Ottawa hikes capital gains tax, amends AMT rules in federal budget 2024

financialpost.com:

The federal budget released on Tuesday did not contain a general tax rate increase for the wealthy, but the government did announce that the capital gains inclusion rate will be going up and it amended the draft alternative minimum tax rules in response to concerns of the charitable sector.

Let’s take a look at each of these changes.

Under the current tax rules, if you dispose of capital property (other than your principal residence) for a profit, only 50 per cent of the capital gain is included in taxable income. The budget proposed to increase the capital gains inclusion rate to two-thirds (66.67 per cent) for corporations and trusts, and to two-thirds on the portion of capital gains realized for the year on or after June 25, 2024, that exceeds $250,000 for individuals.

The $250,000 threshold will apply to capital gains realized by an individual, net of any capital losses either in the current year or carried forward from prior years. Employees who exercise employee stock options and who can currently claim a 50 per cent deduction will now only be entitled to a one-third deduction of the taxable benefit to reflect the new capital gains inclusion rate. They will still, however, be entitled to a 50 per cent deduction of the taxable employment benefit, up to a combined limit of $250,000 for both employee stock options and capital gains annually.

Capital losses carried forward from prior years will continue to be deductible against taxable capital gains in the current year by adjusting their value to reflect the inclusion rate of the capital gains being offset. This effectively means that a capital loss realized at the current 50 per cent allowable rate will be fully available to offset an equivalent capital gain realized