applies to corporations that are not CCPCs or to income not eligible for the small business deduction. Federal Rate: 15% Alberta Provincial Rate: 8% Combined Rate: 23% These rates are current as of January 2025.
That capital tax increase has NOT been passed by Parliment. Although the CRA intends to collect the 66% for 2024, they are being taken to court by the CanadianTax Payers Federation to prevent them from collecting the increase. It is not legal for CRA to implement the increase before legislation has passed Parliment.. When Parliment returns and if a non confidence vote is successful, then the capital gains legislation is automatically defeated.
Actually the caller is wrong. In Canada his restaurant business should be inside a family trust. Both he and his wife would be entitled to $500,000.00 lifetime Capital gains exemption. It was raised from $250K about 12 years ago. His payments for the business would be held within the trust which the trust can pay to him over years to reduce the tax hit on the balance.
Trudeau just increased the capital gains inclusion rate from 50% to 66.6% - it has not yet passed parliament because Trudeau prorogued parliament (aka, paused it so he doesn't have to face a vote of non-confidence) but we are told that the Canada Revenue Agency will still be applying the 66.6% inclusion rate. This means that 66.6% of any capital gain is taxed under your marginal tax rate. This starts at capital gains above 250K. Yes, we are taxed A LOT and so many other consumption, carbon, sin taxes on top of that.
He left out that the 60% applies to 50% of his profits. If he makes 100,000(profits), he pays capital gains on 50,000,not 100k. Also you need to make a certain level of profits for it to be that high. In his case he'd end up paying 50% on half so he'd keep 75k,not 33k, like he thinks. I'm surprised a businessman doesn't know this after 20+ years owning a restaurant. Normally you would leave the profits in the corporation and then take it out over a period of years to minimize the taxes even more. I think for my father it worked out to 10% tax if you did it properly per the laws.
He misread the tax law, capital gains are taken at a 50% rate and added to your personal income. Ie: made 500k, you’re taxed on 250k at your personal income tax bracket. So you’d pay 125k in tax on 500k gains
Listen, I get that we need to pay taxes. It’s what pays for all of our services, roads, healthcare etc, but the rate at which we Canadians are taxed is absolutely astronomical. Taxes aren’t there to pay for Turdboys luxury vacation trips, or a war in Ukraine, they are there for US!
In Canada if you buy a property or business for $1M, and sell it for $1.5M you will have to pay 66% on the $500K profit. It's at the point where it does not pay to invest in to real estate in Canada. This is a reason why I don't invest in to property. If you earn more than $250,000 in the stock markets, you will have to pay 66% on anything above the $250,000. This is a sickening tax. I make very sure I earn less than $250,000 from my investments. In Canada it is very difficult to become wealthy. There are many other ways we are taxed. If you are working and make $100K per year you will pay in the range of 40% income taxes.
Mr. Ramsey - Fellow Canadian Here. Love your show.
The caller is incorrect. Unlike employment income which is 100% taxable, 50% of the capital GAIN is taxable, up to $250,000.
Beyond $250,000, 66.7% of the GAIN is taxable.
The income tax rate is NOT 66.6% on capital gains.
For a business owner to not understand this at a basic level, is puzzling....
At what tax rate is this 50% taxable income taxed? And what about the 66%. Just another foreigner trying to get accurate information. Thanks in advance.
This caller definitely needs to speak to a Canadian tax expert … who does his business accounting? - hopefully not himself!
For any business, the $250k limit does not apply. The inclusion rate is 66% from the first dollar. I agree that the caller is incorrect. If the business made $100k, $66k is not the tax but the amount that is taxed.
No, that’s actually not fully correct either:
Capital gains isn’t taxed at 66.7%. It’s the capital gains inclusion (into your income) that is at 66.7%.
Basically in Canada, we don’t have a separate tax rate for capital gains like in the USA. In Canada cap gains are treated as income the year you sell the item and then added onto your income that year. You pay tax at your tax rate. In Ontario, the highest tax rate is reached at annual income of ~220k/yr income (153k USD based on today’s ex rate). Highest tax bracket in ON is 54% (federal + provincial). Yes our government has no problems taking more than half and then spending it on arrive scam apps and green slush funds to enrich politicians.
Assuming the whole thing is cap gain inclusion 66.7% and highest tax rate, you’re giving government 54%.
The 50% on first 250k rule only applies to individuals. If it’s a corp the 66.7% starts right away which is what it seems like for this guy.
Another note is that government hasn’t fully ratified this into law yet. The CRA (Canadian IRS equivalent) is treating it like law, but because in Canada there’s no functioning government, it’s possible this law won’t come into effect. If it does it’s retroactive to June 25,2024. The normal capital gain inclusion rate is 50%, meaning only 50 % or cap gains is treated as income.
At the highest tax rate you’re looking at 27% tax this is much higher than the USA 20%, but for the average person, it’ll work out to 15% which is not too different.
@Qosmioamit is correct, for business, the 66.7% starts at the first dollar of cap gains.
This is assuming that this new rule becomes law
Caller is clueless as to how the tax system works
Canada isn't socialist?
@@bubbajones4522 i was pissed off first upon hearing the caller's claim on canada's capital gain tax. Then i googled it and yah he doesnt know what is he talking about.
