First time home buyer? Do you have a corporate account or a trust account? Does capital gains tax impact you? Or are you a volunteer firefighter/search and rescue? If you answered yes to any of those questions then you'll need to continue reading!
On April 16th we heard from Finance Minister Chrystia Freeland during the Federal Budget meeting. Here are the main takeaways:
Tax Changes for Capital Gains
It is important to note that there were no changes to personal federal income tax rates or income tax brackets for individuals
There were however changes regarding capital gains
The current capital gain inclusion rate is 50% (meaning half of capital gains is taxable while the other half is tax free)
The 2024 budget is proposing to increase this amount from 50% to 66.67% for corporations and trusts
The budget is also proposing this same increased tax amount to the portion of capital gains individuals receive over $250,000
These new tax measures are predicted to come in affect June 25th 2024
Two different inclusion rates would apply for tax years that begin before and end on or after June 25th 2024
Principle residence exemption remains the same (exempt from tax)
The budget does suggest there may be tax planning opportunities in situations where the higher capital gains inclusion rate may apply which could potentially spread the gains over multiple years to stay within the $250,000 annual threshold
Charitable Gifting
Another proposal from the budget is to increase the claim for charitable donation tax credit from 50% to 80%
Home Buyers Plan
With so many first time home buyers looking to purchase property the government has various ways of offering some help
Home Buyers' Plan (HBP) is a program for first time home buyers in Canada allowing them to borrow funds from their RRSP and use those funds to buy or build a first home
Withdrawn funds will need to be paid back into the RRSP within 15 years
In 2019 the withdrawal limit was increased to $35,000 per individual
The 2024 Federal Budget is proposing a huge increase from $35,000 to $60,000 per person
The Budget is also proposing for those who withdrew from their Home Buyer's Plan between January 1st 2022 and December 31st 2025 to have their repayment grace period extended by 3 years
In 2023 we had the First Home Savings Account introduced which allows individuals to open an account and contribute a maximum of $8,000 annually for 5 years (total of $40,000) while receiving a tax deduction and able to withdraw tax free
For more info regarding this account follow the link below
Volunteer Firefighters and Search and Rescue
The Voluteer Firefighters Tax Credit and the Search and Rescue Volunteers Tax Credit allo individuals who performed at least 200 hours of combined volunteer service during the year as a volunteer firefighter or a search and rescue volunteer to claim a 15% non-refundable tax credit based on an amount of $3,000
Budget 2024 proposes to double the credit from $3,000 to $6,000 resulting in a $900 credit for 2024 and later years
For the full article summary provided by Mackenzie Investments follow the link below!
Information provided by Mackenzie Investments
This document was prepared by the Investment Products & Platforms Team. The opinions expressed in this document do not necessarily reflect the opinions of iA Private Wealth Inc. The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any securities. Contents copyright by the publishers. The information contained herein may not apply to all types of investors.
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