2024 Federal Budget – Proposed Capital Gains Inclusion Rate Increase

On April 16, 2024, the 2024 Federal Budget introduced a proposal to increase the capital gains inclusion rate from 1/2 to 2/3.  The increase in capital gains inclusion rate affects transactions on or after June 25, 2024 which is applicable for the following taxpayers:

• All corporations;
• All trusts with realized capital gains income retained within the trust;
• Individuals with realized capital gains in excess of a $250,000 annual threshold.
  • Please note for 2024, the full $250,000 annual threshold will be available for capital gains realized from June 25, 2024 to December 31, 2024.
  • Realized capital gains which count towards the $250,000 annual threshold include capital gains realized directly by an individual and capital gains allocated from a trust.

Please note should there be any capital loss carryforwards for the above taxpayers which were realized at the ½ inclusion rate, the capital losses are automatically converted to the new 2/3 inclusion rate.

Potential affected taxpayers include but not limited to:

• Corporations, trusts and individuals with investment portfolios and real estate properties including cottages and second homes
• Individuals who make large public stock donations
• Individuals planning emigration from Canada

Potential planning can be considered before the proposed cut-off deadline of June 25, 2024.  We strongly encourage you to contact a member of our team in connection with any potential planning to be implemented before June 25, 2024.  

For more on the capital gain inclusion rate increase or other tax highlights from the 2024 budget, you can learn more here – https://www.budget.canada.ca/2024/home-accueil-en.html#pdf