elitere | Apr. 30, 2024
Attention investors and property owners! With the new 2024 budget on the horizon, significant changes have been proposed to Canada’s capital gains tax that could have a major impact on your finances. Here’s everything you need to understand about what’s changing and how it might affect you.
Currently, 50% of capital gains are taxable in Canada. However, the proposed budget outlines a notable increase specifically targeting corporations, trusts, and high-earning individuals:
– Corporations and Trusts: 66.67% of all capital gains will now be taxable.
– Individuals: The tax structure is split. For capital gains up to $250,000, 50% remains taxable. However, any gains exceeding $250,000 will be taxed at 66.67%.
Capital gains are the profits you earn from selling an asset for more than its purchase price. Common assets include cottages, stocks, or rental properties. It’s important to note that capital gains tax does not apply to your primary residence.
Example:
Consider you bought a cottage for $500,000 and sold it for $1,100,000, making a gain of $600,000:
– Current Law: You would be taxed on 50% of the $600,000 gain, equating to $300,000. Assuming a marginal tax rate of 45%, your tax payment would be $135,000.
– With Proposed Change: 50% of $250,000 ($125,000) and 66.67% of the remaining $350,000 ($233,345) would be taxable. At a 45% tax rate, you’d now owe $161,255—an increase of $26,255.
– All corporations and trusts handling substantial assets.
– Individuals with capital gains that exceed $250,000.
If approved, these changes are set to take effect on June 25, 2024.
While most Canadians won’t see an impact, those with significant investments or ownership of secondary properties will likely feel the financial pinch. Given these potential changes, now is the perfect time to consult with a tax advisor or financial planner. They can help you optimize your investment strategy and mitigate the effects of these new tax responsibilities.
Don’t navigate these complex changes alone. Our team is ready to offer expert advice tailored to your unique financial situation.
Contact Us for More Information:
– Phone: 519-841-6511 | 519-500-2805
– Email: [email protected] | [email protected]
