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Canadian Federal Budget 2024 Summary for Individuals and Businesses



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Canadian Federal Budget 2024


On April 16, the Canadian government unveiled its fiscal year 2024-2025 budget. How will this impact your finances? What should businesses be aware of? We break down some of the key points and implications of the latest budget.


For Individuals


Home Buyers' Plan (HBP):

  • The Home Buyers' Plan ceiling has been increased from $35,000 to $60,000. This adjustment is specifically designed to aid first-time home buyers, and it will apply to withdrawals made after April 16, 2024. Capital Gains Inclusion Rate:

  • The inclusion rate for individuals' capital gains over $250,000 per year will increase from one-half to two-thirds. For capital gains up to $250,000, the rate remains at one-half. These changes will be effective from June 25, 2024. Enhanced Lifetime Capital Gains Exemption (LCGE):

  • The LCGE limit will be raised to cover up to $1.25 million of eligible capital gains, effective for dispositions on or after June 25, 2024. This amount will also be indexed to inflation starting in 2025. Canadian Entrepreneurs’ Incentive:

  • A new tax incentive is proposed to reduce the capital gains tax rate for qualifying shares sold by eligible individuals. The inclusion rate for these gains will be half of the new two-thirds rate, on up to $2 million of gains over the individual's lifetime. This incentive is in addition to any available exemptions. Alternative Minimum Tax (AMT):

  • Proposed modifications to the AMT include allowing 80% (previously 50%) of the Charitable Donation Tax Credit and fully allowing deductions for social assistance and workers' compensation payments. Enhanced Free and Affordable Bank Accounts:

  • The government has tasked the Financial Consumer Agency of Canada (FCAC) with ensuring that financial institutions offer enhanced options for free and affordable banking accounts to meet Canadians' needs better. Registered Education Savings Plan (RESP):

  • Budget 2024 intends to modify the Canada Education Savings Act to auto-enroll eligible children into the Canada Learning Bond if an RESP has not been opened by the time they reach the age of four. Capping Non-Sufficient Funds (NSF) Fees:

  • To alleviate financial stress, the government plans to cap NSF fees charged by banks at $10 per instance. This initiative is expected to be detailed further in upcoming draft regulations.

For Businesses


Capital Gains Inclusion Rate:

  • Similarly to the rate for individuals, the capital gains inclusion rate for corporations and trusts will increase from 50% to 66.67%, effective for gains realized on or after June 25, 2024. Accelerated Capital Cost Allowance for Rental Housing:

  • For new purpose-built rental projects beginning construction between Budget Day and December 31, 2030, an accelerated capital cost allowance rate of 10% will be available. These projects must be ready for use by January 1, 2036. Immediate expensing for productivity-enhancing assets:

  • The 2024 budget introduces a provision for the immediate expensing of capital asset purchases in several specific CCA classes for new property acquisitions. This includes:

  • Class 44, covering patents or rights to use patented information.

  • Class 46, which includes data network infrastructure equipment and associated systems software.

  • Class 50, relating to general-purpose electronic data-processing equipment and systems software.

  • This immediate expensing is applicable to assets acquired on or after Budget Day and that are ready for use before 2027. However, it does not apply to assets purchased from closely related parties or transferred under tax-deferred conditions.


Overall, the Canadian federal budget 2024 includes significant changes aimed at supporting individuals through increased exemptions and capped fees while promoting business investments with enhanced tax allowances. These measures are part of a broader strategy to stimulate economic growth, improve financial security, and encourage entrepreneurial ventures in Canada.


About

Nex CPA is a boutique Canadian digital accounting firm that provides online accounting solutions by combining technology and forward-thinking businesses. Tailored for the modern entrepreneur, we provide an easy, automated and client-focused service so you can focus on working 'on' the business and not 'in' the business.


For more information, please contact us at info@nex.cpa.


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