2024 Federal Budget Increases Capital Gains Inclusion Rate
Proposed Changes Effective As of June 25, 2024
Revised Rate to Align with International Standards
The federal government has proposed raising the capital gains inclusion rate from 50% to 66.67% for individuals, effective June 25, 2024. This follows the announcement in Budget 2024 and aligns with international standards.
The change will impact capital gains over $250,000. Currently, only 50% of capital gains above this threshold are taxable as income. Under the proposed changes, 66.67% of the gain will be included in taxable income.
For example, if an individual sells an asset for $500,000 and has a cost base of $250,000, the taxable gain under the new rules would be approximately $291,750. This is calculated as 50% of the first $250,000 gain ($125,000) plus 66.67% of the remaining $250,000 gain ($166,750).
The government believes that the proposed changes will make Canada's tax system fairer and ensure that individuals pay their fair share of taxes.
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