On June 25, 2024, Canada’s federal government implemented changes to the capital gains inclusion rate, increasing it from 50% to 66.67%. This adjustment affects individuals, corporations, and trusts, particularly those with significant capital gains.
Key Changes:
For Individuals: The first $250,000 of annual capital gains will remain taxed at the previous inclusion rate of 50%. Gains exceeding this threshold will be taxed at the new 66.67% inclusion rate.
For Corporations and Trusts: The higher 66.67% inclusion rate applies to all capital gains, with no threshold.
For more information, please visit: Capital Gains Inclusion Rate – Canada.ca
What’s hasn’t Changed:
- Changes to the principal residence exemption.
- Tax elections or on paper realizations.
- Capital gains averaging over multiple years when the $250,000 annual threshold for individuals has been exceeded.
- Splitting the individual $250,000 annual threshold with corporations.
- Exemptions for specific assets or corporations.
- Time-based or other distinctions.
For more information please visit: Fair and Predictable Capital Gains Taxation – Canada.ca
We’re Here to Help
With Parliament prorogued until March 24, 2025, the many outstanding tax proposals announced will need to be introduced in the next session to become law. This makes the status of those proposal (such as the proposed capital gains rate changes) more uncertainties. Our team is ready to assist you in understanding and adapting to these new rules. Contact us to discuss strategies for optimizing your tax position in light of the capital gains inclusion rate change.
Updated June 25, 2024
