In the 2024 federal budget, there’s a proposal to adjust the capital gains inclusion rate, specifically targeting individuals with gains exceeding $250,000 annually. The plan entails increasing the inclusion rate from 50% to 66.7% for these high-earning individuals, while maintaining the 50% rate for gains below this threshold. This modification extends to encompass all capital gains realized by corporations and trusts as well.
Moreover, the budget preserves the provision of a lifetime capital gains exemption, particularly for individuals selling small businesses, farms, or fishing properties. Notably, there’s a proposed expansion of this exemption from its current just over $1 million to $1.25 million in eligible capital gains.
The budget emphasizes the continued exemption of capital gains taxes on the sale of primary residences. Despite these adjustments, economists are expressing reservations. Some argue that the proposed tax increases could potentially stifle productivity and deter investment attraction, raising concerns about their broader economic impact. This critical perspective highlights the balancing act the government faces in its fiscal policy decisions, aiming to stimulate economic growth while ensuring fiscal sustainability.
