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Smith Falconer Financial Group

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Address CIBC Wood Gundy Toronto Bay Adelaide Branch 333 Bay St., Suite 2800 Toronto ON, M5H 2R2
Telephone Number (416) 594-7950
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Smith Falconer Financial Group

May 05, 2024

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Budget beside Smith Falconer Tree

2024 Federal Budget

In April, Deputy Prime Minister and Finance Minister Chrystia Freeland presented the 2024 Federal Budget. In order to provide “a fair chance to build a good middle-class life”, the approach focuses on building more affordable homes, making life cost less, and growing the Canadian economy in a way that’s shared by all.

 

Below, we will discuss some of the relevant changes that Canadian investors should be aware of.

 

Capital Gains Inclusion Rate for Individuals, Corporations and Trusts

 

The Budget outlined an increase in taxes on capital gains, effective June 25, 2024. For individuals, the capital gains inclusion rate for capital gains in excess of $250,000 will increase from one half to two thirds. This is net of capital losses applied, that may have been incurred in the current year or previous years.

 

For corporations and trusts, the inclusion rate for all capital gains realized will increase from one half to two thirds.

 

Canadian Entrepreneurs Incentive

 

The capital gains inclusion rate will be 33.3% on a lifetime maximum of $2 million in lifetime capital gains, which will come in effect gradually over the next 10 years.

 

Lifetime Capital Gains Exemption

 

The lifetime capital gains exemption will be increased from $1.01 million to $1.25 million, effective June 25, 2024. This applies to small business shares, farming and fishing property. Starting again in 2026, this amount will continue to be indexed to inflation.

 

Home Buyers Plan

 

Effective immediately, Canadians may withdraw $60,000 from their Registered Retirement Savings Plan (RRSP) to buy their first home. This is an increase from $35,000. Additionally, the repayment period has been lengthened for individuals who make their first withdrawal between 2022 and 2025.

 

Alternative Minimum Tax (AMT)

 

The AMT rules that were introduced in 2023 are being adjusted. This will apply to taxation years beginning after 2023. Most notably, individuals will be able to claim 80% of the charitable donation tax credit, increased from 50%.

 

What is not changing?

 

Canadians will continue to benefit from:

  • The principal residence exemption. The appreciated value of your primary home remains tax-free.
  • Tax-deferred savings plans such as the Registered Retirement Savings Plan (RRSP).
  • Tax-free savings plans such as the Tax-Free Savings Account (TFSA).
  • The same taxation on individual capital gains of less than $250,000.

We are always here to discuss the impact to investment portfolios, and partner with our client’s accountants in doing so. We are happy to facilitate a referral to an accountant where appropriate.

 

Smith Falconer Financial Group continues to believe in the importance of focusing on long-term investment goals, and not the headlines of the day. Tax implications should not be the reason you make a long-term investment decision.

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<p><span arial="" style="font-family:">This information, including any opinion, is based on various sources believed to be reliable, but its accuracy cannot be guaranteed and is subject to change. CIBC and CIBC World Markets Inc., their affiliates, directors, officers and employees may buy, sell, or hold a position in securities of a company mentioned herein, its affiliates or subsidiaries, and may also perform financial advisory services, investment banking or other services for, or have lending or other credit relationships with the same. CIBC World Markets Inc. and its representatives will receive sales commissions and/or a spread between bid and ask prices if you purchase, sell or hold the securities referred to above. &copy; CIBC World Markets Inc. 2024.</span></p> <p>&nbsp;</p> <p><span arial="" style="font-family:">CIBC Private Wealth consists of services provided by CIBC and certain of its subsidiaries, including CIBC Wood Gundy, a division of CIBC World Markets Inc. The CIBC logo and &ldquo;CIBC Private Wealth&rdquo; are trademarks of CIBC, used under license. &ldquo;Wood Gundy&rdquo; is a registered trademark of CIBC World Markets Inc.</span></p> <p>&nbsp;</p> <p><span arial="" style="font-family:">Lois Smith and Rodney Falconer are Investment Advisors with CIBC Wood Gundy in Toronto. The views of Lois Smith and Rodney Falconer do not necessarily reflect those of CIBC World Markets Inc. Clients are advised to seek advice regarding their particular circumstances from their personal tax and legal advisors. If you are currently a CIBC Wood Gundy client, please contact your Investment Advisor.</span></p>
 

This information, including any opinion, is based on various sources believed to be reliable, but its accuracy cannot be guaranteed and is subject to change. CIBC and CIBC World Markets Inc., their affiliates, directors, officers and employees may buy, sell, or hold a position in securities of a company mentioned herein, its affiliates or subsidiaries, and may also perform financial advisory services, investment banking or other services for, or have lending or other credit relationships with the same. CIBC World Markets Inc. and its representatives will receive sales commissions and/or a spread between bid and ask prices if you purchase, sell or hold the securities referred to above. © CIBC World Markets Inc. 2024.

 

CIBC Private Wealth consists of services provided by CIBC and certain of its subsidiaries, including CIBC Wood Gundy, a division of CIBC World Markets Inc. The CIBC logo and “CIBC Private Wealth” are trademarks of CIBC, used under license. “Wood Gundy” is a registered trademark of CIBC World Markets Inc.

 

Lois Smith and Rodney Falconer are Investment Advisors with CIBC Wood Gundy in Toronto. The views of Lois Smith and Rodney Falconer do not necessarily reflect those of CIBC World Markets Inc. Clients are advised to seek advice regarding their particular circumstances from their personal tax and legal advisors. If you are currently a CIBC Wood Gundy client, please contact your Investment Advisor.

 
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CIBC Private Wealth” consists of services provided by CIBC and certain of its subsidiaries through CIBC Private Banking; CIBC Private Investment Counsel, a division of CIBC Asset Management Inc. (“CAM”); CIBC Trust Corporation; and CIBC Wood Gundy, a division of CIBC World Markets Inc. (“WMI”). CIBC Private Banking provides solutions from CIBC Investor Services Inc. (“ISI”), CAM and credit products. CIBC Private Wealth services are available to qualified individuals. Insurance services are only available through CIBC Wood Gundy Financial Services Inc. In Quebec, insurance services are only available through CIBC Wood Gundy Financial Services (Quebec) Inc.


CIBC Private Wealth services are available to qualified individuals. The CIBC logo and “CIBC Private Wealth” are trademarks of CIBC, used under license.