On April 16, 2024, the Honourable Chrystia Freeland, Minister of Finance, presented the federal budget, announcing significant financial and tax adjustments for the coming years. Among the key changes are updates to the capital gains inclusion rate, enhancements to the Lifetime Capital Gains Exemption, and the launch of the Canadian Entrepreneurs’ Incentive.
Effective June 25, 2024, the budget proposes an increase in the capital gains inclusion rate from 1/2 to 2/3 for both corporations and trusts, with additional provisions for individuals on gains exceeding $250,000. Furthermore, the Lifetime Capital Gains Exemption will increase to $1.25 million, with indexation resuming in 2026.
A significant new initiative, the Canadian Entrepreneurs’ Incentive, has been introduced. This program offers a reduced capital gains inclusion rate for disposals of qualifying small business shares, promoting long-term investments in active Canadian businesses under stringent conditions.
The budget also introduces changes that affect both personal and business tax realms, including modifications to the Alternative Minimum Tax and improved incentives for investments in clean energy and purpose-built rental housing. Notably, there is a new exemption from the limits on interest and financing expenses for certain rental housing projects, coupled with an accelerated capital cost allowance for such investments and other productivity-enhancing assets.
Also of note, the withdrawal limit for the Home Buyer’s Plan has been increased to $60,000. The budget also introduces the Canada Carbon Rebate for Small Businesses to foster environmentally sustainable practices.
You can find our complete commentary at this link in which we outline these and other significant highlights from the 2024 Federal Budget in more detail.