2024 Federal Budget Update
The federal budget 2024 proposes to increase the tax inclusion rate on capital gains from 1/2 to 2/3 for corporations and trusts. Individuals will continue to enjoy a 50% inclusion rate on the first $250,000 but experience an increase to 66.67% afterwards. While the grace amount for individuals does sound appealing, it is easily surpassed when dispositions involve secondary dwellings (such as family cottages), rental properties or investments in a family business, which is often the case with an estate.
The new calculations will increase tax liabilities by 8-9% on capital gains realized after June 25, 2024. It is important to re-evaluate your life insurance coverage to ensure it is sufficient to meet your needs. Revisiting the tax liabilities that could be impacted when evaluating your estate plans is being prudent and responsible when it comes to personal, family, and business needs.
How Will These Changes Impact You?
Family Business
Will you realize the full value of your business now that 2/3 of the growth be subject to tax?
Family Cottage
How much does it cost now? With a capital gains inclusion rate of 2/3, it will be even more costly to plan for the transfer of this beloved property.
Estate Freeze
Has the estate freeze already been completed? If so, the associated tax bill will need to be recalculated considering the new 2/3 inclusion rate.
Credits and thank you to Marino Filiplic for this information. If you’re looking for a wealth manager, consider reaching out to Marino!
Marino Filiplic, B.Admin.,
Principal, Risk Manager
Insurance & Wealth Management Practitioner
Marino Filiplic Financial
Tel: (519) 577-1616
Email: marino@marinofiliplic.ca