Budget 2024: Capital Gains Tax is Increasing [Canada] 

We have made the tool I show at 4:20 available online: research-tools.pwlcapital.com/

Nice to see the historical comparison to contextualize the numbers.

As this affects the way many Doctors manage their funds, can this be yet another reason even more Doctors leave Canada?

Incredibly timely and helpful information!

Thank you for your videos. I learn so much from these and your podcasts.

Great as always!

That was awesome. Love the analysis on not selling to let the investment grow. 🙏 Strange edit at 7:18 where it repeats the info you already stated.

“Financial Plan: Just buy VGRO” I see you’ve found my notes Ben!

Thank you Ben!!!

You explain nuance very well . Thank you for the information

Thank you for the video. Does the increase of inclusion impacts attractiveness of securities yielding substantial eligible dividends for investments within corporation. The eligible dividends taxation integration is still lossless and is not impacted by these recent changes.

This also impacts a professional tax loophole / grey area in surplus stripping. Often doctors and professionals will convert 1m+ of salary into capital gains to pay half the tax. At least now this loophole will become less efficient.

Not sure how to file tax this year. Some capital gains before June 25th and some after.

As a Canadian doctor , I moved out way before budget 2024 !

This is going to make farm succession planning for family farms even more unnecessarily difficult.

Will actively manage mutual funds do worse now if they have to pay higher taxes when making gains? Especially if the fund is worth multiple billion dollars?

Great video Ben, one more thing to think about in terms of selling assets is how the legislation will affect capital gains with reserves. Will the old rate apply to whole reserve at the sale date or will the new rate kick in after year one? Will it apply to current reserves? Who knows...

will the tax be affected for old purchase in stock

hey ben, love ur work. Been listening to u and mark on moneyscope too. Just wondering in ur assessment on whether it makes sense to realize gains prior to june 25 in a corporation, did u account for the possibility of making a corresponding decrease in other personal payments to reach the same net post tax outflow from corp to personal? for example instead of a corp owner paying salary + flow thru dividends = 150k post tax, he can realize gains to pay CDA + dividends to release the extra rdtoh + less salary such that the end personal amount still reaches 150k post tax. The resulting lower salary paid reduces personal tax, which may offset the added corp tax costs from the cap gain. My point is the net tax hit for a corp owner from "early" realized gain to meet the June deadline can be somewhat offset. At least, relative to a base assumption where the gain would be realized "early" but no other adjustments to personal income distributions were made. Obviously, theres lots of other factors to consider like SBD passive income limits, personal tax brackets, etc.

How does the Dimensional Vector ETF work? Is it a collection of stocks that are either value or high profitability, or are they stocks that have both value and profitability characteristics simultaneously?

Ben - question on this topic: Do the proposed changes to the AMT (tabled last year but delayed to this budget with mods) affect the 'break-even' analysis if one's income is primarily from capital gains?

Will sole proprietors be as affected or is the corporation the one getting hit? And what happens if your sole proprietorship/passive income has a portfolio has little to no equity as you just started out less than a year ago?

Any book suggestion sir?

A big part of many people's - including my own - retirement plan is to sell their business once it reaches a valuation that they could retire on. Most small business owners are living pretty frugally until they can get that "exit". So, at least in my scenario, it's not really "soaking the rich". It's "digging into the small business owner's retirement plan." (Also, before anyone mentions the capital gain exclusion for selling a Canadian business - at least in my industry, people don't buy businesses whole cloth. They buy out parts of the business as assets to avoid past liabilities, which means people realistically rarely get to leverage the cap gains exclusion rule that is only triggered if you literally sell the actual shares in the corporation.)

Can you elaborate how the “just buy VGRO” is affected by this change? Is it just that selling to fund retirement might cost more in tax at >$250k?

How does Canada fare in comparison to other G8 countries when it comes to capital gains tax rates NOW and if this new increase is passed. Where do we sit on the world stage?

So does this make a stronger case for investing money personally by flowing it out of a corporation, rather than within?

