As an accountant, it is essential to stay up to date with the latest changes in tax legislation to help clients navigate the complex world of finance and taxation. Today, we will explore the changes to capital gains taxes in Budget 2024 in Canada and discuss their implications for individuals, entrepreneurs, corporations, and trusts.
Changes to Capital Gains Tax
Increase in Inclusion Rate: One of the key changes is an increase in the inclusion rate on capital gains. This means that a higher portion of your capital gains will be subject to taxation. It’s important to understand how this change could impact your investment returns and overall tax liability.
Higher Tax Rate for Gains above $250,000: Under the new budget, gains realized above $250,000 for individuals would be taxed at a higher rate, at 66.67 percent, up from the current 50 percent. This change aims to address the “capital gains tax advantage” that primarily benefits wealthy Canadians. Middle-income households may feel a greater impact compared to wealthier individuals.
Applicability to Corporations and Trusts: It’s important to note that these changes would also apply to corporations and trusts. If you own a business or have assets held in a trust, understanding the implications of these changes is crucial for effective tax planning.
As an accountant, I can help you determine if you qualify for this exemption and guide you in optimizing your financial plans to take full advantage of it. Book your consultation with Business 360 CPA today!
Lifetime Capital Gains Exemption
Expanded Exemption Amount: The budget proposes expanding the lifetime capital gains exemption. This means that eligible capital gains up to $1.25 million would be exempt from taxation. This change presents an opportunity for entrepreneurs and individuals to optimize their tax strategies when it comes to capital gains.
Carve Out for Entrepreneurs: To further support entrepreneurs, the budget suggests a new carve out. This incentive would protect the sell-off of some shares in specific instances. Understanding the eligibility criteria and how this carve out can benefit you as an entrepreneur is essential for maximizing your tax benefits.
Exclusion for Primary Residence: Selling your primary residence will still be excluded from capital gains taxes. This remains unchanged, providing homeowners with a tax advantage when it comes to their principal place of residence.
Tax Planning Advice from Business 360 CPA in Burnaby to the above changes
With these changes to capital gains taxes, it’s crucial to review and adjust your financial strategies accordingly. As an accountant, I recommend considering the following:
Stay informed: Continuously monitor updates on the changes to ensure you are aware of any developments or alterations.
Review your investment portfolio: Assess the impact of the higher inclusion rate and potential higher tax rates for gains above $250,000 on your investment returns. Explore strategies such as tax-efficient investments or deferred capital gains to optimize your tax liability.
Consult with an accountant in Vancouver: Seek expert advice from a qualified accountant who can help you understand the specific implications of these changes and tailor your tax planning strategies to your individual circumstances. If you are looking for an Accountant in Greater Vancouver, book your consultation with Business 360 CPA.
Tax Planning Strategies with Business 360 CPA in Burnaby
Business 360 CPA provides accounting and management advisory services to clients across Greater Vancouver. Our team of professional accountants in Vancouver is led by experts with over 40 years of professional CPA accounting experience in Canada, the US, and Japan. At our core, we are your trusted guide to financial prosperity. Our tax planning and filing services encompass a wide spectrum of services. We understand the intricacies of the tax landscape, and we’re here to ensure you maximize your returns and pay the least tax while maintaining full compliance. Let us navigate the complexities, while you reap the rewards of optimized tax strategies and financial peace of mind.
