The dust has settled on the 2024 federal budget, and with it comes a wave of changes impacting entrepreneurs and investment holding company owners. Here at HAS LLP, we understand navigating these updates can be complex. So, we've broken down the key takeaways to help you chart your course forward.

Capital Gains Tax: A Two-Sided Coin

The biggest shakeup? Capital gains tax. Effective June 25, 2024, that celebratory toast after exceeding $250,000 in annual gains might come with a slightly higher tax bill for Ontario's top earners (thanks to the inclusion rate jumping from 50% to 67%). But fret not! The Lifetime Capital Gains Exemption (LCGE) rises to a shiny $1.25 million (from $1,016,836) for transactions taking place on or after June 25th, 2024, offering some welcome relief.

Entrepreneurs looking to exit their ventures can rejoice! The Canadian Entrepreneurs' Incentive is here to save the day. Launching in January 2025, this program slashes the capital gains tax rate to a sweet 17.8% (down from 26.6%) on the first $200,000 of qualifying shares you sell. This limit even grows to a whopping $2 million by 2034! But remember, there are specific requirements to meet, so make sure you qualify.

Brighter Days for Personal Taxes

First-time homebuyers, we've got good news! The RRSP Home Buyers' Plan just got a serious upgrade. You can now tap into a much larger chunk of your RRSP savings – a whole $60,000 (up from $35,000) – to finance your dream home purchase (effective immediately).

Feeling charitable? The Alternative Minimum Tax (AMT) brings positive news for you too.  Charitable donations get a bigger tax break – an 80% deduction, way better than the originally proposed 50%.

Corporate Tax Measures: Growth with Efficiency

Corporations, your capital gains inclusion rate is on the rise, mirroring the change for individuals, going up to 33.4% from 25.1% for gains realized after June 25, 2024. But wait, there's more! The budget also throws you a lifeline to encourage investment.

Calling all rental property entrepreneurs! A temporary boost in the Capital Cost Allowance (CCA) rate for new purpose-built projects is here to make you smile. Projects starting construction between April 16, 2024, and January 1, 2031 (and available for use before January 1, 2036) will benefit from a higher CCA rate of 10% (up from 4%). Businesses, get ready for faster tax write-offs!  Immediate expensing is now available for specific new capital asset purchases, improving your cash flow.

New Horizons: A Glimpse into Emerging Opportunities

The budget isn't just about numbers; it opens doors to exciting new ventures! The Canada Carbon Rebate for Small Businesses offers a sweet tax credit for qualifying small and medium businesses based on employee count, rewarding sustainable practices.

Investing in clean electricity generation? The Clean Electricity Investment Tax Credit offers a 15% refundable tax credit, making it a win for the environment and your wallet. The budget even proposes a new 10% Electric Vehicle Supply Chain Investment Tax Credit, perfect for businesses in this growing sector.

Don't navigate the budget alone!

The 2024 federal budget presents a unique landscape for entrepreneurs and investment holding company owners. While this blog provides a roadmap, seeking guidance from a qualified tax professional is crucial. At HAS LLP, our seasoned team is here to help you understand how these changes impact you and craft a tax strategy tailored to your specific goals. We specialize in providing comprehensive accounting and legal solutions tailored to the unique needs of small and medium-sized businesses in Ontario.

Contact us today to schedule a consultation and ensure you make informed decisions for your financial future!