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ARTICLE · 17 APRIL 2024

Budget 2024: Capital Gains Inclusion Rate To Increase

Aird & Berlis LLP
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On April 16, 2024 ("Budget Day"), Canada's Deputy Prime Minister and Minister of Finance tabled Budget 2024: Fairness for Every Generation ("Budget 2024").

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On April 16, 2024 ("Budget Day"), Canada's Deputy Prime Minister and Minister of Finance tabled Budget 2024: Fairness for Every Generation ("Budget 2024").

The boldest tax measure in Budget 2024 is the proposed increase to the capital gains inclusion rate from one-half to two-thirds for capital gains realized on or after June 25, 2024, subject to limited annual relief for individuals. The impact of this change will be profound, resulting in a much higher tax on death for individuals and lower after-tax return to investors and stakeholders on standard commercial transactions, and neutralizing the benefit of an attempted capital gains strip transaction. Moreover, the employee stock option deduction, which is designed to achieve capital gains-like treatment on a stock option benefit, will consequently be reduced.

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