April 17, 2024

2024 federal budget highlights

The Canadian government presented the 2024 federal budget on April 16, and it contains several proposals of interest to Canadians. Here are the highlights of the budget proposals.

Capital gains inclusion rate to increase

Currently, the capital gains inclusion is 50%, meaning half of any capital gain is taxable, and the other half is tax free. The budget proposes to increase the capital gains inclusion rate to two-thirds for corporations and trusts, as well as for the portion of capital gains realized by individuals in a year that exceed $250,000.

Making first-home ownership more achievable

The budget proposes to increase the amount that homebuyers can withdraw from their RRSP to buy their first home. The Home Buyers’ Plan previously had a limit of $35,000, but the budget proposes that this be increased considerably, to $60,000. The repayment period (within which the whole amount withdrawn must be repaid into an RRSP) is being extended by three years, for anyone who withdraws from the Home Buyers’ Plan between January 1, 2022 and December 31, 2025.  

Tax incentives for small and medium businesses

The Lifetime Capital Gains Exemption will increase by 25% to $1.25 million, which will bring a considerable tax benefit to many entrepreneurs when they come to sell their business. A new Canada Carbon Rebate will provide an automatic refundable tax credit to eligible businesses, based on how many employees they have. The budget proposes to increase the Capital Cost Allowance rate for new eligible purpose-built rental housing from 4% to 10%, allowing owners to claim larger deductions.

AMT rule changes are good news

The Alternative Minimum Tax (AMT) is a parallel tax calculation that allows fewer tax credits, deductions and exemptions than with ordinary personal income tax rules. The budget proposes further changes to the AMT rules, which include increasing the charitable tax credit to 80% (from 50%) and fully allowing deductions for GIS, social assistance and workers’ compensation payments.

Read the full summary that includes planning points to discuss with your Advisor.

Read full summary

This report specifically written and published by IG Wealth Management is presented as a general source of information only. Not intended as a solicitation to buy or sell specific investments, or to provide tax, legal or investment advice. Seek advice on your specific circumstances from an IG Wealth Management Advisor.

The tax information provided in this document is general in nature and each client should consult with their own tax advisor, accountant and lawyer before pursuing any strategy described herein as each client’s individual circumstances are unique.  We have endeavored to ensure the accuracy of the information provided at the time that it was written, however, should the information in this document be incorrect or incomplete or should the law or its interpretation change after the date of this document, the advice provided may be incorrect or inappropriate.  There should be no expectation that the information will be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.  We are not responsible for errors contained in this document or to anyone who relies on the information contained in this document.  Please consult your own legal and tax advisor.