Dude, no sh*t. He's calling Dave Ramsey for help. He should talk to a Canadian tax accountant instead, or at least someone familiar with Canadian taxes.
@@chinchunsu4414 it is 66% . Any exception is nothing. The property value increase on everything in Canada due to currency debasement and immigration have made everything sky rocket. Most family businesses have the owner carrying life insurance just to pay the tax bill if something happens. It's killing family businesses.
Canadian taxation is still theft.
Yikes. I think this guy should hire an accountant. The current Canadian law on capital gains is 50% is tax free, the other 50% is taxed at the income tax rate. Which is more like 30%, which really means it's more acts like a 15%-20% on the whole amount depending on the tax bracket. If the capital gains is over $250,000 then 66% of the amount over 250K is taxed at income tax rate instead of 50%. But of course - what do I know?! I'm just a photographer. 🤷🏼♂
Not to mention, this new law won't get passed.
I was gonna say the same thing. However, they said the law isn't a law yet and probably never will be, but currently CRA is going through with it anyway. Hopefully when Trudeau and his government is fully gone it goes back to how it was before
Without mentioning the Lifetime Capital Gains Exemption which it seems would apply as he wants to sell a business if I understood that right which would also reduce the tax bill. Hope he reads the comments from this video!
It was 50% its now 66%. Sonif he has $100,000 in capital gains, he will be taxed on gains of 66,000. Lets take for granted that is near the top bracket of taxes, that would mean. $34,000 in taxes.
@@yves8639yes, 66000 is taxable as income but 34000 would be over 50 percent income tax rate. That doesn't exist, the max rate is 33 percent. So more like 21k in taxes owed on 100k of capital gains assuming an income of over 253k.
Exactly, the CRA is currently following through with the 65% capital gains tax without even having it passed… We’ve been living in a communist regime for a while now… I pray every day that it will all be over soon!
Other commenters have correctly identified the "inclusion" issue, BUT THERE IS ALSO A $1,250,000 SMALL BUSINESS/FARM LIFETIME CAPITAL GAINS TAX EXEMPTION PER PERSON IN CANADA.
Really surprised that the Ramsey team didn't catch all this before putting it out there (these episodes are pre-recorded). Hopefully they take this one down.
Love, love, love, all the other EntreLeader content you are putting out, keep at it folks.
I too would have thought Ramsey's team would, as due diligence, do some fact checking before broadcast or rebroadcast.
@@rossmacintosh5652 And it is not like they don't have the folks on staff who can do this, its a couple clicks on google.
Dead right^. This comment needs to be higher. Family member sold their business for $1.6 mill CAD 2018, exempt of all taxes for the first $1.25 mill CAD
@@brandontrotman5864 And if you put your spouse down as an owner of the business, you get to use both individuals exemption for a total of 2.5 mil tax free.
66% inclusion rate sucks but i dont know how people get this far without knowing things like the difference between inclusion rate and actual tax rate. Tax rates about 50% in high brackets mean the final tax rate is about 33% which still sucks compared to 25%. This guy can also use some lifetime cap gain exemption of 1M on a restaurant sale
Yeah that restauranter needs to consult a tax accountant big time
I have a better question. How did he get that far and not have an accountant to take care of this stuff so he doesn't have to worry about it????
yes those numbers are good estimates, if you profit 200k its taxed about 25% and then everything more about 33% based on those inclusion rates and recent changes
also seems unwise to sell off the restaurant when he seems to enjoy it just to pay down some low cost debt
Anyone can become wealthy even without understanding taxes lol
Weird that the guy didn't know this, Canada tax law is terrible and the new capital gains taxes is terrible, but bad information is bad information.
DAVE!! CPA here from Ontario. Capital gains tax is NOT 66%. It is 66% TAXABLE. It used to be 50% taxable. So he would pay tax on 66% of the amount in capital gains (i.e. taxable capital gains).
Also if the callers company meets certain definitions if he sells the shares there is a lifetime capital gains exemption.
Canadian tax is terrible but not THAT terrible. If you are the caller please don’t hesitate to contact me and I can set you up with an expert.
Love your show. My family’s on baby step 2. We own a small business. Keep up the great work.
The caller is misinformed: In Canada as of June 25, 2024, the capital gains "inclusion rate" changed from 50% to 66.67% for corporations and trusts, as well as for individuals with capital gains of more than $250,000. For capital gains less than $250,000, the inclusion rate remains at 50%
This means that 50-67% of the gain amount is "taxable" based on that rule not that you pay 50-67% in taxes on the gain amount
Yes but keep in mind his business will sell for more than $250K if they are bringing in revenue of $4,000,000
I’m Canadian. What you said sucks just as much as what he said. We are looking at setting up businesses in America now. Just saying.
Many Canadians are taking the leap to leave Canada
Wouldn’t it be nice to remove capital gain tax and enjoy the money you worked so hard for 🤩
I like how you explain that as if its so much better or comforting......
The fact that a Canadian business owner, operating multiple businesses, doesn't understand how his businesses are taxed, is disturbing.
That's not how capital gains tax works in Canada. What the person said is wrong.
First $250K is 50% meaning 50% of the gain is added to your taxable income which is taxed at your marginal tax rate.
