The Government of Canada released its 2024 Budget on April 16, 2024, projecting a deficit of $40 billion for 2023-24.
While there are no proposed changes to personal or corporate tax rates, there are several key items of tax and business interest, including but not limited to:
- Increasing the capital gains inclusion rate
- The capital gains inclusion rate is to increase to two thirds (up from one half) for corporations and trusts, and to two thirds (up from one half) on the portion of capital gains realized in the year that exceed $250,000 for individuals, for capital gains realized on or after June 25, 2024.
- Increasing the lifetime capital gains exemption
- The Lifetime Capital Gains Exemption to increase to $1.25 million of eligible capital gains (from $1.016 million in 2024) realized on dispositions that occur on or after June 25, 2024.
- Introducing the Canadian entrepreneurs’ incentive
- A new Canadian entrepreneurs’ incentive will reduce the tax rate on capital gains on the disposition of qualifying shares by an eligible individual to one half the prevailing inclusion rate, on up to $2 million in capital gains per individual over their lifetime. This measure will apply to dispositions on or after January 1, 2025.
- Alternative Minimum Tax Changes
- Budget would allow individual taxpayers to claim 80% of the Charitable Donations Tax Credit when calculating AMT (instead of 50% which was previously proposed). The budget also includes several additional amendments to fully allow certain deductions and exempt Employee Ownership Trusts from AMT, among other changes.
To help increase the affordability of housing, the budget also provides several incentives for purpose-built rental housing in Canada, including an elective exemption from the interest deductibility limitation and enhanced Capital Cost Allowance for certain new additions of property. There are also new measures designed to help first-time homebuyers.