Navigating the New Landscape: A Guide to Canada's 2024 Federal Budget Analysis
By Tim Leonard
By now, you may have had the opportunity to read as well as watch commentaries on the recent budget changes. On April 16, 2024, the Deputy Prime Minister, and Minister of Finance, Chrystia Freeland, presented the government’s budget. Some of these changes included:
- Increase of the capital gains inclusion rate on passive income taxed inside corporations from 50% to 66%, effective June 25, 2024.
- Personal capital gains above $250,000 per taxpayer, per year, on assets owned personally has also increased from 50% to 66%. This too begins June 25, 2024.
- The lifetime capital gains exemption increased to $1.2 million and introduces a new 33% inclusion rate for up to $2 million of certain capital gains realized by business owners on the sale of their shares.
These changes directly impact the sale of assets personally, as well as the sale of assets in your corporation. Therefore, the sale of your shares in your business, large gains on real estate that is not your principal residence and significant unrealized gains in your investment portfolios, may have a larger tax impact going forward.
Here is a tailored checklist of strategies we integrate into our clients personalized Lifecycle Wealth Plan:
● When donating to charity is important for our clients, gifting investments owned by your corporation will save more tax by increasing the CDA credit and avoiding the 66% capital gains inclusion rate.
● There may be more of an incentive with these tax changes to move corporate dollars into the tax-free environment of an exempt life insurance policy.
● Legally extract cash at little to no incremental tax to pay for your lifestyle needs which include both corporate owned insurance and passive investments.
● Manufacture and harvest capital gains on passive investments.
● Proactively plan your estate, as it is more important now than ever.
● Proactively lock in your insurability by purchasing term life insurance and converting to permanent life insurance when it is affordable to do so.
● Business owners should have corporate owned life insurance as an asset class for their company.
● Good news is the sale of the shares of your Canadian controlled private corporation (CCPC) will be less taxing, up to $3,250,000. Therefore, this can save hundreds of thousands of tax, for you and your family.
Our Mission is to “help business owners pay the least amount of tax at each stage of life using our Lifecycle Wealth Plan.” Our Lifecycle Wealth Plan helps provide financial security for you, your family and future generations. Contact us for a 15-minute complimentary call to see how your financial plan may have been affected by these new federal budget changes.
About Tim
Tim Leonard is an investment advisor at Mandeville Private Client Inc., providing private and alternative fund solutions in addition to public investments to high-net-worth professionals and business owners in Ontario, Canada. Tim uses his over 40 years of experience to develop and implement the Lifecycle Wealth Plan, using appropriate and customized investment tools to help business owners create more wealth by paying less tax at each stage of life. His desire is to see his clients save tax, fund their lifestyle, and build their legacy—all through proactive planning. Tim and the Lifecycle Wealth team specialize in understanding the various tax rules exclusive to business owners and building a plan with both standard and unique investment, insurance, and personal financing products tailored to their needs, goals, and situations. Tim wants his clients to sleep better at night, knowing they’re on the right path and having a team of professionals advocating for them no matter what comes their way.
Tim has a Bachelor of Arts from Western University and a degree in commerce, accounting, and finance from the University of Windsor. While his favorite thing to do is help people excel financially, Tim also enjoys a good game of golf. He’s a member of the Whistle Bear Golf Club and is the chair of the Stratford Chefs School’s finance committee. To learn more about Tim, connect with him on LinkedIn.
This publication contains the opinion of the writer. The information contained herein was obtained from sources believed to be reliable, but no representation or warranty, express or implied, is made by the writer, Mandeville or any other person as to its accuracy, completeness or correctness. This publication is not an offer to sell or a solicitation of an offer to buy any securities. The information in this publication is intended for informational purposes only and is not intended to constitute investment, financial, legal, tax or accounting advice. Many factors unknown to us may affect the applicability of any statement or comment made in this publication to your particular circumstances. Hence, you should not rely on the information in this publication for investment, financial, legal tax or accounting advice. You should consult your financial advisor or other st professionals before acting on any information in this communication.
Regulated by Canadian Investment Regulatory Organization. Member of the Canadian Investor Protection Fund.
These latest budget changes are referred to from the Government Of Canada Chapter 8: Tax Fairness for Every Generation.