On the “not-so-exciting” news front, today we are digesting the large amount of information outlined in the federal budget. In anticipation of questions you might have, I’ve included a comprehensive report here highlighting the key points. Perhaps the most notable change is as follows:
Budget 2024 proposes an increase in taxes on capital gains on the wealthiest 0.13 per cent. To make Canada's system more fair, the inclusion rate—the portion of capital gains on which tax is paid—for capital gains for individuals with more than $250,000 in capital gains in a year will increase from one-half to two-thirds. Individuals will continue to only pay tax on 50 per cent of any capital gains up to $250,000 per year. The inclusion rate will also increase to two-thirds for all capital gains realized by corporations and trusts. The new rules will apply to capital gains realized on or after June 25, 2024.
With respect to the statement above, we need to be mindful that capital gains also apply to secondary residences such as cottages, rental properties and so on.
A few other anticipated changes include a significant increase in the “first-time-home-buyers” withdrawal amount, from $35,000 to $60,000. There is also an amendment to the previously proposed alternative minimum tax treatment for charitable donations.
As a reminder to those clients that haven’t yet taken us up on our offer of producing a comprehensive financial plan, I want to take this opportunity to remind you that having a proper plan in place is not only prudent, but will undoubtedly put your minds at ease. As I’ve said many times, the RBC DS financial planning software tools at our disposal are outstanding (I would argue the best I’ve ever seen). Please get in touch with us.
Libby
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