Year-end tax tips: Here’s what is unique to 2024

financialpost.com:

With just six weeks to go before Dec. 31, now is the perfect time to begin your year-end tax planning. Here’s a few things to consider, which are unique to 2024.

The 2024 federal budget proposed an increase to the capital gains inclusion rate for gains realized on or after June 25, 2024, whereby the inclusion rate was increased to 66.67 per cent, up from 50 per cent. Individuals and certain trusts (specifically, graduated rate estates and qualified disability trusts) are still entitled to the former 50 per cent inclusion rate on the first $250,000 of capital gains annually. The increase in the tax rate on capital gains over $250,000 is about nine percentage points, depending on your province or territory of residence.

While the legislation hasn’t yet been passed, it’s widely expected to eventually receive royal assent, and be effective as of this June 25. For investors with significant accrued capital gains in their portfolios, a new tax planning option exists for 2024.

Consider whether it’s worth crystalizing up to $250,000 of capital gains before year end to take advantage of the lower 50 per cent inclusion rate. Crystallization for publicly traded shares is as easy as selling the position on the open market and immediately buying it back. Note that, unlike for loss crystallization, there’s no equivalent superficial gain rule, meaning you don’t need to wait 30 days to buy back the stock on which you crystalized a capital gain.

For 2024, the last trade date is Dec. 30 for the trade to settle by Dec. 31.

When deciding whether to make this move, consider your expected rate of return and time horizon. For example, if the tax that you don’t pay for 2024 was invested to earn six per cent capital gains, compounded annually,