The federal government announced plans to introduce a share buyback tax in its Fall Economic Statement.

The statement said it would be a “corporate-level two per cent tax that would apply on the net value of all types of share buybacks by public corporations in Canada.”

The tax will come in effect on Jan. 1, 2024 and more details will be announced in the 2023 budget. It is expected that the new share buyback tax will generate $2.1 billion in revenue to the government’s coffers over the next five fiscal years. It will also encourage corporations “to reinvest their profits in their workers and business,” the government said, without adding further details.

The announcement is similar to a recent measure introduced in the United States. In August, U.S. President Joe Biden announced a one-per-cent levy on stock buybacks in U.S. Senate’s tax and climate package. The U.S. surcharge on corporate buybacks will go in effect in 2023.


The idea of a share buyback tax has already received mixed opinions from some Bay Street executives.

Dan Daviau, president and chief executive officer of Canaccord Genuity Group Inc., said the government should leave capital allocation to companies.

“The government should stay out of capital structure decisions. Companies have enough work to do other than [being] worried about government taxing certain types of behaviour,” Daviau said in an interview on Thursday.