Aravind (Along with some other notable FP collective members including Mark McGrath, Ben Felix, and Tim Lew) broke down the new capital gains inclusion rate for corporations & trusts and what the downstream implications might be. With the inclusion rate going to 2/3 for all capital gains in corporations & trusts, the effective tax on capital gains has increased greatly.

The downstream implications include:

  • The impact on the value of incorporating overall (especially for professional corps)
  • The changed value of capital gains and the impact on taxes personally as well as factoring in a reduced CDA (Capital Dividend account)
  • Whether it makes sense to trigger gains now or hold on to them for deferral
  • Impact on Registered Accounts vs Corporations for investment deferral
  • How this may change the Salary vs Dividend discussion
  • Passive income complications such as RDTOH increase and AAII increase
  • In Kind Charitable contributions efficiacy
  • Tax Efficient investing just increased in value
  • The various downstream implications on trusts including their simultaneous increased relevance but also the danger of retaining capital gains inside a trust vs flowing out to a beneficiary
Federal Budget 2024 - Capital Gains Inclusion on Corporations & Trusts
The 2024 Federal Budget raised the capital gains inclusion rate on corporations & trusts Every dollar taxed inside a corporation as of June 25th will be subject to the new 2/3 inclusion rate which is a BIG DEAL. Historically what would happen is as follows: With a 50% inclusion rate – on a capital g