Financial Perspective – Eight important reminders before the year ends
To end the year on the right note and maybe even reduce next spring’s tax bill.
In a few weeks we’ll be turning the page on 2024. The short period remaining before the new year is a great time to consider certain options that could have a noticeable financial impact in the future, especially in terms of taxes.
So here are eight topics you might want to discuss with your advisor as the year winds down.
1. New capital gains inclusion rate
The federal government’s decision to increase the capital gains inclusion rate is without a doubt this year’s most talked about tax measure. It’s important to note that the mechanics of this change, which came into force on June 25, have been subject to some finetuning since then. As well, experts note that the fate of this measure could be uncertain if an early election is triggered since, at the time of this writing, the bill containing it has not yet been passed. Even so, here are the general principles to be aware of.
Before last June 25, only half of a capital gain realized within a non-registered account had to be included in your taxable income. The other half was tax free. Since June 25, this inclusion rate has been increased from 50% to 66.6% (more precisely, from half to two-thirds), now leaving only one-third of the gain tax free. An important qualification to remember is this: if you realize the gain as an individual, the first $250,000 of capital gains realized each year will continue to benefit from the rate of 50%. But if it’s your business that realizes the gain, the new rate of 66.6% will apply to the whole amount…