The 2024 Federal Budget has sparked significant discussion and uproar regarding the changes in capital gains rates and the amendments set to take effect on June 25, 2024. Below is a breakdown of the forthcoming changes:

In reality, this change will effect only a small number of Canadians individually. However, if you have any investment holdings within your corporation, you will be impacted regardless of the amount of capital gain.

Here are some of the affects to corporations:

  1. More tax on capital gains
  2. Adverse effect on small business deductions
  3. Reduction of the capital dividend account credit

Now that you know the changes,

What considerations should be made?

  1. Sell assets now and prepay tax.
  2. Continue to defer tax and pay the increased tax later.
  3. Do you want to sell the asset, or is it more beneficial to keep the asset? Will the growth and gain far exceed the tax differences?
  4. If you trigger gains now, triggering losses after June 25 is beneficial.
  5. Consider corporate flow-through shares that are purchased and sold prior to June 25, 2024.

Passive assets have been a target of the government of Canada as they introduced the small business deduction clawback several years ago. They are now making it less beneficial to have investments that produce capital gains.

In our next video, we will introduce an asset class that can alleviate all these important factors and should be considered with a portion of your investments, dependent upon your specific needs and goals.