After $250K its 66%. This means that for every $1 capital gain after $250K, 67 cents is added to your taxable income. You would then multiply that by your marginal tax bracket rate.
Here's an example. If you made a capital gains tax of $100,000, 50% of that would be added to your taxable income. You would then need to pay taxes on the $50,000. If your provincial and federal marginal tax rate combined is 30% as example, then you would pay $15,000 in taxes. That effectively works out to be 15% ($15,000/$100,000).
On the flip side, if the capital gain was $300,000 then 50% of $250,000 is added to the taxable income which works out to be $125,000. For the remaining $50,000, 67% would be added to your taxable income meaning $33,333 would be added to your taxable income. In total the taxable income would be $158,333 ($125K + $33.333K). Assuming a higher tax rate at like 40% due to higher income, the amount of taxes owed would be about $63,333. This means that the tax rate would be about 21% ($63,333/$300,000).
Still way too high, especially when Trudeau embezzles that money.
I have personal paid capital gains tax in Canada and this is correct. Good job!
As a Canadian this explanation is 100% correct.
Okay gotcha, thanks... Ya'll should do what we do, 20% for Buffett and and 5% for everyone else.
Gotta pay for all that “free” social programs. 😂😂😂😂😂😂. Free my azz. Ain’t nothing free.
That is NOT how capital gains tax works in Canada. 50% of any GAIN is taxed as income up to a gain of $250000, and 66% of it over that amount. So If he bought the restaurant for $100k, sold it for $350k, it would be like he had an additional $125k of income that would be taxed as normal income.
Don't justify the theft, that's insanity bro
@@airforcerymer15 Its not theft . . . but it is getting very, very close to it. Holy crap.
@a.r.hollowayauthor7210 all taxation is theft.
Bro owns 2 successful businesses, and has no clue how capital gains works? Inclusion rates aren't tax rates.. I hope Dave looked this up later and realized he was talking to a dumbass.
Whew! Thanks for clariifying.
How does someone have 2 businesses and not know the very basics of how taxes work
I had the same WTF moment. He needs an accountant ASAP if he's that clueless...
He is spending too much time in the kitchen. No wonder his is struggling financially.
It's the same with 99.9% of all business people they don't even know what money is - including Dave Ramsey.
Because, I believe this caller is spinning wheels!!
Because he's busy with his business.
He needs an accountant.
the 66% isn't even passed LOL its still at 50% and its AN INCLUSION RATE! this guy has zero idea what hes even talking about.
the bank of canada is still pushing it through for the time being...
You do realize that he won't sell it tomorrow. By the time it does sell the law will have passed thanks to the incompetent left winged liberals that continue to tax and waste.
Not many people know it hasn't been changed. Can you provide a source? It sure sounded like it had been.
Selling does not happen over night by the time its sold it would he txed
CRA pushed it through without putting it through the house
Hello; the caller is misinformed! Capital gains in Canada is that the first 50 percent is tax free, the last 50 percent is added to your taxable income. The 66 percent proposal did not get voted on before parliament was dissolved. The proposal was any capital gains over $250,000 would have 66 percent of that entered into your taxable income. Any of the taxable capital gains can be reinvested for possible tax credits. Also, the first $400,000 of a lifetime taxable capital gain is tax free. Call a Canadian accountant. Which this caller should have done.
They aren't misinformed. The CRA is doing it anyways which is illegal but who's going to stop them
That's so exciting I wish I could give the government even more of my money
@@Hightower613and here in the great USA, our cap gains tax caps at about 20%
The caller is incorrect. They are *included* at a 50% rate. A gain of $100k only shows up as taxable income of $50k on your taxes. If the gain in a single year exceeds $500k then it is included at a 66% rate (i.e. a gain of $100k shows up on you taxable income as $66k).
So tax is 50%? In Switzerland its 11% lmao.
@@nemiw4429 Tax is based on income. But only 50% of the gain is taxed. 50% is not the tx rate.
@@nemiw4429 Canada is ranked #25 Highest-Taxed Countries out of 172 countries. living in Canada is expensive, Food is more expensive than US, house is expensive. You can't even get to see a doctor without waiting for months or years because private clinic is illegal in most of Canada
@@nemiw4429 If I'm not misreading his comment (which I may be) it is not 50% tax. It is that 50% is taxable
What's worse than criminal socialists stealing the product of others hard work is people like you who try to make excuses for the socialist theft.
There is a good chance this caller would pay no tax on the first $1.25M gain using his lifetime capital gains exemption in Canada. The fact that Dave did not say get a competent accountant instead of believing a clueless caller who is clearly not financially literate is beyond me.
As an accountant i see one of the biggest suffocaters in a small business is the insane utility prices. If you have a $100 natural gas bill the delivery fees will be about another $50 and Trudeaus carbon tax or carbon levy can be an additional $110. Add this to electrcity, fuel, delivery charges, theres no surprise small business in Canada is dying.
It is terrible! We had a business in one city where the utilities in the winter were $1000 a month. We have since moved to another location where it is $250. The hit from that first location is still hurting us though. It was a big hit being stuck in a three year lease on a place where we could barely break even. Small businesses were supposed to get a carbon tax rebate. We never did.
It’s 66% that is taxed at your personal rate. 34% is tax exempt. Guy who owns a couple businesses should know this.
