BUILDING STRATEGIES FOR YOUR BUSINESS

Currently, 50% of a capital gain (and 50% of a capital loss) is included in computing a taxpayer’s income. For capital gains and losses realized on or after June 25, 2024, Budget 2024 proposes to increase such rate:

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• from 50% to 66.7% for all corporations and trusts; and

• from 50% to 66.7% for individuals, but only with respect to the portion of capital gains or losses realized annually that exceed $250,000.

 

In other words, the inclusion rate will continue to be 50% for capital gains or losses up to $250,000 realized annually by individuals (including through trusts or partnerships). The $250,000 threshold would be fully available in 2024 (i.e., it would not be prorated) and would apply only in respect of capital gains or losses realized on or after June 25, 2024.

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Accordingly, individuals should consider whether they wish to realize capital gains prior to June 25, 2024, in order to access the 50% rate rather than be subject to the 66.7% rate. For example, consideration should be given to choosing not claim an otherwise available capital gain reserve in a taxpayer’s 2023 income tax return. Moreover, individuals should consider whether they wish to realize $250,000 in capital gains annually from 2024 onwards in order to benefit from the 50% rate rather than being subject to the 66.7% rate.