The 2007 federal budget proposes increasing the lifetime capital gains exemption to $750,000.

The income tax system currently provides a lifetime capital gains exemption on up to $500,000 of capital gains realized on the disposition of qualified farm and fishing property or qualified small business corporation shares.

However, this increase falls far short of the federal Conservative’s 2006 campaign promise to permit tax deferral on gains reinvested within six months. Tax experts have urged the government to follow through on this promise.

For example, the Investment Funds Institute of Canada has suggested that the reinvestment plan would be too administratively complex, but should be replaced by a re-instated, more broadly available capital gains exemption.

“This is extremely disappointing,” says Jamie Golombek vice president of Toronto-based AIM Funds Management Inc. and chairman of IFIC’s tax working group.

“Given that the government has had more than a year to consult with industry, some measure of broad-based capital gains tax relief was expected,” he says.
This measure will apply to dispositions of property that occur from March 19, 2007 onwards.

2007 Federal Budget

http://www.budget.gc.ca/2007/index_e.html