The recent federal budget proposed significant changes to how capital gains will be taxed to individuals, corporations, and trusts. These changes are proposed to impact capital gains realized on or after June 25, 2024.
The Department of Finance has not released draft legislation for the capital gains tax changes presented in the Budget. As such, we have no certainty regarding whether the proposed changes will be enacted or what the technical details of those legislative amendments will be. Any planning or transactions you undertake in contemplation of the Budget 2024 proposals will have to be carefully considered.
Despite the uncertainty relating to the proposed rules, we can offer certain criteria when evaluating the decision to crystallize capital gains prior to June 25, 2024:
Are you currently involved in a sale transaction that may close after June 24, 2024?
If you wish to crystallize a capital gain and are not actually disposing of the property, will you be able to fund the tax liability created on the crystallization?
Do you have plans to dispose of an asset or investment in the near or short term (less than five years)? If so, then crystalizing may be warranted given most break-even analysis'.
Have you considered the potential change in your Estate plan?
There are numerous factors that will be relevant in determining whether a taxpayer should undertake planning to realize capital gains on or before June 24, 2024, and every scenario will require a nuanced analysis of those factors. Please contact our office if you have questions or concerns about how the proposed capital gains changes will affect you or your corporation. We have also attached a more detailed Summary of the Capital Gain Changes and how it may impact you.
CPA’s are precluded from providing investment advice relating to portfolio investments and other securities. If you have questions about how the proposed capital gains changes affect your portfolio investments, please discuss them with your investment advisor. Please also note that capital gains are considered realized as of their settlement date, so a securities trade must be initiated on or before June 20, 2024, to be settled before June 25, 2024.
While this post provides a high-level summary of the capital gains changes presented in Budget 2024, there are numerous other tax and non-tax policies that may be of interest.
Please click here for our summary of Budget 2024 or read our extended summary of the Capital Gains Changes below.