Rotfleisch & Samulovitch P.C. reposted this
Canada’s Capital Gains Tax inclusion rate to increase from 50% to 66.67% Amidst the uproar over the planned increase in the capital gains tax inclusion rate as a result of the last Federal budget, here’s a roundup of 7 related tax changes that may affect you: 1. Rate Increase: The current capital gains tax inclusion rate of 50%, in place since October 2000, will increase to 66.67% for capital gains realized on or after June 25, 2024, that exceed C$250,000 for individuals and companies. 2. Target Demographics: The Government of Canada asserts that the increase will see wealthy Canadians contribute more, projecting nearly C$20 billion in additional tax revenue over five years. 3. Adverse Side Effects: This change may increase tax on death, reduce after-tax returns to investors, increase the tax burden on professionals whose retirement savings are tied up in capital property (including cottages), and reduce employee stock option deductions. 4. Exemptions: The Tax-Free Savings Account (TFSA), principal residence exemption, and registered pension plans will be exempt from the new capital gains inclusion rate. 5. Relief Efforts: - Lifetime Capital Gains Exemption (LCGE): An increase of 25% from $1,016,836 to $1,250,000 for entrepreneurs. - Canadian Entrepreneurs’ Incentive (CEI): A new initiative reducing the capital gains inclusion rate to 33.3% for up to $2 million in eligible capital gains. - Net Capital Losses: These will remain deductible against taxable capital gains but will be adjusted to reflect the new inclusion rate. 6. Public Outcry: Several Canadian professional bodies, including the Canadian Medical Association (CMA), Mining Association of Canada (MAC), and Council of Canadian Innovators, have voiced opposition to the change. 7. Triggering of GAAR: The Canada Revenue Agency (CRA) has indicated that engaging in complex transactions solely to benefit from the current inclusion rate may trigger the General Anti-Avoidance Rules (GAAR); however, straightforward transactions are generally acceptable. Tax Tip: While it’s natural to try to take advantage of the current capital gains tax rate before the increase, be cautious of unintended consequences, such as triggering other taxes. Consult your tax professional. To learn more, read the full article: [Full Article](https://lnkd.in/gatrdVt6) written by an experienced Canadian tax lawyer Are you a Canadian taxpayer, businessman, or investor concerned about the increased capital gains inclusion rate? Our experienced team of tax lawyers can help. Call us at 416-367-4222 for a free 10-minute consultation or email Info@taxpage.com. Taxpage.com All the tax help you need. Disclaimer: Posts on this page are for educational purposes only and shouldn't be taken as tax or legal advice. For legal advice, please consult your lawyer. #Taxpage #CapitalGainsTax #FederalBudget #Canada #Taxlaw