Understanding the 2024–25 Federal Budget: Key Changes and Their Impact

The Canadian Federal Budget for 2024-25, presented by Deputy Prime Minister and Federal Finance Minister, Chrystia Freeland, introduces a myriad of changes set to influence the financial landscape of individuals and corporations alike. This article aims to demystify these novel tax measures and provide a holistic understanding of their impact on financial planning and strategies. From changes in capital gains inclusion rates to the debut of the Canadian Entrepreneurs' Incentive, let's delve deep into these fiscal alterations and their potential implications.

Increased Capital Gains Inclusion Rate

One of the most significant changes presented in the budget is the increase in the capital gains inclusion rate for corporations. Previously set at half, the rate will now be two-thirds for capital gains realized on or after 25 June 2024. This change will require transitioning rules to separately identify capital gains and losses realized before 25 June 2024 and those realized after that date.

Enhanced Capital Cost Allowance

Another significant change is the temporary acceleration of the capital cost allowance (CCA) rate from 4% to 10% for new purpose-built rental projects. This increased rate applies to construction that begins on or after 16 April 2024, and before 2031, and is available for use before 2036.

Under this provision, certain properties will be eligible for an immediate 100% expensing in the first year. These properties must be in CCA classes 44, 46, and 50 and acquired on or after 16 April 2024. This immediate benefit will be available for the year the property becomes available for use and applies until 1 January 2027.

The Canadian Entrepreneurs' Incentive

The Canadian Entrepreneurs' Incentive is a new measure designed to support small businesses and stimulate entrepreneurial spirit. Under this incentive, the tax rate on capital gains will be reduced by half of the prevailing inclusion rate on the disposition of qualifying shares by eligible individuals. This provision applies to dispositions occurring on or after 1 January 2025, offering an additional capital gains exemption on up to $2 million per individual over their lifetime.

Amendment to Lifetime Capital Gain Exemption

The budget also increases the lifetime capital gains exemption to apply to up to $1.25 million (up from $1,016,836 in 2024) of eligible capital gains. This applies to dispositions that occur on or after 25 June 2024. The exemption's indexation will resume in 2026, creating more potential for individuals and corporations to strategize and maximize this benefit.

How Charles Ghadban Accounting Can Help

At Charles Ghadban Accounting, we’re equipped to guide you through these financial changes. Our team of seasoned professionals stands ready to assist with your tax planning, financial reporting and corporate tax filings, ensuring that the changes in the 2024–25 Federal Budget are effectively integrated into your financial strategy.

Navigating changes in tax regulations can be complex and challenging, but you don't have to do it alone. Our team is dedicated to providing personalized service, backed by years of experience and a commitment to professional excellence. Whether you're an individual seeking to optimize your personal finances or a business aiming for growth, our firm can help navigate these changes effectively.

To Summarize

The 2024–25 Federal Budget introduces significant changes that may impact your financial strategy. Understanding these new measures is key to making informed decisions about your financial future. Whether you’re an individual or a corporation, these changes could affect your tax planning and financial outlook.

For expert assistance in navigating these changes and ensuring they’re integrated into your financial strategy, contact Charles Ghadban Accounting today. With us by your side, you can feel confident in taking the steps necessary to align your financial planning with your goals.