Most of our clients, used by the Will and Estate Lawyers, or Wills and Probate Lawyers at Dale Streiman Law LLP are aware that capital gains as opposed to straight income is treated differently under The Income Tax Act. They are generally treated more favourably. Some capital gains are completely free of any tax such as on ones principal residence. So, if your home increases in value dramatically during the time that you live there, all of that gain is yours tax free to keep. One of the few times the government keeps its hands off of your money. When drafting Wills and Power of Attorney documents, these tax concepts need to be taken into account.

Estate Lawyers point out that as of the time of the publishing of this blog article, there are proposed changes to the inclusion rate of capital gains. By inclusion rate, we mean how much of the capital gain is to be treated as taxable income and most recently that has been at 50%, although the proposal is that it will increase in most circumstances to two thirds.

One can snort and complain about this tax grab by the government; however, this inclusion rate has changed over time:

Prior to 1972

None, capital gains were not taxed

1972

One half

1988

Two thirds

1993

Three quarters

2000

One half

2024

Two thirds in excess of $250,000 which is subject to an inclusion rate of one half

To be specific, it is only an individual and a graduated rate estate, “GRE” see our blog on what is a graduated rate estate (GRE) ( https://www.dalestreimanlaw.com/what-is-a-gre-a-graduated-rate-estate/ ) that are entitled to use the first $250,000 capital gain to be included at 50%. Capital gains in excess of $250,000 are taxed at the inclusion rate of two thirds. Companies and most trusts do not enjoy that $250,000 initial capital gains lower inclusion rate of 50%.

The increase to two thirds was slated to begin as of June 25, 2024. The federal government in January of 2025 announced that the inclusion rate of two thirds was to be delayed until January 1, 2026. This author doubts that in light of the ongoing political uncertainty that this is the final word on the subject.

Generally speaking, the quality of individuals appointed to sit in judgment upon all of us is exemplary. Often they are the best of the best who for often selfless reasons wish to have an impact on the law and society far beyond the comparatively few cases that would cross their desk as a lawyer.

One of my regular steps in writing blog articles is to examine the biography of the judges making the decisions discussed. Time after time one is impressed with the social, academic and professional achievements that the individuals appointed to the bench have attained.

In other words, generally speaking, the judge you appear before is no slouch.

Nonetheless they are mere mortals, human beings no different than those that read these blog articles. The simple answer to the title of this blog is if one feels that the judge in question has made an error in their decision, one would simply appeal and have a higher court overturn the decision made in error.

But what does one do when there is no appeal?  A failure to appeal can be driven by financial or emotional exhaustion.  So does a plainly wrong decision just sit there? Decisions by judges have meaning and they are cited and repeated and relied upon in other cases with similar facts.

One example of such a decision was one made in 2008 by the Honourable Mr. Justice McIssac in Ashton estate v. South Muskoka Memorial Hospital.

In that decision, Justice McIsaac simply got it wrong.  This is not merely the opinion of this author, but many other far more learned academic commentators and other judges have since held.  Justice McIsaac held that the standard blurb at the beginning of almost all Wills “I hereby revoke all previous testamentary dispositions” is a cancellation of all beneficiary designations one makes in registered investments such as TFSAs and insurance policies. In simple terms, if you named your spouse as the beneficiary of your RRSP and then made a will starting with that blurb, the beneficiary designation is cancelled.  Quite frankly that is wrong.

We discussed the law in our article titled  CAREFUL BE VERY CAREFUL DRAFTING A WILL

The law with respect to a decision made by a judge of an equal judicial level is most clearly described by Justice Laskin in the 2005 decision of the Ontario Court of Appeal in McNaughton Automotive Limited v. Co-operators General Insurance Company.  Justice Laskin states that court should be cautious about overruling earlier non-binding decisions as it sacrifices consistency, certainty and predictability. Unless there was a clear reason not to follow a decision made by a judge of an equal level, they should be followed.  Those reasons include the judge simply getting their decision plainly wrong.

The moral of this long-winded point is that every lawyer when doing research and finds themself facing a decision that is contrary to their client’s position, will check to see if that decision has been overturned or discounted.