1 minute read
How does 2024 budget affect you?
Measures for Individuals Capital Gains Inclusion Rate
Currently, the capital gains inclusion is 50%, where one-half of any capital gain is taxable, while the remaining 50% is tax free. Budget 2024 proposes to increase the capital gains inclusion rate from one-half to two-thirds for corporations and trusts. The same increase would apply to the portion of capital gains realized by individuals in the year that exceeds $250,000. Changes to the inclusion rate would apply to capital gains realized on or after June 25, 2024
Advertisement
The $250,000 threshold would effectively apply to capital gains realized by an individual, either directly or indirectly via a partnership or trust, net of any:
*Current year capital losses.
*Capital losses of other years applied to reduce current-year capital gains
*Capital gains in respect of which the Lifetime Capital Gains
The 2024 federal budget tabled by Finance Minister Chrystia Freeland on April 16 contained several proposals that will impact the financial, tax and estate plans of Canadians. This column presented by IG Wealth Management is a summary of the most relevant budget proposals that may impact Canadians.
Exemption, the proposed Employee Ownership Trust
Exemption or the proposed Canadian Entrepreneurs’ Incentive is claimed
*The employee stock option deduction would be limited to one-third of the taxable benefit, reflecting the new capital gains inclusion rate. However, a deduction of one-half of the taxable benefit (up to a combined limit of $250,000 for both employee stock options and capital gains) would continue to be available
The annual $250,000 threshold for individuals would not be pro-rated for 2024.
It’s important to note that selling a principal residence will continue to be exempt from capital gains taxes.
Planning point:
in situations where the higher capital gains inclusion rate would apply, there may be tax planning opportunities available to spread capital gains over multiple years to stay under the $250,000 annual threshold for individuals
Continued on page 27