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This video and the comments are very wrong. You are not giving up 66% of that income, you are TAXED on 66% of it. It's called the "inclusion rate". If you make a capital gain of 100k, the taxable capital gain is 66k, of which your tax bracket will apply to it. The other 34% is non taxable. You are NOT losing 66% of that capital gain. And yes the 66% rate only applies to gains over 250k, so the inclusion rate on anything below that is 50% only.
That makes literally zero sense. Why not simply tax based on a percentage of the gain then? Canada is so odd.
@@jonreed5431 Because their tax rates do not change based on the type of income. So you have to change the income. In countries like the US you have a bunch of different tax rates depending on how you earned the income. Not sure why you think one is weirder than the other.
@@Ag3ntStrength the 250k is for individuals but if he owns multiple restaurants, I would assume he has a corporation owning them at which point the inclusion rate starts at $0.
@@jonreed5431 Because it is added to your income not kept separately. If you sell a cabin and have no income you pay a lot less than if you sell 10 of them and are already making a lot. US also has different rates. California taxes it as normal income and has the most capital gains in the world.
@@jonreed5431 Your guess is as good as mine, I'm thinking the government did it this way as part of the negotiation between the different parties of the coalition to make it more palatable as a tax bill.
Basically everyone is pointing out how this caller is wrong. But can we get an actual correction on air??
of course not, you would not want to go against the narrative 😊😊
The worse thing a business can do in Canada is make money.
There's a couple things that a lot of people who are correcting the caller are themselves wrong or probably wrong about.
The caller is almost certainly incorporated so that "first $250k" people keep mentioning wouldn't apply as it doesn't apply to businesses.
Now onto the other part technically the inclusion rate is still 50% as the increase never passed into law, (the federal government has been frozen for months now.
The CRA (Canada Revenue Agency, our version of the IRS) has taken it upon themselves to start using the 66% inclusion rate even though it was never passed into law.
So the caller should be taxed on 50% (but will be at 66%) of his profits at income tax bracket rates (our income tax brackets work the same here in Canada as they do in the USA).
So if he invested $100k into the business, and sold it for $300k he'd have a profit of $200k. He then will be taxed ON 66% of that or $132k (the other $58k is tax free).
The 132k will be added to his current year's income where he will pay tax on the amount according to tax brackets. In the end he will be taxed about 40% of his income between federal and provincial taxes.
So on his $200k profit he will keep roughly $137k (the 58k tax free from earlier and the remain 79k after being taxed on the rest).
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American in Canada here.. I just want to point out how it's even worse than that. The bill to increase it to 66.66% was removed from the government's agenda while still only a bill and then the government froze because they refused to hand over documents to the police. So the bill never became law, AND YET STILL their version of the IRS is collecting the tax. The Canadian Taxpayers Federation just started a lawsuit against them for it.
The caller is NOT accurate on tax rates of capital gains. The first $250,000 - only 50% is taxed at the marginal income tax rate. If caller was in a high marginal tax rate of 40%, then the capital gains of the first $250,000: $250,000 * 50% * 40% = $50,000 in taxes owed. It used to be like this for all cap gains, now any cap gains over $250,000 is taxed at 66% (still multiplied by the marginal tax rate).
The caller possibly exergerated his own worth. You don't run a business for 25 years without understanding the tax implications of it's disposition or transition. Its a deceptive call.
Secondly, I wonder if Dave Ramsey's team remotely tried to crosscheck such information that left him so outraged. As an education and leadership training provider with audience in Canada, the team could check the facts in 3 minutes and know that the caller was ignorant or insincere.
Dear Mr. Ramsey, we your Canadian audience would appreciate a session posted to correct this. 66% tax is not true.
It has NOT been approved but the CRA is illegally collecting on this ridiculous venture while the government has been prorogued. 😔
You're the best Dave.
"Bless your heart"
This is factually inaccurate, and if this Canadian businessman has such a poor understanding of the taxes he is facing it's no wonder he is struggling...
It is a 66% INCLUSION rate on capital gains above $250k/y, otherwise it is 50% inclusion rate. This included gain is then taxed at your marginal rate.
As a business he may face the entire 66% inclusion rate depending on how he is structured, but regardless - it is NOT a 66% tax on gains, it is that 66% of your gain is subject to tax - the other 34% is tax-free.
It is also likely he will pay no tax as there is a ~$1M lifetime capital gains tax exemption on individuals who sell elligible Canadian businesses.
This guy needs to do his homework...
thank you, these people have zero idea what they are talking about its wild.
quit trying to justify it, even 50% is still criminal.
@@kcmatloff5707 please learn what an inclusion rate is before posturing your opinion.
@ Its amazing all the ppl who have zero idea what they spew lol yes even a 50% inclusion
rate is dumb it should be 25% or zero but we live in communist canada
How the fuck have we not gotten a correction on this yet?
Trump fans support a fake narrative is my guess.
He is mis-representing the tax info which can easily be googled
He is not mis representing anything. He is refering to a jew law which will be passed by the time he sells
@@JamesBurdon-gu5yu Incorrect. He he claiming the tax rate is 66%, which is factually incorrect. Capital gains taxes in Canada do not work like that. The number he is referring to is the INCLUSION RATE, or the fraction of capital gains that get lumped in with regular income and taxed at ordinary income tax rates. The law proposing this boost in the inclusion rate from 50% to 66% for gains >250k was also never passed by the government, meaning that bill is dead now with parliament prorogued. So no, that law is never getting passed.
