The 2024 budget has introduced significant changes to the capital gains inclusion rate effective on June 25, 2024, aiming to redefine the taxation framework for corporations, trusts, and individuals in Canada.
Changes to Canada’s Capital Gains Inclusion Rate
Impact of Updated Capital Gains Inclusion Rate for Individuals:
Under Budget 2024, the capital gains inclusion rate for individuals means a higher tax liability on gains exceeding the $250,000 threshold in any given tax year. Previously subject to a 50% inclusion rate into your income, gains in excess of $250,000 will be subject to a 66.7% inclusion rate, representing a notable increase in the tax burden. This adjustment may influence investment decisions and tax planning strategies for individuals with substantial capital gains.
Individuals may want to consider triggering gains on assets before June 25, 2024, if they think such gains will otherwise exceed the $250,000 threshold and be subject to this additional tax.
Impact of Updated Capital Gains Inclusion Rate for Corporations and Trusts:
Corporations and trusts will also feel the effects of the revised inclusion rate, facing a higher tax liability on all realized capital gains. The inclusion rate will rise to 66.7%.
Corporations should consider what unrealized gains on assets they have and whether they should trigger those gains before June 25, 2024.
Accounting and Advisory Support to Achieve Your Goals
Budget 2024 underscores the importance of staying informed and proactive in managing tax liabilities and financial strategies. By understanding the implications of the revised capital gains inclusion rates and taking proactive steps to optimize tax positions, individuals and entities can mitigate risks and capitalize on opportunities in an evolving tax landscape.
Understanding and adapting to the proposed changes in the capital gains inclusion rate demands expertise and strategic planning. At KWB Accountants & Advisors, we specialize in providing tailored tax and financial advisory services to help you navigate these changes with confidence and clarity. Schedule an introductory meeting here to learn more.
