Canadian here and our new budget gets most of it’s new money from a new capital gains tax. Can you explain what they are, and surrounding context? Thanks!
In: Economics
Capital gains is money you make from an investment.
For example:
Let’s say you buy $1000 worth of shares in ABC Company.
The stock increases in price, so you sell your shares for $2000. That means you made $1000 in profit. That profit is considered a capital gain.
(This doesn’t just apply to stocks… you could have a capital gain on the sale of a business or some real estate – probably some other scenarios that I’m not thinking of. And there are other factors involved… to qualify for the lower tax rate you might have to hold the asset for a certain amount of time.)
I know nothing at all about Canadian tax law. In the United States, capital gains are taxed at a different rate than other forms of income – which is theoretically supposed to create an incentive for people to invest. (We could certainly argue whether that’s true, or whether it’s fair… but that’s not an ELI5 discussion.)
I’m guessing, based on your question, that maybe your government is talking about raising the tax rate on capital gains to generate new revenue.
Hope that helps.
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