As an example using the 50% inclusion rate: If you realized a capital gain of $10,000 you apply the 50% inclusion rate, which means $5,000 is added to your income and taxed at your marginal rate. Another way to conceptualize this is that taxes on capital gains are always exactly half of what the taxes would be on regular income.
This is great advice. I will definitely apply it to our family business in Bolivia. I wish I could do the same with my home chores in Canada and get some extra free time.... LoL
If caller has unused contribution room in RRSP / spousal RRSP (Canadian variant of 401K) he can use the proceeds of the restaurant sale to reduce his income from a tax perspective. Possibly ending up in a lower tax bracket for the year.
But what do I know. I am just an IT guy 🙂
In Ontario, capital gains are taxed as part of your income. However, only 50% of the capital gain is taxable. This means that if you sell an asset (like stocks or property) and make a gain, you only need to report half of that gain as income for tax purposes.
For example, if you make a $10,000 capital gain, only $5,000 is added to your taxable income.
Federal tax rates range from 15% to 33%, depending on your income.
• Ontario provincial tax rates range from 5.05% to 13.16%.
So, if you fall into a higher income bracket, you’ll pay more in taxes on the taxable portion of your capital gains. Would you like to know more about how to calculate your exact tax liability or specific tax brackets?
Do they not fact check their content before they choose which calls to publish?
How else would they get wonderful Canada bashing content?? Let everyone believe we tax at 66%!
Two Major things to consider 1. That changes everything is 66.7% is the inclusion rate not the average tax rate on the capital gain and 2. The Lifetime Capital Gains Exemption for Canadian…. This caller did not provide info about his capital gains liability on either business but he should speak with a tax professional about this because he may not need to pay nearly as much tax as he believes…. This could be life changing for him and allow him to get back time with his family….
WRONG. It's 66% of the gains are taxed at approx. 25%. With 50% of the 66 on amounts 250K and below. Dude should be calling a Canadian CPA for advice.
This is correct
The caller is totally incorrect, I am a retired Canadian CFP and the CG tax is not close to that. He needs an accountant, a lawyer, a certified business valuator and financial planner to map out his future, to help him decide what to do with his balance sheet and income requirements.
Under current proposed tax law, which has not yet been passed by Parliament, the first $250,000 capital gain is taxed at 50% of your marginal tax rate. If both he and his wife own the restaurants, then it can be split equally, if owned personally. So he and his wife could keep close to 75% of the capital gains.
Second, if his business is under corporate ownership, and he finds a buyer willing to buy his shares that is completely exempt from capital gains over $1MM CAD. That is highly unlikely for an operating business like a restaurant.
The buyer will maybe pay a small amount to take over the business, but if there is no property and he is leasing the space there is very little to sell.
Dentists, vets, pharmacists and optometrists for example can all get that free exemption for a qualified sale of small business corporation shares because they are selling their client base with recurring revenues and use the share structure to pay tax at the corporate rate and keep retained earnings in their holding companies or ProCorps.
This caller is very BADLY INFORMED, he needs to pay for PROFESSIONAL advice.
Canadian capital gains is NOT 66.666% rate. Capital gains up to $250K in one year are 1/2 tax free with the balance brought into your income. Capital gains over $250K have 2/3 of those gains brought into income with the balance tax free. The tax rate is whatever your marginal rate is. Wasted time talking to a dummy restaurant owner. LOL
I’m a Canadian. A lot of people are correcting the caller. I say both scenarios are terrible. We are now looking at setting up a new business stateside because of things like this. Just saying. 🇺🇸
This is so incorrect. Hey, get the taxes correct. Have a real financial expert explain the actual tax situation.
The Tax rate is not 66.667% that is the INCLUSION RATE. Only 66and 2/3rds of the Cap Gains are included for taxable which would be a max of approximately 33-35% Tax. If the business is incorporated its less.
Its works similar to the 80% inclusion rate for Social security in the US.
There is no special capital gains tax rate in Canada. Gains are taxed as ordinary income. The 66.67% referred to by the caller is the portion of the gain subject to tax. The remaining third of the gain amount is excluded from tax
The caller is incorrect. The inclusion rate (what is added to your income in the taxation year which you take the profits) is 50% for the first 250% and 66% for the remaining.
He said he could sell for $200,000. Not all 200k would be capital gains as he could deduct the expenses incurred to launch the business.
However: as an example. If he had a capital gain of $350,000 the first 250k would result in an inclusion of $125,000 to his income for income tax purposes in that year, and the remaining 100 k would add another $66,000 of taxable income. That means he would add $181,000 to his taxable income for that year. He claims he has a 10 million dollar income, doubtful that is net - probably it is his gross sales - however, If he had 1 million dollars of income before the sale he would pay 47.4% or $473.820, and if you added the 181k taxable from the sale to his total income (1,181,000) he would pay 47.9% or $565,945.
