FPC Contributors have had much to say about the 2024 Federal Budget, and much more will be coming. This will have implications for real estate sales, investing in corporations, estate freezes, charitable contributions, business sales, and many other financial planning concerns.
Aaron Hector has unleashed a Tweetstorm unpacking the good and the bad of this budget:
Increase to Capital Gains Inclusion rate - from 50% to 66.67% - only applies on gains in excess of $250,000.
— Aaron Hector, R.F.P., CFP, TEP (@AaronHectorCFP) April 16, 2024
Also, only applies after June 25, 2024 <-- nice to allow some planning for affected individuals.
Details: pic.twitter.com/vBM2X8wt8V
Alternative Minimum Tax (AMT) - further refinements.
— Aaron Hector, R.F.P., CFP, TEP (@AaronHectorCFP) April 16, 2024
They partially backed off the attack on charitable donations.
Disappointing and not good enough imho, but better than the last year's announcements. pic.twitter.com/rdSq8iX3cF
Canada Child Benefit
— Aaron Hector, R.F.P., CFP, TEP (@AaronHectorCFP) April 16, 2024
Previously payments ended when a child died. If the death was not communicated to the Gov't in a timely manner it would result in the need to repay CCB payments received after death. Painful.
Budget 2024 changes this so that payments will continue to be… pic.twitter.com/9PNNlRu0x4
Previously announced changes to the Home Buyers' Plan are confirmed.
— Aaron Hector, R.F.P., CFP, TEP (@AaronHectorCFP) April 16, 2024
Withdrawal amount increased from $35k to $60k.
Repayments can be delayed as late as year 5 (instead of year 2).
Full repayment remains at 15 years total. pic.twitter.com/KNk7NgUupU
This is new... "Canadian Entrepreneurs' Incentive"
— Aaron Hector, R.F.P., CFP, TEP (@AaronHectorCFP) April 16, 2024
Good news for small business owners.
$2 million of capital gains on the sale of eligible small business shares will be eligible for a capital gains inclusion rate equal to one half of the current inclusion rate.
So going… pic.twitter.com/awFmV0WZwt
Tax credit for Volunteer Firefighters and Search and Rescue Volunteers
— Aaron Hector, R.F.P., CFP, TEP (@AaronHectorCFP) April 16, 2024
This already existed, but they are doubling the tax credit. Maximum value now at $900 instead of $450.
Nice to support those who volunteer in our communities. (thanks for your service if you're out there!)… pic.twitter.com/71yEo1M8Wh
Disability Supports Deduction
— Aaron Hector, R.F.P., CFP, TEP (@AaronHectorCFP) April 16, 2024
For those unaware, this already existed and allows a deduction for expenses incurred for those with a disability to allow them to work or go to school
Budget 2024 expands the list of expenses that will qualify for the disability supports deduction.… pic.twitter.com/yXS1dXMVjg
Add on to the previous post on the Disability Supports Deduction as I think it's warranted.
— Aaron Hector, R.F.P., CFP, TEP (@AaronHectorCFP) April 16, 2024
Service animal costs now count for this.
Anything that supports good boys and good girls is... good in my books. 🐶🐕 pic.twitter.com/Dnm8r6GV3V
Lifetime Capital Gains Exemption
— Aaron Hector, R.F.P., CFP, TEP (@AaronHectorCFP) April 16, 2024
Currently $1,016,836 for 2024 and subject to annual inflation adjustments.
Effective June 25, 2024 this is being increased to $1.25 Million.
(NO INFLATION ADJUSTMENT IN 2025)
Then indexation of the LCGE to resume in 2026.
Ok so here's what… pic.twitter.com/zvKH8zdbHv
Everyone - don't just run out and sell everything before June 25.
— Aaron Hector, R.F.P., CFP, TEP (@AaronHectorCFP) April 16, 2024
There are lots of factors in this:
How much will the extra tax actually be?
When would you have sold it otherwise?
If you accelerate the sale, you are also accelerating the tax payment. By paying tax earlier… https://t.co/TEkgHwFFCF
Jason Pereira is never shy to express his opinion, and I think this is just the beginning for Budget 2024:
Feds: Nice cottage and/or small business you have there. It would be a shame if we decided to tax it more after June of 2024.
— Jason Pereira (@jasonpereira) April 16, 2024
Yours truly went into spreadsheet mode and build this sheet comparing the sale of a business under the old rules (LCGE and 50% inclusion) to the sale of a business under the new rules (LCGE, mixed inclusion rates, CEI). You should be able to download from this link: https://docs.google.com/spreadsheets/d/1VGynK7iRphPTA_9FDYUJvG0I7ajW6n5-ApiXW1MS9Ng/edit?usp=sharing
I know we'll see more in the coming days. Aravind Sithamparapillai has smoke coming out his ears as he processes the impacts on estate freezes. Benjamin Felix is thinking about the Money Scope content he and Mark Soth will have to re-record.
Discussion