Discover the potential impact on client investments with the Capital Gains Tax Break-even calculator.

The Capital Gains Tax Break Even calculator compares selling an investment before June 25, 2024 at the 50% inclusion rate, to holding the investment until a future date and selling at the new inclusion rate of 66.67%.

Calculate the break-even holding period when the after-tax value of the portfolio will be the same whether it’s sold before June 25 or held and sold after June 25, assuming all else remains the same.

Sell or hold before June 25? Help your clients make informed decisions.

Budget Proposal

The 2024 Canadian Federal Budget proposed to raise the inclusion rate on those proceeds to 66.7 per cent for all corporations and trusts and for individuals making more than $250,000 in capital gains annually. For individuals, any such gains made under that bar would continue to face the current inclusion rate of 50 per cent.

Who this may affect

The proposed capital gains inclusion rate increase targets high-income individuals who realize significant capital gains each year, such as in their non-registered investment portfolios. However, the proposed capital gains inclusion rate increase may also affect individuals who may be disposing of personal use property (such as their cottage), rental properties, shares of private corporations, farming, and more.

Considerations

• Clients affected by the new rules are corporations and trusts and individuals who will realize capital gains of more than $250,000 per year.

• Large capital gains may result in alternative minimum tax for individuals and certain trusts.

• The impact of the increase in the lifetime capital gains exemption to $1.25 million (from $1,016,836) effective June 25, 2024, proposed in Budget 2024.

• The break-even calculations will differ between individuals and trusts/corporations because of the annual $250,000 threshold for individuals versus no threshold for trusts/corporations.

To help with your planning, try these related calculators:

• Capital Gains Tax Calculator
• Taxes and Investment Income
• Final Tax Bite
• RRSP Tax Savings
• TFSA vs Taxable Income

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To use the full-featured versions of these calculators in FreshPlan, please contact us.