Capital Gains Taxation Changes Announced in Budget 2024
Fairer Tax System
In Budget 2024, the federal government announced changes to capital gains taxation to make Canada's tax system fairer. Starting in 2023, the inclusion rate for capital gains will increase from 50% to 66.67% for individuals with capital gains exceeding $250,000.
Impact of Changes
This change will primarily affect those who realize significant capital gains, such as from the sale of investments or properties. The higher inclusion rate will result in a larger portion of these gains being subject to income tax.
Lifetime Capital Gains Exemption Boost
To mitigate the impact on business owners, the federal government has proposed increasing the lifetime capital gains exemption from $1 million to $1.25 million. This exemption allows individuals to shelter a portion of their capital gains from taxation.
Conclusion
The proposed changes to capital gains taxation are part of the government's broader efforts to ensure that Canada's tax system is equitable for all. By increasing the inclusion rate and boosting the lifetime capital gains exemption, the government aims to balance the need for fairness with the desire to foster economic growth and support business owners.
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