On April 16, 2024, the Deputy Prime Minister and Finance Minister, the Honourable Chrystia Freeland, presented Budget 2024 to the House of Commons.
No changes were made to personal or corporate tax rates. However, the inclusion rate on taxable capital gains has been increased!
Below we have summarized the key provisions of the budget. Click here to read our full analysis and commentary – 2024 Federal Budget Highlights & Commentary.
Personal Measures
- An increase to the capital gains inclusion rate to 2/3, effective for capital gains realized on or after June 25, 2024. However individuals will retain the 1/2 inclusion rate on the first $250,000 of capital gains annually.
- Added incentives of specific types of business sales:
- An increase to the lifetime maximum capital gains exemption to $1,250,000 for dispositions taking place on or after June 25, 2024, and indexed to inflation commencing in 2026.
- Introduction of the Canadian Entrepreneurs’ Incentive, which halves the prevailing capital gains inclusion rate up to $2 million, but to be phased in over annual increments of $200,000 commencing in 2025.
- Further details provided on the proposed $10 million tax exemption for Employee Ownership Trusts.
- Modifications to the proposed amendments to focus the alternative minimum tax regime on high-income individuals, with some improvements from last year’s budget including the effect on donations.
Business Measures
- An increase to the capital gains inclusion rate to 2/3, effective for capital gains realized on or after June 25, 2024. No preferential 1/2 inclusion rate on the first $250,000 of annual capital gains.
- A Canada carbon rebate for small businesses that will begin by delivering payments to eligible corporations for five years of carbon tax.
- Accelerated capital cost allowance on purpose-built residential rental properties.
- Immediate expensing of certain productivity-enhancing assets, including computer hardware, acquired on or after April 16, 2024.
Trust Measures
- An increase to the capital gains inclusion rate to 2/3, effective for capital gains realized on or after June 25, 2024. No preferential 1/2 inclusion rate on the first $250,000 of annual capital gains.
Previously Announced Measures
- Intention to proceed with previously announced measures, including those related to:
- Intergenerational business transfers;
- Latest updates to the Underused Housing Tax (UHT); and,
- Changes to the General Anti-Avoidance Rule (GAAR).