$350,000 capital gains: $169,000 is not included
$181,000 is included and taxable for 47.9% = $86,699
$94,301 balance after taxes applied - therefore:
He pays 86,699 and keeps 263,301 from the sale.
This guy is confused on tax rates in Canada. The 66% is the inclusion rate, not the tax rate. For individuals it's for gains over $250,000, however it is likely held by a corporation in which it starts from $0 (which is the biggest baloney in Canada and drives down business investment). Therefore if he sold his restaurant for $1M dollars, his corporation that owns it would be taxed on $666,000 of it. The Canada Revenue Agency will take it's cut based on this, but since this tax rate technically is not fully implemented due to the Canadian Government being in shambles, there is a chance in the back end that he would get a refund of some of that tax bill back with a pittance in interest when the Conservative government comes in and axes that tax change.
The highest possible capital gains tax in Ontario is 35.69%. this is because the highest marginal income tax rate is 53.53% and capital gains are taxed at 2/3 that rate at the highest.
Welcome to Canada..
Well, for a guy who lives in Canada, dude knows jack shit on how taxes work. He needs to talk to an accountant if he's that clueless.
It's not 66% tax. It's 66% of any capital gain ABOVE 250K is TAXABLE. Below 250K, 50% of that gain is taxable.
At a tax rate that depends on the province and his current income.
@@1acreproject Yes but still horrible. No one can defend the taxes we pay here in Canada .
Canadian CFP here. Caller is uninformed about how taxes work. The inclusion is 67% on gains over 250k. Yes sucks, but not that bad.
Misinformation live... Canada doesn't have 66% capital gain tax as explained by many already.
As a Canadian business owner, this caller doesn’t understand the capital gains law. We still pay way too much but you don’t pay 66% on the entire amount.
Important detail left out. The 66% capital gains tax is for funds above $250,000. For capital gains below that amount 50% of the gains are taxable as income.
The fukc's going on in Canada?
Sounds good Trudeau
Capital gains are not taxed at 66% of 50% in Canada. Nobody pays that much tax here. The 50%/66% rates are INCLUSION RATES - meaning 50% of any capital gain from 0-250,000 is subject to taxation, and 66% of any capital gain over $250,000 is subject to taxation. The taxes you pay on those inclusions is based on your marginal tax rate.
No, they are *included* at a 50% rate. A gain of $100k only shows up as taxable income of $50k on your taxes. If the gain in a single year exceeds $500k then it is included at a 66% rate (i.e. a gain of $100k shows up on you taxable income as $66k).
But the new 66% rule is unlikely to survive anyway, because we are likely to get an election before it comes into force.
That still sucks
Canadian here my parents bought land in the 80's now worth 20 million but if they pass it down to the 2 kids or grandkids the government takes 66% they can't take care of the property anymore yet will loose so much. It would take all the savings of both kids and parents plus a loan and selling some just to save the main farm.
Can we just agree that tax is too high in Canada? Ok guys it still hurts alot.
no, we can't. Our taxes are fine.
Nope. Very simple reason why our taxes are fine. Here's why...giving birth to a child here is free. Giving birth to a child in the US without coverage is on average $11,000. Open heart surgery here is also free. Open heart surgery in the US is on average $1.5M. Thanks.
No, they’re fine. Canadians have better social welfare system in place and are currently running a budget deficit of about $50billion. As an American, I’d say our taxes are too low and our healthcare system is a mess.
Tax on that would approximately be 33% on the gain if the business is doing well.
Canadian government convoluted the system to make it hard to understand and give their rich friends ways around it.
66% tax? Why has Canada's citizenry not risen up and overthrown the government that takes 66% of what they make?
but free healthcare! haha
Because they are literally subjects to an old man in Britain who was born into a magic family.
Because it isn't true what he said. He doesn't understand how the law works. A corporation is taxed on 66% of the capital gains. the tax rate is not 66%. so if you have a capital gains of 100,000 dollars you are taxed on 66,000 dollars at around roughly 25%. But with Trudeau resigning it doesn't seem like this will actually go through after all and corporations will remain at the previous 50% of capital gains being taxed.
Maybe Trump can use this to get them to join the US...
Not Canadian, but the reason is because that's not how it works. It's not 66% capital gains tax, it's 66% of a gain over 250K being classed as taxable income. It's massively different and much much less.
you think? in portugal lets say you have a restaurant each meal you sell yo u pay 23% VAT then u still have the corporte tax 28% and then if you want to take the money out is capital gains tax again 28% ( not counting small taxes ) amazing socialism
The caller is incorrect. If he sells his business, he does not pay 67% tax; he pays Tax on 50% of what he gained, meaning 50% of that money is tax-free. For example, if he sold his business for 100k and he made no other money that year he would have to pay tax on 50k. The personal tax rate on 50k usually ends up being between 10-20% depending on the allowable deductions.
What a dumb caller. It's 66% inclusion rate. So at 50% tax rate that 66 -> becomes 33%.
Caller is completely wrong. He is talking about the INCLUSION rate, not the tax rate. It used to be 50% inclusion rate, meaning half the gain is taxable. It just gets added to your personal income tax and is taxed at your marginal tax rate (we don't have specific rates for specific forms of income in Canada). It's all income tax. Now the inclusion rate is 2/3 (although the law is in limbo and may not ultimately receive Royal Assent). Anyway, it doesn't matter because he will have a personal capital gains exemption of up to $250K. But the correct math would be roughly 50% tax bracket combined provincial and federal * 66% of whatever the gain is less $250K (lifetime limit).
