Looking to sell your business? Several tax-efficient options exist. These include the ability to shelter up to $1.25 million in capital gains under the lifetime capital gains exemption (indexed starting in 2026).
Category: Tax Tips & Traps
The voluntary disclosures program (VDP) provides taxpayers with a change to correct past tax errors or omissions before CRA finds them. If CRA accepts a disclosure, taxpayers may receive some penalty and interest relief and will not be referred for criminal prosecution. Any taxes owing will still have to be paid by the taxpayer in full.
The government has proposed to reduce the tax rate on the lowest bracket to 14% (from 15%) effective July 1, 2025, resulting in reduced tax for many individuals. This change would be implemented as a 14.5% rate for 2025 and 14% for 2026 onwards. However, the rate for personal tax credits would likewise be reduced, resulting in lower tax credits.
CRA has been significantly delayed in posting several tax sli8ps to its online portal this year. Adjustments to filed personal tax returns may be needed to report income that was missed.
The capital gains inclusion rate has been proposed to increase from 50% to 2/3, effective June 25, 2024, for corporations and most trusts as well as for the portion of capital gains realized in the year that exceeds $250,000 for individuals, graduated rate estates and qualified disability trusts.
New! As of June 25, 2024, 2/3s of capital gains in excess of $250,000 per year are proposed to be taxable. Capital gains of $250,000 or less will effectively continue to be included at a 50% rate due to a new deduction.
A June 2, 2022 Technical Interpretation discussed the taxability of funds received through crowdfunding campaigns. CRA first noted that amounts received through a crowdfunding arrangement could represent loans, capital contributions, gifts, income or a combination of two or more of these.
All eligible Canadian resident seniors (over age 65), children under 18
and individuals eligible for the disability tax credit can now apply for the Canadian Dental Care Plan.
The 2024 Federal Budget proposed to increase the capital gains inclusion rate form 50% to 2/3 of the actual gain, effective for capital gains realized on or after June 25, 2024, for all tax payers (including corporations and trusts) other than individuals.
Changes requiring more trusts (and estates) to file tax returns and more
information to be disclosed, first proposed in the 2018 Federal Budget, were delayed several times in the legislative process. The final rules (that are now law) first apply for 2023, with a filing deadline of April 2, 2024.