Capital Gains Exemption
The current capital gains inclusion rate is 50% whereby one-half of any capital gains is taxable and is included in calculating a taxpayer’s income. The other 50% is tax-free. This current inclusion rate also applies to capital losses. Budget 2024 proposes to increase the capital gains inclusion rate from one-half to two-thirds for corporations and trusts and on the portion of capital gains realized by individuals in the year that exceeds $250,000, effective on June 25, 2024.Â
Home Buyer’s Plan (HBP)
The Home Buyer’s Plan (HBP) is a great program for eligible first-time home buyers in Canada. Currently, the program allows these buyers to withdraw up to $35,000 from a registered retirement savings plan (RRSP) to buy or build a home for themselves or a family member. Funds withdrawn under this program must be paid back into their RRSP over 15 years. Budget 2024 proposes to increase this limit from $35,000 to $60,000 starting with any withdrawals after Budget Day. Combined with the new FHSA, this is a great opportunity for Canadians to access funds for the purchase of a new home.
RESP Enhancements
Registered Education Savings Accounts are a great way to save for your children’s post-secondary education. Currently, owners of the account must apply for the Canada Education Savings Grant (CESG) as well as the Canada Learning Bond. Budget 2024 proposes the government’s intention to introduce automatic enrollment in the Bond for any eligible children who currently do not have an RESP by the time they turn four. Starting in 2028/29, all eligible children born in 2024 or later will have a Registered Education Savings Plan automatically opened for them and the eligible Canada Learning Bond payments will be auto-deposited in these accounts.
Extending GST Relief to Student Residences
The Purpose-Built Rental Housing Budget 2021 previously announced an earnings stripping measure that limits the amount of net interest and financing expenses incurred in respect of arm’s length financing for certain public-private partnership infrastructure projects. Budget 2024 proposes to temporarily remove the Goods and Services Tax (GST) from new purpose-built rental housing projects, such as apartment buildings, student housing, and senior residences built specifically for long-term rental accommodation. This change will take effect for taxation years beginning on or after October 1, 2023.
Disability Supports Deduction
The Disability Supports Deduction allows individuals who have an impairment in physical or mental functions to deduct certain expenses that enable them to earn business or employment income or to attend school. To qualify, the expenses must be specified in the Income Tax Act and a medical practitioner must either prescribe the expense or otherwise certify in writing that the expense is required. Budget 2024 proposes to expand the list of expenses recognized under the Disability Supports Deduction such as the cost of an ergonomic work chair, and the cost of purchasing a mobile computer.
Canada Child Benefit
The Canada Child Benefit (CCB) provides monthly financial assistance for eligible families with children under the age of 18 and is income-tested. A CCB recipient becomes ineligible for the CCB in respect of a child the month following the child’s death. Budget 2024 proposes to amend the Income Tax Act to extend eligibility for the CCB from one month to six months after the child’s death. For example, if a child dies in June, the child’s primary caregiver would be eligible to receive the CCB for the remainder of the year under the proposed change to the CCB. This measure would be effective for deaths that occur after 2024.
Canada Carbon Rebate for Small Businesses
Budget 2024 proposes to introduce a new Canada Carbon Rebate for eligible small businesses to receive an automatic refundable tax credit directly in proportion to the number of employees in each applicable province. The tax credit for the 2023 taxation year would be available to eligible corporations that file their 2023 tax return by July 15, 2024.
[Sources: https://budget.canada.ca/ CI Global Asset Management Budget Highlights report, and Mackenzie Investments Federal Budget 2024 – What you need to know. Every effort has been made to provide information that is current and accurate. The information contained in this blog comes from a variety of sources and is subject to change at any time without notice. Jeff Greenfeld gives no representation or warranty of any kind regarding the accuracy, validity reliability, or completeness of the information.]