As you are aware, the government of Canada has released the 2024 Federal Budget. CIBC's Jamie Golombek has summarized key measures that will affect business owners and certain individuals. A copy of Jamie's summary can be found here: 2024 Federal Budget.

 

To watch the full coverage of Budget 2024 from Jamie Golombek, please click on the replay link and register:

https://cibcvirtual.com/federalbudget2024

 

We thought it would also be worth pointing out a couple of changes from the investment management standpoint that may affect some of our clients; and in particular all of our clients with corporate investment accounts.

 

Capital gains inclusion rate changing June 25 - who might it impact?: 

We've identified 3 groups of our clients that will get affected by the proposed change in inclusion rate from 50% to 66 2/3% on capital gains triggered after June 25:

1. Non-registered accounts: capital gains triggered in one year of over $250K, inclusion rate will change from 50% to 66 2/3%
2. Corporate / trust accounts: any capital gains, inclusion rate will change from 50% to 66 2/3%
3. Clients who own vacation or rental real estate property
   • IF you are contemplating the sale this year of a property that is not your designated primary residence; and 
   • have a capital gain of $250K or more, inclusion rate will change from 50% to 66 2/3% if sold after June 25, 2024

What can we do?

• For Individual non-registered accounts: Typically in a calender year realized gains have been under $250K for most clients, so only a few will be affected and we will reach out to touch base before June if we think any of our portfolio rebalancing will trigger more than $250K so that can included in the lower inclusion rate of 50%.
• For our corporate and trust client accounts we will be doing any model portfolio rebalancing between now and mid-June. For our non-discretionary clients, we will send recommendations for trims (if any) over the coming month.

 

Trades will be effected before June 21st to accommodate the new trading settlement periods starting in late May* (see below).

 

Our rebalancing or recommendations for any trimming will be ones that make sense from an investment management perspective first, as per usual.

 

However, if there are any particular tax management matters that we should be made aware of and your tax advisor has recommended you trigger more before the June 21st date please let us know. Examples where you might be affected by the higher inclusion rate include:

• If you are selling real estate property other than your primary residence this year after June 21st that may trigger gains over $250K when combined with gains triggered in your non-registered account
• If you have crystallized large capital gains in a non-registered account elsewhere, and you think you may trigger more than $250K when combined with gains here

As always, please consult your accountant or tax advisor on your particular circumstances, and if there are any actionable items for us to do before June 21st please reach out to let us know. In addition, if you are selling vacation or rental property this year, you may want to reach out to both your tax advisor and your realtor to see if there would be a material difference that would impact your decision on whether to sell before or after June 25.

 

Increase to Homebuyers Plan from $35,000 to $60,000

For the first time homebuyer clients, in addition to the FHSA first time home buyers can now withdraw up to $60,000 from their RSP.

Furthermore, HBP withdrawals made between January 1, 2022 to December 31, 2025, repayments will begin 5 years after the home purchase (was previously 2 years).

 

*The new settlement periods for Canadian and US securities are changing to trade date + 1 business day (previously 2 business days):

Canadian securities effective May 27

US securities effective May 28

 

As always, please feel free to contact us if you have any questions or require more information.

 

Marleena Markham, CFP, Senior Wealth Advisor | Tel: 604-608-5217 marleena.markham@cibc.com

Keith Bockhold, CIM, Associate Wealth Advisor | Tel: 604-608-5218 keith.bockhold@cibc.com

Jenny Yim, FInancial Associate  | Tel: 604-608-5219 jenny.yim@cibc.com

Ignacius Parengkuan, Administrative Assistant | Tel: 604-608-5280 ignacius.parengkuan@cibc.com