Federal budget 2024

On April 16, 2024, Finance Minister Chrystia Freeland released the Liberal Government’s federal budget. Titled Fairness For Every Generation, Budget 2024 with net new spending of $39.2 billion over the next five years and includes significant changes to capital gains tax, with some support on the sale of small businesses and a focus on affordability.

Insight:

Budget 2024 does not propose changes to the following items:

  • Personal income tax rates;
  • Corporate income tax rates; and
  • The Principal Residence Exemption.

Budget 2024 also does not introduce a wealth tax for individuals.

However, Budget 2024 does propose to:

  • Increase the capital gains inclusion rate for corporations, trusts, and certain individuals;
  • Increase the Lifetime Capital Gains Exemption; and
  • Introduce a new Canadian Entrepreneurs’ Incentive to provide preferential tax treatment for sales of qualifying shares of a business.

Highlights:

Changes to capital gains tax

  1. Increase the capital gains inclusion rate from 50% to 66.67%: 
    • On capital gains over $250,000 realized by individuals 
    • On all capital gains realized by corporations and trusts 
    • For capital gains realized on or after June 25, 2024
  2. Revise Alternative Minimum Tax proposals impacting philanthropy 
    • Permit 80% of charitable donation tax credits to be claimed

Support for small businesses

  1. Increase the Lifetime Capital Gains Exemption to $1.25 million
    • 23% ↑ in the exemption for dispositions on or after June 25, 2024
  2. Introduce the Canadian Entrepreneurs’ Incentive:
    • Preferential capital gains inclusion rate of 33.33% on up to $2 million of eligible capital gains
    • $2 million limit is phased in by $200,000 increments per year from 2025 until 2034

Focus on affordability

  • Increase the Home Buyers’ Plan (HBP) withdrawal limit from $35,000 to $60,000
  • Temporarily defer HBP repayment period by an additional 3 years
  • Permit 30-year mortgage amortizations for first-time buyers of newly built homes
  • Invest in national housing and health programs 
  • Launch a new Canada Disability Benefit

Read the full report here

Have questions?

Talk to us today to find out how Budget 2024 may impact your personal financial situation, particularly if you are a business owner or high-income earner.