Federal budget commentary 2024
The Federal Budget 2024 has introduced a suite of tax reforms with implications for both personal and corporate finances.
These changes have significant implications for individual taxpayers, businesses, and trusts, which may affect your financial planning and tax strategies moving forward. Below, we have outlined the key points for your convenience:
Personal Tax Measures:
Capital Gains Inclusion Rate: Effective from June 25, 2024, the capital gains inclusion rate will increase to two-thirds of the actual gain, impacting individual taxpayers and corporations. Notably, this includes an adjustment to the deduction available for certain employee stock option benefits.
Lifetime Capital Gains Exemption: An increase in the lifetime exemption limit to $1,250,000 is proposed for dispositions of qualified small business corporation shares and farm or fishing property, effective for dispositions on or after June 25, 2024.
Canadian Entrepreneurs’ Incentive: A reduced capital gains inclusion rate for eligible individuals disposing of qualifying shares, with a lifetime limit on gains.
Employee Ownership Trust (EOT) Tax Exemption: Detailed provisions concerning the exemption of capital gains on sales to an EOT, subject to specific conditions.
Alternative Minimum Tax (AMT) Changes: Proposed increases in AMT rate and exemption amount, among other adjustments.
Enhancements to Various Tax Credits: Proposals include doubling the volunteer firefighters and search and rescue volunteers tax credit, and extending the eligibility for the mineral exploration tax credit.
Business Measures:
Accelerated Capital Cost Allowance (CCA): 100% expensing for certain productivity-enhancing assets and accelerated CCA for purpose-built rental housing.
Interest Deductibility Limits: Expansion of exemptions concerning purpose-built rental housing.
Canada Carbon Rebate for Small Businesses: Introduction of an accelerated process for direct carbon rebates to eligible CCPCs.
Clean Economy Investment Tax Credits: New tax credits for investments in the electric vehicle supply chain and adjustments for clean technology manufacturing.
Regulatory Changes for Mutual Fund Corporations: Proposals to restrict certain corporations from qualifying as a mutual fund corporation.
International Measures:
Crypto-Asset Reporting Framework: Annual reporting requirements for crypto-asset service providers.
Withholding for Non-Resident Service Providers: Conditions for waiving the withholding requirement on payments to non-residents for services rendered.
Sales and Excise Measures:
GST Relief for Student Residences: Application of GST/HST rules and rebates to new student housing projects.
GST/HST on Face Masks and Shields: Repeal of the temporary zero-rating for certain face masks and shields effective May 1, 2024.
Other Notable Proposals:
Housing Plan Initiatives: A range of measures to stimulate home construction and support homebuyers.
Canada Pension Plan (CPP) Enhancements: Amendments aimed at increasing benefits under certain conditions.
Canada Disability Benefit: Details on the commencement of the benefit payments.
Student Loan Forgiveness Expansion: Extension of eligibility to additional healthcare and social service professionals.
Canada Learning Bond Adjustments: Automatic opening of RESPs for eligible children and retroactive claim age increase.
Charitable Sector Amendments: Updates and simplifications to regulations and receipting processes.
These are mere highlights of the complex changes in the Federal Budget 2024. We recommend reviewing these changes carefully and considering how they may impact your financial and tax planning.
Access our full report here for a detailed analysis and to ensure you're equipped to navigate these reforms.
Stay informed and adjust your strategies accordingly.
