On April 16th, the Government of Canada presented the 2024 federal budget. The budget forecasts deficits of $39.8 billion for 2024-2025 and $38.9 billion for 2025-2026. Keeping with a key theme of "Fairness for younger generations" the budget's proposed $53 billion in new spending measures over five years includes affordable housing initiatives and healthcare. This is to be offset in part by new tax measures including changes to the capital gains inclusion rate. The budget does not include changes to the federal or corporate tax rates. Below we highlight some key initiatives:

 

Spending initiatives:

• Targeted spending to make new and existing housing more affordable (including $15 billion in loans for rental constructions and $6 billion to support infrastructure)
• $1.5 billion over 5 years on a National pharmacare program
• $8.1 billion in new spending on the Canadian armed forces
• $2.4 billion to accelerate Canada's AI sector
• $6.1 billion over 6 years funding for low-income working age persons with disabilities
• $2.5 billion Carbon price rebates to small businesses
• $1 billion on a national school food program

 

Spending Cuts & Revenue Generation:

• Of particular significance for investors is the changes to the capital gains inclusion rates. The rate will rise from 50% to 66.7% for all corporations and trusts and on sums over $250,000 for individuals.
• Increase excise tax on tobacco and vape products
• Introduce a digital service tax
• Implement a new global minimum effective tax rate of 15% on profits of large multinational corporations

Other measures:

• An increase to the first time homebuyer plan from $35,000 to $60,000. As well as a temporary deferral to the start of repayment by an additional three years.
• The lifetime capital gains exemption for small qualifying businesses has been increased from $1.0 million to $1.25 million
• Secondary Suite Loan Program - enables homeowners to access 40,000 in low interest loans to add secondary suites to their homes.
• A new Canadian Entrepreneurs’ incentive to lower capital gains inclusion rate for certain industries to 33.3%

To learn more details about these and other measures, RBC Wealth Management has summarized the budget in Federal budget 2024: Key measures that may have a direct impact on you.

 

RBC Economics' also shares their thoughts in this article - Budget 2024: Lack of spending restraint offset by revenue surprise and tax hikes.

 

If you have any questions as to how these changes will impact you, please do not hesitate to contact us.