2024 Budget to Increase Capital Gains Inclusion Rate for Wealthiest Canadians
Headline Accurately Reflects Budget Proposal
Revised Inclusion Rate and Exemption Thresholds
The federal government's proposed 2024 budget includes changes to the capital gains inclusion rate and lifetime capital gains exemption for business owners. The inclusion rate would increase from 50% to 66.67% for capital gains above $250,000 for individuals, while the lifetime capital gains exemption for business owners would increase to $125 million from $1 million.
Currently, only 50% of capital gains are taxable, meaning the remaining 50% is tax-free. Once the changes are implemented, 50% of the first $250,000 in capital gains and 66.67% of any capital gains over $250,000 would be taxable.
The proposed changes are intended to make Canada's tax system more fair and to ensure that the wealthiest Canadians pay their fair share of taxes. The government estimates that the changes will generate an additional $2.7 billion in tax revenue over five years.
Reaction to the Proposal
The proposed changes have been met with mixed reactions. Some business groups and economists argue that raising taxes on capital gains disincentivizes investment and economic growth. However, the government argues that the changes are necessary to address income inequality and to ensure that the wealthy pay their fair share of taxes.
The changes to the capital gains tax are part of a broader effort by the government to make Canada's tax system more fair and equitable. Other changes in the 2024 budget include increasing the basic personal amount, introducing a new tax credit for low- and middle-income Canadians, and increasing taxes on corporations that earn more than $500 million in profits.
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