The recent 2024 budget rollout ushered in a host of new tax benefits, extending existing incentives and exemptions to aid various sectors. Here’s a breakdown:
Canadian Entrepreneurs’ Tax Incentive:
This new measure proposes a one-third capital gains inclusion rate for qualifying share sales, effectively reducing taxed capital gains. Beneficiaries can leverage this alongside lifetime capital gains exemptions. Effective January 1, 2025, with a $2 million lifetime limit phased in gradually until January 1, 2034.
Employee Ownership Trust Tax Exemption:
Building on previous announcements, this exemption offers significant relief for qualifying share sales to an Employee Ownership Trust (EOT). The budget outlines conditions for the exemption, including a $10 million capital gains exemption shared among involved parties. However, exempted gains will face a 30% inclusion rate for Alternative Minimum Tax (AMT) purposes.
Purpose-Built Rental Housing Incentives and Accelerated Capital Cost Allowance (CCA):
To tackle the housing crisis, measures incentivize rental unit development. The EPBRH incentive exempts third-party financed projects from EIFEL rules, with accelerated CCA for new residential rentals, enabling a larger deduction of capital asset costs from taxable income. Eligibility criteria apply.
Accelerated CCA for Certain Property:
Investors eyeing long-term growth benefit from immediate expensing for eligible property acquired post-April 15, 2024, with an available use deadline before January 1, 2027. Classes eligible for 100% first-year CCA deduction include patents, data network infrastructure equipment, and computers.
Canada Carbon Rebate for Small Businesses:
Small businesses can anticipate a carbon rebate, refunding a portion of fuel charge funds through a tax credit. Eligibility criteria and automatic determination by the Canada Revenue Agency (CRA) ensure accessibility.
Support for First-Time Home Buyers:
In a bid to enhance housing accessibility, the budget proposes expanding the RRSP Home Buyers’ Plan, increasing the withdrawal limit from $35,000 to $60,000 for first-time buyers. Repayment schedules also see an extension, allowing repayment commencement five years after withdrawal, easing financial pressures.
These measures reflect a concerted effort to bolster various sectors, fostering economic resilience and growth. As the budget included several changes to key tax rules, it’s important to review these measures with a trusted financial team, reach out to your accountant for more information.