Yeah, we being mismanaged up here.
I thought Justin Trudeau's legacy would have been "The prime minister that lost Alberta", but now I believe it will be "The prime minister that lost Canada". 51st state is voming sooner than we can imagine.
Yes, the Canadian government believes that if you invest all of your after-tax dollars, all of your time, and all of your energy, that they deserve at least one third of what you've created when you decide to sell it. And what have they done to grow the company? You've paid taxes on the income from the business, as well as taxes for local property etc. So how does the government believe that they have any claim whatsoever to anything that has been created by the business owner, when they had no hand in it?
Damn. I could've told him that. I love Canada, but they suck!! Hahaha
It’s not a 66% tax rate, it’s a 66% INCLUSION rate, and this is only for capital gains in excess of $250.000. This means that if you have a $1,000,000 capital gain, 666,667 is the amount of taxable income included in your tax return. You then pay tax on this amount at your personal tax bracket (~50%) on this amount. So actually 0.33 cents on the dollar.
the gains increase wasn’t even passed to law, it passed the vote as a bill, but the bill was killed when parliament was prorogued (which the Liberal government is being sued over).
CRA is just collecting taxes, illegally based on the gains increase anyway, which is why CRA is being sued. illegally in that it’s not law to pay taxes at that rate.
unless Trudeau recalls parliament and the bill happens to pass into law (unlikely since the government will be voted down well before then anyway), the gains increase will not become law
if trudeau does not recall parliament, the bill will remain dead and therefore not law.
that’s my understanding of the situation. i’m not a lawyer
Even easier solution than wading through Canadian tax law would be to hire someone to help lighten his work load. It sounds like his restaurants are doing well, so use some profit to hire help to improve his situation, especially at the restaurant with the paid for property.
Pierre for PM
The callers understanding is incorrect. The capital gains tax was increased from 50% to 66%, but that’s not the tax rate, that’s the portion of the capital gain that is subject to your personal tax rate. This is also only on gains above $250k. This is for large stock gains or business gains. Not the everyday Joe. (51% tax on 66% of a million dollar gain is like 340k, so 34%.)
Whether the caller was wrong with the numbers of taxes or not, taxes in Canada for both employees and employers SUCK!
66 percent is taxable and then at your marginal rate. Still really high and it used to be only 50 percent until our latest federal budget
Yes, the tax system in Canada is different. If for example you earned $300,000 Capital Gains from the sale of property, $150,000 ($300,000 *50%) of the Capital Gains is Taxable. Because you earned over $250,000 of Capital Gains, you will pay $100,000 ($150,000 * [2/3]) to the Government of Canada. In Canada, the higher income you make, the more tax you pay.
I can’t breathe either as a Canadian. Taxes are killing us.
No wonder why he works 60+ hours a week, he clearly does not understand the how it works. CG tax is not 66%, in short Canada's capital gains tax uses tax brackets.
The CRA has stated that even with Parliament prorogued and that change not coming into effect, they will proceed as if it is law. It's their prerogative
While I’m on a roll here, just to let you know that common law marriages are recognized in Canada the same as legal marriage. I’ve lived common law for 33 years and we own our residence jointly.
The caller is wrong. Canadian capital gains tax is different to USA where the profit made from the capital gains is added to income and taxed at whatever slab the total amount is like its income tax. On top of that not 100% of your capital gains is taxed, only 66% is taxed, you dont pay tax on the other 33%. Example if you made $100, you pay 13% of $66 as income tax and you dont pay anything for the rest.
Better off just keeping it and just continuing the grind.
This is why any ones with the means and mindset have left or are in the process of leaving.
Actually when you sell a business in Canada, $888,000 is tax exempt per director. So he would not pay any tax.
Not sure if anybody has replied, but the first million in a share sale on an ontario business is tax free. Yep you read that right capital gains exempt if he sells it as a going concern. That’s a nice chunk of cash for a small time entrepreneur
As a Canadian I can honestly say that the vast majority of of “Can’t Breathe”. This exactly why businesses are not investing in Canada and also why we need a change in Government. We need to remove the socialist nightmare that is Justin Trudeau immediately.
Not true 50% of 66% , so 33%
Sad to say that the business owner was incorrect in his statement regarding capital gains tax. In Canada, you are taxed on 50% of your capital gains up to $250,000 and 66% there after. So if you sold a business for $300,000, you deduct any expenses you might have had to buy that business in the first place and after you have the remaining balance, then 50% of that would be added to your yearly income and taxed according to your tax bracket for that year.
So the guy would probably pay somewhere in the neighborhood of 30-40k in taxes that year, not 66% of all his capital gains.
I would suggest that the fellow hire an accountant to help him out because he is struggling to understand the capital gains tax.
Taxes was a big considering factor in getting promoted during my career. It is too bad that taxes was a factor in not being the best I could.
Will they correct this? Likely not.
Joe from Ontario should talk to a tax accountant. It's not 66% tax on capital gains. The new increase taxes 66% of gains over $250k. So roughly 50% of the 66% gain is the tax amount. About 33%. Under $250k capital gains only 50% of gains are taxed. So closer to 25% in actual tax.
