JR Wealth Management flags lingering tax risks after capital gains rollback

JR Wealth Management says Canada’s cancellation of the proposed capital gains inclusion rate increase did not erase other tax exposures facing families and private company owners. The firm’s new analysis says business owners should still review trust timing, QSBC status and TOSI risk after the policy reversal.

Why it matters: - Canadian families and private company owners may still face tax triggers even though the proposed capital gains increase was cancelled. - The analysis says planning done for a change that never took effect may no longer match current rules. - The issue matters for estates, family trusts and business succession planning.

What happened: - JR Wealth Management highlighted new analysis on ProsperityOrchestrator.com about what remains after the federal government cancelled the proposed increase to the capital gains inclusion rate. - The analysis says the 2024 federal budget proposed raising the inclusion rate from one-half to two-thirds. - The same analysis says the effective date was deferred to Jan. 1, 2026, and the increase was formally cancelled on March 21, 2025. - The rate remains at 50%.

The details: - The analysis says several tax mechanics still apply regardless of the inclusion rate. - Those mechanics include deemed disposition on death. - Those mechanics also include the 21-year deemed disposition rule for most family trusts. - The analysis also points to the tax on split income, or TOSI, rules. - The analysis also flags the 24-month asset test that governs Qualified Small Business Corporation, or QSBC, share status. - The increase to the Lifetime Capital Gains Exemption did take effect and remains current. - JR Wealth Management founder Jonathane Ricci said families that restructured in 2024 for a rate increase that never took effect may now hold structures built for a policy that does not exist. - Ricci said families that did nothing are still exposed to mechanics that were never conditional on the bill. - The analysis recommends auditing restructurings undertaken in 2024 and 2025 in anticipation of the rate change. - It also recommends confirming current QSBC status for shares intended to use the exemption. - It also recommends calendaring the next 21-year deemed disposition date for every family trust holding shares. - It also recommends reviewing TOSI exposure on income paid to family members who did not contribute capital or labour to the business. - The full analysis is available in the company’s coverage.

Between the lines: - The cancellation of a proposed tax increase did not remove baseline planning risks for private business families. - The analysis draws a line between headline-driven restructuring and rules that continue on their own timetable. - The 21-year trust rule is especially important because it runs on a fixed clock, not legislative momentum.

What’s next: - Affected families are expected to review structures created in response to the proposed increase. - Families with trusts should map upcoming deemed disposition dates. - Owners relying on the capital gains exemption should verify whether shares still qualify under QSBC rules. - Families receiving income from a private business should assess whether TOSI could apply.

The bottom line: - The capital gains increase was cancelled, but core Canadian tax exposure points remain in place.