The 2024 Federal Budget introduced a few key changes that could affect tax and how you plan and draw down your retirement savings. Here are three important updates to be aware of:
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1. Capital Gains Tax Is Going Up for Large Gains
Starting June 25, 2024, the capital gains inclusion rate increases to 66.67% — but only on annual gains over $250,000 for individuals.
- Gains under $250,000 stay taxed at the 50% inclusion rate.
- This change won’t impact most Canadians day-to-day, but it could matter for those selling real estate, large stock positions, or settling an estate.
Tip: If you’re close to triggering a large gain, talk to your advisor before June 25.
2. Corporations Hit Harder
For business owners, the 66.67% rate applies from the very first dollar of capital gains inside a corporation.
- This makes investing inside a corporation less tax-efficient.
- RRSPs and personal investing may now be the smarter route.
3. Life Insurance Looks More Attractive
Higher taxes on non-registered investment growth make life insurance a more compelling tax shelter.
- The tax-free payout from a life insurance policy can now outperform taxable investments more easily — especially for estate planning.
Final Thoughts
These updates may seem minor now, but over time they can have a big impact on your retirement strategy, especially when it comes to tax efficiency.
Want help reviewing your plan before June 25?
