CANADA – QUEBEC Trends and Developments Contributed by: Eleonora Eusepi, Alain Castonguay, Joseph Piazza and Alessia Talarico, BCF LLP
Shortly thereafter, on 18 April 2024, the Quebec Ministry of Finance announced its intention to harmonise Quebec’s tax legislation with the fed - eral proposals. The announcement of the proposed capital gains tax increase in the 2024 budget prompted many Canadians to act quickly, selling off invest - ments, including real estate, before the 25 June 2024 implementation date to take advantage of the existing 50% inclusion rate. This wave of early selling led to a spike in listings and may have temporarily driven prices down. However, the federal government’s later decision to cancel the tax hike caused confusion and market dis - ruption. Real estate investors, particularly those involved in development projects, may have delayed or reconsidered investments amid the uncertainty, potentially slowing new construction and affecting housing supply in Quebec. For transactions already underway, some indi - viduals even accelerated their closing dates to take advantage of the 50% inclusion rate. Oth - ers who were not planning to sell immediately considered restructuring their holdings before 25 June 2024, through pre-closing reorganisations. This allowed them to realise any unrealised capi - tal gains and preserve the 50% inclusion rate by executing internal crystallisation transactions. On 31 January 2025, the Canadian Ministry of Finance announced its intention to delay the increase to the capital gains inclusion rate until 1 January 2026, while still moving forward with the planned increase to the lifetime capital gains exemption and the introduction of the Canadian Entrepreneurs’ Incentive. The Quebec Ministry of Finance followed suit, confirming it would align with the federal government on both the postponement and the maintained implementa - tion of the other measures.
However, on 21 March 2025, the federal govern - ment reversed course entirely and cancelled the planned capital gains inclusion rate increase. As a result, the rate remains at 50%. This rever - sal caused confusion for taxpayers and advis - ers who had already taken steps based on the expected increase, often incurring costs or missing out on better timing. The sequence of announcement, delay and cancellation contrib - uted to a sense of instability that may impact the real estate market in Quebec in the near future. Competition Act In an effort to strengthen the rules and regulations currently in force in Canada with respect to com - petition matters, amendments to the Competi - tion Act (R.S.C., 1985, c. C-34.) (the “Act” ) were enacted on 20 June 2024, to broaden the scope of provisions related to abuse of dominance and civil collaboration provisions (the “Amendment” ). These changes aim to increase the Competition Bureau of Canada’s ability to protect competi - tion and prevent mergers and anti-competitive behaviours. These changes also impact how the Competition Bureau addresses property controls in commercial real estate, more spe - cifically as they pertain to exclusivity provisions in commercial leases and restrictive covenants on land that prohibit purchasers or owners of commercial properties from using such property to operate businesses that compete with a previ - ous owner. As of 15 December 2024, the Competition Bureau can intervene in agreements between two non-competing businesses if it considers that one of the main purposes of the agreement is to prevent or significantly lessen competi - tion (Section 90.1(1) of the Act). This authority extends to all types of contracts, including leas - es and deeds of sale; from the outset, the Com - petition Bureau presumes that a restrictive cov -
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