Sam Cooper

By providing advance notice, the government effectively lit a starting pistol for investors: sell now or face a higher tax later. And sell they did… The result was a short-term windfall for Ottawa.

Was it just a cynical shell game?

Last year, Prime Minister Justin Trudeau announced a major capital gains tax hike, only to delay its implementation — a move that triggered a flurry of asset sales before the higher tax could take effect. That maneuver temporarily swelled federal coffers and made the 2024–25 fiscal outlook appear stronger, although Trudeau is no longer around to capture the political benefits.

As it turns out, his successor, Mark Carney, has been able to swoop in and campaign in Canada’s snap election on the back of reversing the very same tax hike. This sequence — proposal, delay, revenue spike, and cancellation — raises serious questions about the Liberal Party’s credibility on tax fairness and economic stewardship. And it adds a thick layer of irony that Mr. Carney, in his previous role at investment giant Brookfield, reportedly helped position tens of billions in green investment funds through offshore tax havens like Bermuda — a practice that appears starkly at odds with the Liberal campaign’s rhetoric on corporate taxation and fairness.

In April 2024, the Trudeau government unveiled plans to raise the capital gains inclusion rate — the portion of profit from asset sales that is taxable — from 50% to 66.7% for individuals and businesses earning over $250,000 in gains annually. The change, part of the spring budget, was set to take effect on June 25, 2024. By providing advance notice, the government effectively lit a starting pistol for investors: sell now or face a higher tax later.

And sell they did.

In the weeks leading up to the June deadline, Canadians rushed to lock in gains under the lower rate. Some sold off stocks, others divested investment properties — even treasured family cottages — to beat the looming hike. The result was a short-term windfall for Ottawa. Capital gains that might otherwise have been realized gradually over years were instead pushed into a single quarter.

In fact, the prospect alone of the June 25 change was projected to generate C$10.3 billion in additional revenue over two fiscal years — an eye-popping sum from a tax policy that, in the end, was never enacted. This fire-sale effect temporarily inflated federal revenues and painted a rosier picture of the Liberals’ fiscal management than reality would suggest.

Critics say this was no accident.

“It was used to plug a fiscal hole, not because there was some grand strategy on tax policy,” said Sahir Khan, of the University of Ottawa’s Institute of Fiscal Studies and Democracy, pointing to the $20 billion budget overshoot from the previous year.

It was a play that appears unprecedented, potentially financially reckless—and, in the context of Canada’s high-stakes snap election—perhaps politically manipulative. On the face of it, this gambit provided short-term budgetary relief—a sugar high for Ottawa’s ledgers—while any pain would be borne by Canadians cashing out investments early or by future governments left with a revenue hole once the rush subsided.

To better understand the economic impact, I reached out to Victoria-based fund manager Kevin Burkett, whose firm Burkett Asset Management manages $500 million and advises Canadian clients.

“Most major tax changes announced in a federal budget take effect immediately to prevent taxpayers from planning around them,” Burkett told me. “However, this budget introduced a nine-week delay, widely seen as an opportunity to sell assets before higher tax rates applied. In reviewing both the benefits and risks with our clients, those who chose to sell early are understandably frustrated by recent announcements as they’ve now prepaid taxes unnecessarily.”

I asked Burkett whether these circumstances—the abrupt reversal of tax policy and the politics surrounding it—might linger in ways we can’t yet foresee. Has some deeper confidence been shaken?

He measured his words carefully.

“Emphasis on enforcement in tax compliance overlooks the critical role of perceived fairness in maintaining trust in the system,” the British Columbia-based financial manager told me. “In recent years, last-minute policy changes, seemingly political, risk undermining this fairness and eroding confidence in the integrity of tax policy.”

Good-Faith Voters Left Holding the Bag

What about those Canadians who heeded the government’s signals? Consider the family that sold a cherished vacation property, or the entrepreneur who offloaded company shares pre-emptively to avoid a looming tax hike. Now, they find that the increase was never actually enforced. Incoming Liberal leader (and Prime Minister before the campaign writ was dropped) Mark Carney confirmed in early 2025 that the capital gains changes would not move forward at all.

Meanwhile, Ottawa has already happily counted the extra tax revenue generated from their asset sell-offs. It’s hard to escape the conclusion that these Canadians were sacrificial pawns in a larger power play. On March 21, 2025, Carney’s office formally announced the cancellation of the proposed increase to the capital gains inclusion rate, framing the reversal as a pro-investment, pro-entrepreneurship decision: “Cancelling the hike in capital gains tax will catalyze investment … and incentivize builders, innovators, and entrepreneurs,” he said.

The political subtext was clear: the new leader was distancing himself from an unpopular Trudeau-era policy, aiming to boost Liberal fortunes ahead of an election. And boost he did—polling immediately ticked upward for the Liberals once the tax hike was shelved. Carney got to play the hero, scrapping a “widely criticized” proposal and casting himself as a champion of the business class.

Yet, conveniently, he also inherited the short-term fiscal boost Trudeau’s gambit had generated. In effect, Trudeau’s delayed tax hike handed Carney a double win: healthier-looking federal revenues in the near term, and the credit for killing the tax before it ever touched taxpayers. If that sounds orchestrated, it’s because the sequence of events feels almost too politically perfect.

Add this to the layers of irony.

Carney’s rise to the Liberal leadership was accompanied by lofty rhetoric about restoring trust and fairness—including tax fairness. It’s a bit rich, though, considering Carney’s own track record in the private sector on that very issue.

Before entering politics, Carney served as a vice-chair at Brookfield Asset Management, a global investment giant, where he co-led the firm’s expansion into green energy. Notably, as CBC reported this week, Carney personally co-chaired two massive “Global Transition” funds at Brookfield—one launched in 2021 and another in 2024—aimed at financing the shift to a net-zero economy. These projects became marquee pillars of “Brand Carney,” amassing roughly $25 billion from global investors and touted as a major effort to mobilize capital for the climate cause.

The financial structure of these funds tells a less high-minded story. According to documents obtained by Radio-Canada, both Brookfield Global Transition Fund I ($15B) and Fund II ($10B) were registered in Bermuda—a jurisdiction long synonymous with offshore tax advantages. In plainer terms, Mark Carney helped set up green investment vehicles that avoided the very tax burdens average Canadians shoulder.

The same kind of burdening and unburdening that defined Trudeau’s capital gains rug-pull now shadows Carney’s buoyant election campaign, which has gained momentum by adopting policy positions first championed by Pierre Poilievre. Poilievre vowed to undo Trudeau’s unpopular left-wing policies—the very ones Carney now pledges to reverse, despite their origins in his own party.

Canadians would be wise to remember the tax reversal. Fool me once, as the saying goes.