Budget 2024 Proposes Changes to Capital Gains Taxation
Changes to Capital Gains Inclusion Rate
New Rate of 66.67%
In Budget 2024, the federal government announced changes to capital gains taxation. Effective June 1, 2024, the inclusion rate for capital gains will increase from 50% to 66.67%. This means that two-thirds of capital gains will be subject to income tax.
Estimated Impact
The government estimates that approximately 285,000 Canadians will not have any capital gains income. For those who do, the average increase in tax payable is expected to be $3,600. The increase will primarily affect high-income earners who have realized substantial capital gains.
Effective Marginal Tax Rates
The top effective marginal tax rate for stock option benefits and capital gains will increase from 40.5% to 54.8% with the inclusion rate increase. This means that individuals in the highest tax bracket will pay a significantly higher tax on their capital gains.
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