If you are working as a financial advisor, or if you aspire to be one, the ongoing debate about a wealth tax is likely on your radar. With political discussions heating up and high-net-worth individuals watching closely, it is vital to learn what a wealth tax could mean for your clients.
In this article, Wealth Professional Canada will highlight the basics of wealth tax as well as how it compares to income tax. Do millionaires pay taxes? How so? Keep reading to find out.
A wealth tax is a recurring tax on an individual’s net worth. This means it is not based on income or capital gains, but on the total value of assets someone owns. These assets can include:
The concept is like property tax, which taxes the value of a home, but a wealth tax would apply to a wider range of assets.
As of this writing on Novemeber 17, 2025, Canada does not have a federal wealth tax. Unlike some European countries that tax net worth every year, Canada’s tax system is focused on income, capital gains, and certain provincial taxes.
Still, the idea of a wealth tax is a regular topic in political and economic circles, especially as concerns about wealth inequality grow.
“...wealth tax discussions are policy-driven and often speculative until legislation is enacted,” Brad Grsic said. He has Chartered Accountant (CA) and Certified Public Accountant (CPA) designations and is a partner in Burkett & Co. Chartered Professional Accountants.
For clients who are concerned about potential changes if a wealth tax were ever implemented, the best course of action is to study the matter in depth.
“We suggest clients discuss any concerns directly with their professional advisor team. Coordinated advice ensures that decisions are made in the context of their overall financial and estate plan, not in isolation,” Grsic said.
Watch this video to learn more:
Governments in Canada and the United States are under renewed pressure to raise taxes on the wealthy. Supporters argue that these measures target top earners who benefit most.
However, critics say the wealthy already pay a large share of taxes and that definitions of fairness remain subjective.
Wealth taxes also work like top tax brackets. The super-rich only pay a wealth tax on the highest portion of their wealth, not on every dollar they own. For example, if a tax is set at one percent above $10 million, the first $10 million is not taxed at all.
Every year, the government would add up the value of all the assets of the super-rich and require them to contribute a small percentage of that growing wealth back to society.
The definition of “wealthy” can vary depending on the context, but in the discussion about wealth tax, it is usually tied to the thresholds set by proposed tax policies. For instance, Forbes cited that those who are earning $100,000 or more might be considered wealthy. However, most wealth tax proposals target net worth in the millions.
Income tax and wealth tax are often confused, but they are quite different in how they work and who they affect. Income tax is about what your clients earn each year, while wealth tax is about what they own.
Both systems are designed to generate revenue for the government, but they target different aspects of wealth and financial activity. Let’s further discuss each tax type below:
This tax is imposed on the money that your clients earn such as:
Every year, your clients must report their income to the Canada Revenue Agency (CRA) by filing a tax return. The CRA relies on a self-reporting system. This means that it trusts citizens to accurately declare their income.
Although the CRA does have access to some income information, it mostly depends on individuals to be honest.
The Canadian income tax system is progressive. This means that higher earners pay a higher percentage of their income in taxes. There are also tax deductions and credits that can reduce the amount owed.
Filing a tax return is necessary even for those who do not earn income, as they might be eligible for benefits such as:
Deadlines for paying and filing income taxes can differ. For most employed individuals, both payment and filing are due by April 30. For self-employed individuals, taxes owed must be paid by April 30, but the filing deadline is June 15.
On the other hand, wealth tax is not based on income but on the total value of assets owned. It is like property tax, but instead of taxing just the value of a home, it taxes the value of all considerable assets.
The tax is usually only applied to wealth above a certain threshold, so only the wealthiest individuals are affected.
While there is no formal wealth tax in Canada right now, high-net-worth individuals should be aware of related taxes, such as:
These taxes can have an impact on clients’ finances, especially if they have substantial investments or real estate holdings.
Yes, millionaires pay taxes in the country. In fact, high-net-worth individuals are subject to several types of taxes, even though there is currently no federal wealth tax:
“Another misconception is that existing taxes, such as capital gains and probate fees, are separate from wealth taxation. In practice, these already function as partial forms of wealth tax,” Grsic said.
While there is no formal wealth tax in Canada at this time, millionaires are still subject to a range of taxes that can have a substantial impact on their finances.
Watch this video to better understand these types of taxes and more:
In case you don’t know, most people are not familiar with recent federal tax changes. Just one in five Canadians are aware of the latest tax rules.
Discussions about a wealth tax in Canada often focus on how much revenue it could raise and who would be affected. Several proposals and sample scenarios have been made, each with different thresholds and rates.
Let’s use this illustration from BC Society for Policy Solutions (BCSPS). Suppose there is an annual wealth tax on the net wealth of families with rates of the following:
This structure means that more than 99 percent of Canadians would pay nothing. Only the richest (less than one percent of the population) would be affected.
Estimates show that such a tax could raise $39 billion in its first year and $62 billion by its tenth year. And even after accounting for enforcement costs and tax avoidance, this could create $495 billion over a decade. These tax rates are expected to slow the growth of wealth among the super-rich, with projected revenues continuing to rise over ten years.
However, because extreme wealth concentration can threaten democracy and the economy, some argue that higher tax brackets and rates should also be considered.
Another scenario estimated that a one percent wealth tax on net wealth above $20 million would bring in over $5 billion annually. According to the Parliamentary Budget Officer (PBO)’s 2020 report, this would affect less than one percent of Canadian households.
Canadians for Tax Fairness (C4TF) suggested that a progressive tax starting at one percent for wealth over $10 million could generate close to $20 billion annually. They also proposed a two percent tax for wealth over $100 million and three percent for wealth over $1 billion.
All these proposals share a common theme. They would raise large amounts from a very small group of people, who would likely notice little change in the growth of their fortunes.
However, implementing such taxes is far from simple. Legal and administrative challenges, as well as political resistance, mean that even if these proposals are discussed publicly, their actual adoption and enforcement remain uncertain.
“The most common misconception is that a wealth tax is imminent or will apply broadly to all Canadians. In reality, such proposals face significant legal and administrative hurdles in order to implement,” Grsic said.
If formed and implemented properly, a wealth tax in Canada can be a real boon to its citizens and the economy. The challenge is to create and enforce a system that generates enough revenue to benefit the public, without taxing the wealthy at unsustainable levels.
While there is no federal wealth tax in place as of 2025, the topic remains a focus of political and economic discourse. Overall, financial advisors should be prepared to answer clients’ questions, especially as debates and policy discussions continue.
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