The release of the Canadian federal budget is always a highly anticipated event. Serving as the government’s financial blueprint, it outlines its priorities and proposed spending initiatives across diverse sectors.
On April 16, 2024, the 2024 federal budget was released. Now, let’s take a closer look at what it contains and what you should know as an individual or business operator:
For Individuals
- Personal Tax Rates: Personal tax rates remain unchanged from the previous year.
- Increase in Capital Gains Inclusion Rate: The capital gains inclusion rate will increase from 1/3 to 2/3 or 66.6% on capital gains exceeding $250,000 when realized on or after June 24, 2024.
- Lifetime Capital Gains Exemption (LCGE): The LCGE will be raised to $1.25 million. The indexing of the LCGE will resume in 2026.
- New Capital Gains Inclusion Rate for Entrepreneurs: Entrepreneurs will benefit from a new 1/3 capital gains inclusion rate for up to $2 million of certain capital gains realized.
- Principal Residence Exemption: Capital gains from the sale of a principal residence will continue to be exempt from tax.
- Increase in Home Buyer’s Plan (HBP) Withdrawal Limit: The withdrawal limit for the Home Buyer’s Plan (HBP) will be increased from $35,000 to $60,000 for withdrawals from a RRSP made under the HBP after April 16, 2024.
- Extension of Repayment Grace Period for HBP: The repayment grace period under the Home Buyer’s Plan (HBP) will be extended from 2 to 5 years.
- Alternative Minimum Tax (AMT) Calculation Change: The calculation of the Alternative Minimum Tax (AMT) will be changed. This revision allows individuals to claim up to 80% of the proposed charitable donation tax credit when calculating AMT, instead of the previous 50%.
- Extension of Disability Support Deduction: The list of expenses covered by the disability support deduction has been extended. You can find a complete list of eligible expenses here on this CRA list.
For Businesses
- Corporate Tax Rates: Corporate tax rates remain unchanged from the previous year.
- Increase in Capital Gains Inclusion Rate: The capital gains inclusion rate for corporations and trusts will be increased from ½ to 2/3 or 66.6% on capital gains realized on or after June 24, 2024.
- Temporary Increase in Capital Cost Allowance (CCA) Rate: The capital cost allowance (CCA) rate for eligible new purpose-built housing projects will temporarily increase from 4% to 10%.
- Amendments to Immediate Expensing: Amendments will be made to immediate expensing for productivity-enhancing assets purchased by businesses.
- New Canada Carbon Rebate for Small Businesses: The new Canada Carbon Rebate for Small Businesses proposes to return a portion of the fuel charge proceeds to Indigenous governments and small to medium businesses.
- Additional Details on Clean Electricity Investment Tax Credit: Additional details are proposed on the eligibility and implementation of the Clean Electricity Investment Tax Credit.
The release of the 2024 federal budget brings important updates for individuals and businesses. It is essential for individuals and businesses to review the budget carefully and seek professional advice to understand how these measures will impact their financial situations and investments.
For more information on how these budget measures may affect your financial situation, or have any questions about other financial or investment matters, please contact Rothenberg Wealth Management. We would be pleased to assist you.
