Canada’s government is reversing course on a signature tax measure, deferring the implementation of an increase to capital-gains tax until after an election and a potential hit to the economy from threatened U.

Canada's government on Friday announced that it would defer the implementation of the controversial changes in the capital gains tax to January 1 next year. People who fell under the ambit of the proposed changes of the tax regime were concerned whether they would have to continue paying the modified capital gains tax after the measure failed to pass through parliament.

The federal government is likely to reverse course on changes to the capital gains tax that were announced in the last federal budget, CBC News has learned.