Wait, what? We pay 50% on out gains and it is now foing to ve 38% thats a decrease so why sell at 50%? Why not sell at 38%? Hiw is 38% higher than 50%?

3:56 does it have to be sold before June 25 or as long as it is listed by June 23? In order to avoid this capital gains tax changes.

So glad I still have quite a few $$ room in my tax sheltered accounts so not looking at this as an immediate threat

you suggested buying RRSP for Tax deferral, howevery, if later in year, If I happen to die, the government would still force your spouse or kids to cash it out, if the total retirement fund is abover the taxable bracket, my family would lose a lot of money from this tax. I feel this tax adjustment will affect everyone, I hope the goverment think this through.

I live in a country with a 0% capital gains tax rate (Singapore). I'm a foreigner and don't have a guarantee that I will be allowed to live here indefinitely. Should I sell and rebuy my ETF portfolio every year in July?

Thanks Ben

When I heard the new I knew the video was coming. Thank for the guidance Ben

So does the capital loss rates stay the same as well or is that changing also?

We are living off the investments within our holdco as retirees. Time to do some serious thinking.

Did you consider the reduced CDA amounts for corporations in your calculations?

I feel if people panic to sell cottages many will be on the market and the value will drop. Keep until your income is low. Hedge your investment 😊

Hmmm does this include mpp and prime ministers who lined their pockets on our poor backs . Capital gains for mpps, prime ministers, rich, ceos pockets to be taxed.

Is it good to realize gains by selling and then rebuying the same assets?

If the gain is realised in real estate, I assume that the property would have to not only be sold, but also be closed before June 25th.

TFSA

Is this only for Long term capital gains?

After this capital gain tax, so what's good is CANADA for investment and business?

They should just impose this on real estate. Leave businesses and stocks alone.

How to navigate this: Borrow against your assets and differ.

0:52 - the greatest economic expansion (and TSX returns) in Canada occurred during 2000s..go figure.

VTBs will become much more well known with this being implemented for individuals.

Why should actual work be taxed more heavily than passive income?

Technically, realizing gains and paying taxes shouldn't really impact your overall return in disposable income unless your able to be tax advantaged in retirement.. Ultimately all that matters is the tax rate that your gains experience.. That's why paying taxes now and putting it in a Roth IRA is still good versus putting into a 401k, as long the funds experience the same tax rate then it doesn't matter in the ending result (other than for tax strategies in retirement).. So ultimately if you can get a lower tax rate now rather than in 10 years from now, it would be better to realize the gains anyway. Just depends on if the tax changes are reverted, which I guess is where the risk comes with realizing gains now versus later.

To be fair the so called middle class is more likely to be t4 employees who don't have the luxury to stress over these questions. These people were hit way harder during yet another great wealth transfer that was 2020.

why no one opposes drastic tax raises?

My condolences to Canada 😢

ur doing god's work Ben. im so happy you are bastion of hope in these times....

As long as the federal government stops trying to make the sale of your primary residence a capital gains tax, I'll be good. Why tax the only thing that is going to make me money in life!

So now factoring in a 3% yearly inflation + taxes my investments need to make a 5% yearly return just to break even? (and that's not counting investment fees such as a fund manager or other). I mean why bother invest and generate ROE.

So basically all this will do is make people less likely to sell out of businesses and invest in other businesses, thus resulting in less capital gains tax actually being collected...

I'd have a $400k capital gain on my farmland. I guess I could sell half the acres to a buyer on Dec 31st and the other half on Jan. 2nd.

This isn't even about tax. Its about dismantling the economy as we know it and implementing the CBDC once the economy is destroyed. Silly normies!

New capital gains hike won’t work as claimed, but will harm the economy as the economic costs exceed the amount of tax collected! Capital gains taxes are not paid exclusively, or even largely by ultra-high-income earners. Rather, Canadians with much lower levels of income, including many entrepreneurs and small business owners cashing out after a lifetime of work pay the majority of capital gains taxes in Canada. Therefore, any increase to the capital gains tax will affect Canadians across a variety of income levels, not simply the rich, as is claimed by Trudeau/Freeland.

