2024 Canadian Federal Budget: Proposed Increase to Capital Gains Inclusion Rate

Canadian Federal Budget 2024 proposed an increase to the capital gains inclusion rate for capital gains realized on or after June 25, 2024, from fifty percent inclusion to two-thirds income inclusion for capital gains greater than $250,000 realized in any given year for individuals. This will have far reaching impact on investors (even if owned through partnerships or trusts), owners of rental properties, corporations, as well as higher taxes upon death of a taxpayer. While any capital gains on the sale of a principal residence remains tax-free, capital gains on other capital properties and investment properties (such as cottages and marketable securities) would be subject to the proposed rules. This change would also impact employees who have long term incentive compensation and claim the employee stock option deduction - they would now only be able to claim one third deduction (currently 50%) of the taxable benefit if taxable benefits exceed the $250,000 threshold.

Amidst these changes, there may be strategic planning opportunities to leverage the previous rates. If you have any questions or need assistance in evaluating your tax situation, feel free to get in touch. We're here to help you navigate through it all.