2024 Budget Introduces Changes to Capital Gains Tax

Wealthiest Canadians Could Pay More Under Proposed Changes

Inclusion Rate to Increase from 50% to 67%

The federal government's 2024 budget proposes changes to how capital gains are taxed, a move that could see the wealthiest Canadians pay a higher proportion of their investments. The changes include increasing the inclusion rate from 50% to 67% on capital gains above $250,000 for individuals.

Previously, individuals were taxed on 50% of their capital gains, meaning that only half of the profit from the sale of an asset was subject to income tax. The proposed change would increase the taxable portion to 67%, effectively raising the amount of tax owed on capital gains.

The Department of Finance has stated that for 99.87% of Canadians, personal income taxes on capital gains will not increase. However, the changes could have a significant impact on high-income earners and those with large investment portfolios.

The budget also includes other measures related to capital gains tax, such as limiting the use of the principal residence exemption for secondary properties and closing loopholes that allowed individuals to avoid paying capital gains tax.