Navigating Canada’s Proposed Capital Gains Tax Changes in the 2024 Federal Budget
SUMMARY:
- Capital gains are profits made from selling assets or investments for more than their purchase price.
- Currently, 50% of capital gains are taxable.
- The proposed changes aim to increase the tax inclusion rate to 66.67% for corporations, trusts, and individuals with gains over $250,000.
Understanding Capital Gains:
- Capital gains arise when you sell assets or investments for a profit.
- They apply to various investments and properties, excluding primary residences.
What is Capital Gains Tax?
- In Canada, capital gains are taxed, but only a portion of the gain is taxable.
- Currently, the taxable portion is 50%.
Proposed Capital Gains Tax Changes:
- The federal budget for 2024 proposes increasing the tax inclusion rate to 66.67%.
- This change affects corporations, trusts, and individuals with gains over $250,000.
Who Will Be Affected?
- All corporations and trusts, regardless of value.
- Individuals with capital gains exceeding $250,000.
- Primary residences are exempt from capital gains tax.
When Will the Changes Occur?
- If approved, changes will come into effect on June 25, 2024.
Potential Impact:
- The majority of Canadians won't be affected.
- Those with substantial gains or secondary property sales may see an impact.
- Seeking advice from tax advisors and financial planners is advisable to mitigate the effects.
CONCLUSION:
Canada’s proposed capital gains tax changes in the 2024 federal budget aim to adjust the tax inclusion rate, potentially impacting corporations, trusts, and individuals with significant gains. Understanding these changes and seeking professional advice can help mitigate their impact on your finances.
Let's talk it through
While I understand capital gains tax can be intimidating, as your dedicated collingwood mortgage broker I am here for you. I would be happy to discuss any concerns you have or help explain in more detail how these changes may impact you.
Tim Ward, Collingwood Mortgage Broker.
