Dear client,
Although the federal budget has not yet been adopted, the measures announced by the Minister of Finance on April 16 should still catch your attention. The intention of this info letter is to share some significant points that may have an impact on your financial planning. If you want to better understand how these measures affect you, don’t hesitate to get in touch with me.
You are planning to become a homeowner
The withdrawal limit from your RRSP is increasing to $60,000 within the Home Buyers’ Plan (HBP). Combined with the sums in an FHSA, is this strategy the right one for you?
You own a business, cottage, land, rental property, or even non-registered investments
Starting June 25, 2024, the tax inclusion rate on capital gains will likely increase from 50% to 66.67% for all capital gains realized by corporations and trusts, as well as capital gains over $250,000 realized by individuals.
Important to know
The law requires you to have disposed of all your assets just before your death. If you have an asset that generates capital gains (cottage, rental property, land, non-registered investments, etc.), your loved ones may therefore be required to pay a tax bill to conserve your assets.
Example
Jeanne and Jeannot
Retired parents of three children
Their family assets include a family cottage that they wish to bequeath equally to their children.
Purchase price of the cottage in 1990: $100,000
Market value of the cottage in 2024: $750,000
| Currently | As of June 25, 2024 | |
| Capital gain | $650,000 | |
| Taxable capital gain | $325,000 (50%) | $391,680 (50% on the first $250,000 and 66.67% on the portion over $250,000) |
|
Taxes payable In the absence of life insurance, children may need to borrow this sum if the succession doesn’t have the necessary liquidity. |
$173,257 (deceased tax rate of 53.31%) |
$208,804 (deceased tax rate of 53.31%) |
If adopted, the proposed budget will have an impact on the tax inclusion rate on capital gains, since it provides for certain modifications to capital gains taxation.
In a snapshot
- Corporations and trusts: the tax inclusion rate on capital gains will increase from 50% to 66.67%.
- Individuals with registered gains over $250,000: the tax inclusion rate on capital gains will increase from 50% to 66.67%.
- Individuals with registered gains under $250,000: the tax inclusion rate on capital gains will remain unchanged at 50%.
Thank you for your trust. I look forward to continuing to team up with you!
Sources: RBC, LaPresse, Le bel âge
