On April 16, 2024, Canada’s Deputy Prime Minister and Minister of Finance, Chrystia Freeland, unveiled the 2024 Federal Budget, titled “Fairness for Every Generation,” in Ottawa. This budget is focused on three key pillars: building more affordable homes, reducing the cost of living, and fostering inclusive economic growth.
Here’s a breakdown of the significant tax measures proposed in the budget and how they might impact you, your family, and your business:
Federal Budget 2024 Update: Capital Gains Inclusion Rate
One of the notable changes proposed in the 2024 Budget is the increase in the capital gains inclusion rate from 50% to 66.67% for corporations and trusts. effective June 25, 2024. This adjustment will also affect how capital gains are taxed for individuals, with any annual capital gain amounts exceeding $250,000 having an inclusion rate of 66.67% as well.
Federal Budget 2024 Update: Lifetime Capital Gains Exemption (LCGE)
Entrepreneurial Canadians will benefit from an increase in the Lifetime Capital Gains Exemption which is being proposed to increase to $1.25 million of eligible capital gains from June 25, 2024 onwards.
Federal Budget 2024 Update: Canadian Entrepreneurs’ Incentive
A new incentive seeks to reduce the tax rate on capital gains for eligible individuals, offering a lower inclusion rate of 33.33% for qualifying dispositions of all or part of a business for a lifetime maximum of $2 million in eligible capital gains. This measure aims to spur entrepreneurship and innovation in Canada.
Federal Budget 2024 Update: Alternative Minimum Tax (AMT)
Changes to the AMT rules, originally proposed in the 2023 Budget, are set to take effect from January 1, 2024.
Federal Budget 2024 Update: Employee Ownership Trust Tax Exemption
The budget outlines rules to facilitate the creation of Employee Ownership Trusts (EOTs), proposing an exemption on the first $10 million of capital gains realized on the sale of a business to an EOT. This initiative encourages employee ownership and succession planning within businesses.
Federal Budget 2024 Update: Home Buyers’ Plan Increase in RRSP Withdrawal Limit
To address housing affordability concerns, the budget proposes increasing the withdrawal limit of the Home Buyers’ Plan from $35,000 to $60,000 and deferring the start of the repayment period. These measures aim to alleviate financial burdens on prospective homebuyers and stimulate the housing market.
Federal Budget 2024 Update: Disability Supports Deduction
Expanding the list of deductible expenses under the Disability Supports Deduction provides greater tax relief to individuals with impairments. Recognizing expenses for service animals under this deduction highlights the government’s commitment to supporting individuals with disabilities.
More Information on 2024 Federal Budget
While this overview doesn’t cover every detail, it offers a summary of the major tax changes proposed and their potential impact. It’s important to note that these proposals are subject to change and consulting tax and legal experts is advisable.
For more information and additional resources on the 2024 Canada Budget, click here.
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