The budget expects a deficit of $40.0 billion for 2023-24 and forecasts deficits of $39.8 billion for 2024-25, and $38.9 billion for 2025-26. Although the budget does not change the federal personal or corporate tax rates, Finance announced that it will increase the inclusion rate for capital gains realized on or after June 25, 2024, in certain circumstances. Specifically, the inclusion rate will increase to 2/3 for corporations and trusts and to 2/3 for individuals on the portion of capital gains realized in the year that exceed $250,000. Finance also provided details on related changes to increase the Lifetime Capital Gains Exemption to $1.25 million, and clarified a temporary tax exemption on up to $10 million in capital gains that may be realized when a business is sold to an Employee Ownership Trust (EOT).
One of the major themes of this year’s budget is to increase the affordability of housing. In particular, the budget provides several incentives for purpose-built rental housing in Canada, including an elective exemption from the interest deductibility limitation and enhanced Capital Cost Allowance (CCA) for certain new additions of property. There are also new measures intended to benefit first-time homebuyers. Finance’s budget also focuses on clean economy changes, including to provide expected detail on the Clean Electricity investment tax credit, among others.
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