As the new year approaches, you may be wondering how the Canadian income tax system will change for the 2024 tax year in comparison to 2023. Whether you are an employee, a self-employed individual, or a retiree, these changes will affect your tax obligations and benefits for the next tax year. In this blog post, we will summarize some of the key personal income tax changes that have been announced by the federal and provincial governments for the tax season 2024. Please note that these changes are based on the announcements made by the Federal and Provincial governments, and there might be more changes or adjustments for 2024. The list of tax changes in this blog post is not definitive and is subject to change.
Alternative Minimum Tax (AMT) - Changes have been made to the alternative minimum tax (AMT) calculation. Some of these changes allow for individuals to claim 80% of their allowable donations for the charitable donation tax credit, the full deduction for the guaranteed income supplement, social assistance and workers’ compensation payments, and the full federal logging tax credit.
Canada Child Benefit (CCB) - Starting in 2025, eligibility for the Canada child benefit (CCB) will be extended for six months after a child’s death if the individual claiming the CCB for that child is otherwise eligible. The individual receiving the CCB will still be required to notify the CRA of the child’s death before the end of the month following the death. The extended period will also apply to the child disability benefit (CDB).
Canada Pension Plan (CPP) and Québec Pension Plan (QPP) Enhancement - A second CPP/QPP contribution limit was introduced on January 1, 2024. This new limit subjects workers' earnings to two earnings limits. Employees and employers each contribute an additional 4% on earnings above the first earnings ceiling, up to the amount of the second earnings ceiling. For self-employment income, an additional 8% is contributed by the individual.
Capital Gains - For 2024, the capital gains inclusion rate has increased from 1/2 to 2/3 on the portion of capital gains realized on or after June 25, 2024, that are more than $250,000. The lifetime capital gains exemption has increased to $1.25 million for dispositions occurring after June 24, 2024.
Capital Gains Deduction for Qualifying Business Transfer - This deduction is available to individuals on the sale of shares of a qualifying business transfer where certain conditions are met. An individual can claim a deduction of up to $10 million on capital gains realized on the sale.
Disability Supports Deduction - The list of expenses that are eligible for the disability supports deduction has been expanded to include expenses for service animals. Eligible taxpayers can choose to claim this expense under the disability supports deduction or the medical expense tax credit.
Home Buyers’ Plan Withdrawals - The withdrawal limit has increased from $35,000 to $60,000 for withdrawals made after April 16, 2024. Temporary repayment relief was introduced to defer the start of the 15-year repayment period by three additional years for participants making a first withdrawal between January 1, 2022, and December 31, 2025.
Mineral Exploration Tax Credit - Eligibility for the mineral exploration tax credit has been extended to flow-through share agreements entered into before April 2025.
Short-Term Rentals - Tax deductions for expenses incurred relating to non-compliant short-term rentals will be denied. This change applies to all expenses, including interest expenses, incurred to earn income from short-term rental properties after 2023.
Volunteer Firefighters and Search and Rescue Volunteers Amounts - The amounts for both have increased from $3,000 to $6,000 for eligible individuals who performed at least 200 hours of combined eligible volunteer service during the year.
For Further Information
Please contact TaxTron Support at 416-491-0333 or visit www.taxtron.ca.
Posted on 30 December 2024