So this tax nudges aspiring entrepreneurs with a business idea to move to USA.

Great content. One suggestion: could you speak/present a little more slowly, and include some pauses. Your videos are a bit hard to follow.

the big side effect is on the deemed disposition tax that happens when you relocate outside Canada and cease being a tax resident. people with a lot of capital gains are going to be impacted. Another tax grab and more expensive exit tax. Canadians with an upright professional trajectory or entrepreneurs are well advise to leave now and incorporate elsewhere.

I refuse to pay that much tax. Therefore I will hold my rental house forever and when my tenants move out in July the rent is going up 150 percent. I was fair before because the taxes were fair. Now I will pass it along unfortunately

This is quite interesting, this makes residential speculation, or any major growth stock holder very unhappy. I guess dividends is more the move from now in tax accounts. Very interesting.

I Do not think a senior who has had a family cottage for yrs are rich

every time you say "increased tax rate" rather than "increased inclusion rate threshold" a kitten dies prematurely.

Huh! I never noticed it until now, but you have a copy of Thomas Piketty's "Capital in the 21st Century" on your bookshelf! Very cool!🤓

Absolutely awful! Im appalled by the fact that this is happening.

Great video as usual Ben! I was originally planning to use my corp to income smooth during maternity leave but the new tax rate might mean I have to plan to realize those capital gains earlier...

Small and med sized corps will def feel it. Lowest hanging fruit first vs largest.

Thank God I only lose money so will never pay any capital gains. 😢

Thats really going to attract investors to Canada :/

Until Government gets 110% of what you earn they will not own you. But, don'f expect those in government to pay those amounts.

Next is Taxing TFSA😂

Maybe I'll migrate my assets to a canadian account, I just love being taxed Canadian Government just did something great!

YOU BUY HIGH QUALITY INCOME ETFS, DRIP THE DISTRIBUTIONS, AND ALLOW IT TO COMPOUND. THATS IT. THERE IS NOTHING ELSE NEEDED TO BECOME A MILLIONAIRE.

So, if you sell before June 26, who buys it makes a big mistake. Who's buying it?

Feels kind of like a rushed change if the decision isn't made yet and its already to go in effect in June which is just couple of months away. Good points brought in video, its not straightforward answer.

Do not pass this law

Did anyone really think that capital gains taxes could never change? That would be magical thinking.

If you try to sell an asset quickly - you are likely going to accept a lower price. How dumb is that!

Sold. Four months ago. Getting prepared to move to the states had enough of Trudeau

Yes, more taxes pls.. we just want more taxes

LOL no clue why I'm even watching this, I'm broke as a bad joke.

Interesting right as around the BoC is about to also talking about raising rates. Pretty much money is going to vanish from our economy while Turdeau is trying to drain the treasury.

Sure am glad I'm not retiring anytime soon. In a time when our country needs to grow our GDP (legitimately) and improve our healthcare system by retaining more doctors, the Liberals release a budget that discourages both. It would be like having record immigration during a housing crisis

Fairness for every canadian, except the ones who end up paying I guess

Soak the rich, eh?

“You vill own nothing undt you vill be appy!”

Got to love the liberal government, what’s next a tax of 27% on primary residence

People are not gonna sell anything anymore . We will all HODL :P Good luck , with real estate . :)

New rules give birth to new hacks.

They should give us more time. This gov can go f itself as far as im concered.

Be careful of a knee jerk reaction it will all work out

Capital gains tax should be abolished. If I take a big risk with an investment and win big on it, why the hell should the government get a cut of that? I was the one putting my money on the line. It's BS.

Crook Tax!!

Go ahead sell now. Then watch the budget fail with non confidence 😆

So creating a buisness and jobs you are punishable by taxes .

Why am I watching a clip on Canadian tax planning? 🤔