As many other people comment, the caller did not know financial taxes of his own country.
Personal Capital gain is 50% up to 250 000 (but this has been delay I think) then after that this is 66.6% This Gain in Capital is added to your Revenu and then gouverment take the taxes related to your scale, Example if you have 0 revenu, but you have 500 000 gain in capital, than mean you have 333 000 revenu, at that level you pay 51% revenu tax, so on this example 500 000 gain is tax 170 000.
If you have 100 000 gain and 21 0000 other revenu. 50% of 100 000 will be added to your revenu so 71 000, With that Canada take around 28% (Sorry for not been precise, those rules change each year. It's the princple that count)
For business, any capital gain is always 50% no matter what, no threshold. but same principle, half of your capital cain is consider a revenu and then Revenu are taxed.
To add on the beatu of all this , if you report a Lost in Capital in the previous 5 year it can be deduct of your actual gain.
*Note: I am not a fiscalist on accountable, so might me wrong on some detail, but pretty sure about the big picture.
** Edited : I forget to say. Also you don't sell the restaurant, you sell the business, the incorporation. By doing so in Canada every person have a 1 time 989 000 dollars credit for capital gain on Sellon business. If he and his wife go the restaurant into a trust, they can match their credit. If he has kids, same things. At some point you create a structure that allow fiscally to pay to taxes on your business. He should get help from a professional fiscalist to organise that. There 3 condition to have access to that credit and the Fiscalist will be able to organise that for him.
Fellow Canadian here...while it soulds like the caller is confused...the Liberal government has caused signficant damage to our economy over last 10 years. The top marginal rate (income greater than $150k USD) is 53-54% for the major provinces. There is a reason our productivity is terrible. Essentially the country is developed due to the infastucture built > 10 yrs ago...but deveoping based on a failing health system...soaring uses of food banks...and tent cities that have popped up everywhere. The Liberal leader in waiting, Mark Carney, will be more of the same.
The caller needs to change a tax accountant. Only half of capital gain is taxable. This amount is to be included into your personal income. Also, if you sell one business and purchase another one then the capital gain is deferred and rolled into the second property.
66%, I don't think so, In Alberta, General Corporate Rate: Applies to corporations that are not CCPCs or to income not eligible for the small business deduction.
Federal Rate: 15%
Alberta Provincial Rate: 8%
Combined Rate: 23%
These rates are current as of January 2025.
That capital tax increase has NOT been passed by Parliment. Although the CRA intends to collect the 66% for 2024, they are being taken to court by the CanadianTax Payers Federation to prevent them from collecting the increase. It is not legal for CRA to implement the increase before legislation has passed Parliment.. When Parliment returns and if a non confidence vote is successful, then the capital gains legislation is automatically defeated.
Actually the caller is wrong. In Canada his restaurant business should be inside a family trust. Both he and his wife would be entitled to $500,000.00 lifetime Capital gains exemption. It was raised from $250K about 12 years ago. His payments for the business would be held within the trust which the trust can pay to him over years to reduce the tax hit on the balance.
Trudeau just increased the capital gains inclusion rate from 50% to 66.6% - it has not yet passed parliament because Trudeau prorogued parliament (aka, paused it so he doesn't have to face a vote of non-confidence) but we are told that the Canada Revenue Agency will still be applying the 66.6% inclusion rate. This means that 66.6% of any capital gain is taxed under your marginal tax rate. This starts at capital gains above 250K. Yes, we are taxed A LOT and so many other consumption, carbon, sin taxes on top of that.
Not how the system works
He left out that the 60% applies to 50% of his profits. If he makes 100,000(profits), he pays capital gains on 50,000,not 100k. Also you need to make a certain level of profits for it to be that high. In his case he'd end up paying 50% on half so he'd keep 75k,not 33k, like he thinks. I'm surprised a businessman doesn't know this after 20+ years owning a restaurant. Normally you would leave the profits in the corporation and then take it out over a period of years to minimize the taxes even more. I think for my father it worked out to 10% tax if you did it properly per the laws.
Dave Ramsey:
I'm a million dollars in debt on a 50k income >> 😕
Our capital gains tax is 66% >> 😧
He misread the tax law, capital gains are taken at a 50% rate and added to your personal income. Ie: made 500k, you’re taxed on 250k at your personal income tax bracket. So you’d pay 125k in tax on 500k gains
Listen, I get that we need to pay taxes. It’s what pays for all of our services, roads, healthcare etc, but the rate at which we Canadians are taxed is absolutely astronomical. Taxes aren’t there to pay for Turdboys luxury vacation trips, or a war in Ukraine, they are there for US!
In Canada if you buy a property or business for $1M, and sell it for $1.5M you will have to pay 66% on the $500K profit. It's at the point where it does not pay to invest in to real estate in Canada. This is a reason why I don't invest in to property. If you earn more than $250,000 in the stock markets, you will have to pay 66% on anything above the $250,000. This is a sickening tax. I make very sure I earn less than $250,000 from my investments. In Canada it is very difficult to become wealthy. There are many other ways we are taxed. If you are working and make $100K per year you will pay in the range of 40% income taxes.
You made another video about this?