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Wealth Update – Three Ideas Regarding the Proposed Capital Gain Inclusion Rate

Last week we saw the Federal government present their 2024 budget. How can you help your clients manage the change in Capital Gains taxation?

Quickly, the budget proposes increasing the capital gains inclusion rate to 66% on capital gains of more than $250,000. We see three immediate reasons to contact your clients.

  1. Increase life insurance coverage for estate planning purposes. A good example is the family cottage which may be sitting on a huge capital gain.

  2. We see a lot of clients reluctant to move to non-registered segregated funds because they have a big capital gain on their non-reg portfolio at another institution. Now, they may want to crystalize those gains at the lower inclusion rate and take advantage of seg’s beneficiary designations, and probate avoidance features. Their new ACB on the segs will be the amount they move over.

  3. Any corporate clients will now face 66.6% capital gains inclusion from dollar-one. May be time to realize some gains and move to segs and review corporate insurance needs.

 Here’s a simple spreadsheet to calculate the before and after tax on capital gains. Just change the figures in the highlighted cells.

Remember, the budget must receive royal accent before coming into law. We don’t expect any delays in this process.

P.S. Under the proposed budget, the maximum home buyers plan withdrawal has been increased from $35,000 to $60,000.


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