Upcoming changes to capital gains taxation announced in Budget 2024
Budget 2024 proposes to increase the capital gains inclusion rate
The federal government has proposed an increase in the capital gains inclusion rate from 50% to 66.67% on capital gains realized on or after January 1, 2024. This change is intended to make the taxation of capital gains more equitable and to generate additional revenue for the government.
What does this mean for you?
If you realize a capital gain on the sale of a capital property after December 31, 2023, the new inclusion rate will apply. This means that two-thirds of your capital gain will be included in your income for tax purposes. The remaining one-third of your capital gain will be tax-free.
For example, if you sell a capital property for $100,000 and your adjusted cost base is $50,000, you will have a capital gain of $50,000. Under the new rules, two-thirds of your capital gain, or $33,333, will be included in your income for tax purposes. The remaining one-third of your capital gain, or $16,667, will be tax-free.
The proposed changes to capital gains taxation are part of a broader set of tax changes announced in Budget 2024. These changes are intended to make the tax system more fair and to generate additional revenue for the government.
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