Good to Know – New for 2024

Capital gains inclusion rate

As a result of the 2024 federal budget, the capital gains inclusion rate has increased from 50% to 66.67%, meaning that gains realized on a sale since June 25, 2024, are subject to a higher tax rate.

To mitigate this sudden increase, the first $250,000 realized by the individual will remain at 50% and the portion of gain exceeding the $250,000 threshold will be subject to the 66,67%.

It is therefore expected that a greater amount of tax will have to be paid on capital gains realized since June 25, 2024.

The Canadian Entrepreneurs Incentive

This new incentive will be introduced starting in 2025, and will allow eligible shareholders to reduce by half the inclusion rate on capital gains realized on eligible shares or on farm or fishing property, up to a maximum gain of $400 ,000. This limit will increase by $400,000 per year, to reach a maximum sum of $2 million for life in 2029.

Several criteria must be met to qualify for this incentive, we recommend that you contact your Forvis Mazars advisor to assess your situation and determine whether you are eligible for this measure.

Increase in capital gains deduction

A capital gains deduction (CGD) may be claimed on the disposition of qualified small business corporation (QSBC) shares, as well as on qualified farm or fishing property. The amount of this deduction, which has been $1,250,000 since June 25, 2024, is indexed annually.

A number of conditions must be met for shares to qualify as QSBCs and thus entitle the shareholder to the CDG. Some of these conditions must be met during the 24 months preceding the disposition.

If you're thinking of selling shares, it's important to structure the transaction so well as to take full advantage of the CDG. You might even consider crystallizing the gain immediately while the shares are eligible for this deduction.

In addition, setting up a family trust could make it possible to split the capital gain among the beneficiaries when disposing of the company's shares, thereby multiplying this deduction. Be sure to discuss this with your advisors.

Business transfer

If you're planning to pass on your business to your children, grandchildren or employees, it's essential to be aware of recent legislative changes regarding share transfers. Since 2024, revised rules have facilitated intergenerational transfers of shares in small businesses, as well as in family-owned farming or fishing companies.

The government has also introduced measures to encourage the use of employee ownership trusts (EOTs), providing an additional option to facilitate the transfer of the business without the need for employees to hold shares directly.

Under these new measures, business owners can benefit from a tax exemption of up to $10 million on capital gains realized on the sale of their shares to an eligible EOT or workers’ cooperative, between January 1, 2024, and December 31, 2026.

If you are considering transferring shares to your family or employees, it is strongly recommended that you consult your tax advisor.

New for importers

The Canada Border Services Agency (CBSA) has officially launched its Assessment and Revenue Management (CARM) system, an initiative designed to modernize and simplify the collection of duties and taxes on goods imported into Canada. The new portal centralizes communications with the CBSA and customs duty payments, providing a single platform for managing processes related to commercial imports.

As of October 21, 2024, all companies importing goods into Canada must register on this portal and provide financial security. This requirement also extends to companies working with customs brokers, even if they didn't previously need an import-export (RM) program

account. Companies failing to comply with this new requirement could be refused permission to import into Canada.

Make sure you are properly registered if you plan to import goods.