Budget 2024 makes changes to capital gains tax. Who will it affect?
Global News
The changes to capital gains taxation have been billed as a way to ensure the government can make up some for some of the big spending measures announced in Tuesday’s budget.
Some Canadians making money from capital gains are set to pay higher taxes starting this year, according to the federal budget tabled by Finance Minister Chrystia Freeland on Tuesday.
The changes to how capital gains are taxed have been proposed as the government eyes ways to make up for some of the big spending measures announced in Tuesday’s budget.
According to the federal budget, the inclusion rate — the portion of capital gains on which tax is paid — for individuals with more than $250,000 in capital gains in a year will increase to two-thirds from one-half.
People realizing up to $250,000 in capital gains will continue to pay tax on 50 per cent of their capital gains. For corporations and trusts, however, there is no threshold. The inclusion rate for them will increase to two-thirds for all realized capital gains.
The Department of Finance said for 99.87 per cent of Canadians, personal income taxes on capital gains will not increase.
“The good news is that these changes, which is an increase in the capital gains inclusion rate from 50 per cent to two thirds, will probably affect very few people,” said Jamie Golombek, managing director of tax and estate planning with CIBC Private Wealth.
He added: “This is really not aimed at your average investor. Remember, your average investor has most of their money either in a principal residence that is tax-free, in an RSP or a tax-free savings account, where you don’t have to worry about paying tax on capital gains.”
John Oakey, vice president of taxation with Chartered Professional Accountants of Canada, said: “The average person is going to have difficulty generating more than $250,000 of capital gains in any particular year. So, this will be isolated to the more wealthy people who have the ability and the capital to do that.”
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