NORTHERN ASSET MANAGEMENT LTD’s Post

🚨 ATTENTION: All Canadian Investors and Business Owners!!! 🇨🇦 Starting later this month, the capital gains tax in Canada will increase from 50% to 66.67% for gains exceeding $250,000. This major policy shift will have widespread implications for affluent families, investors, and entrepreneurs throughout the nation. 🔎 As an avid real estate investor and a keen observer of Canadian tax policy, I have thoroughly investigated what this increase means for your financial landscape—how it might affect your investment decisions, business planning, and overall financial health. While touted as a step towards greater tax equity, this change poses serious risks to our economic growth and could disrupt your financial strategies. 📖 For a detailed analysis, check out my latest article: Canada's Capital Gains Tax Hike: Impact & Measures for 2024 What are your concerns or strategies for navigating these tax changes moving forward? DM me to learn more and set up a consultation to discuss mitigation strategies. 🤝 - - - #Finance #CapitalGainsTax #CanadianEconomy #TaxChanges #BusinessOwners #Investors https://zurl.co/4kAM

🎯 Capital Gains Tax Overhaul: Revenue Boost vs. Economic Fallout 🔲 The Parliamentary Budget Officer (PBO) projects a $17.4 billion increase in income tax revenues from 2024-2029 due to a capital gains tax overhaul. 🔲 Tax Rate Increase: Capital gains inclusion rate for corporations and trusts raised from one-half to two-thirds, and the same rate applies to individuals on yearly gains exceeding $250,000. 🔲 Revenue Projection: Expected to improve the federal budgetary balance significantly over the next five years. 🔲 Critics' Concerns: The Montreal Economic Institute (MEI) estimates the policy will generate nearly $2 billion less than projected, citing a "fire sale" of assets and reduced investment incentives. 🔲 Economic Impact: Critics argue it will harm entrepreneurs and the middle class, slow down the investment cycle, and reduce growth opportunities for startups. 🔲 Public Sentiment: MEI-Ipsos poll shows 60% of Canadians fear negative economic impact, with 70% believing the middle class will be affected. 🔲 Real Estate Investment: The higher capital gains tax may deter real estate investors, potentially leading to decreased investment in the property market and affecting housing availability and prices. #CapitalGainsTax #Economy #Investment #Entrepreneurs #CanadaEconomy #TaxPolicy #RealEstate

Canada's latest budget introduces a significant rise in capital gains tax to 67% for earnings above $250,000 annually, marking the highest rate worldwide and surpassing Denmark's 42%. This change, effective from June 25, 2024, applies to individuals, corporations, and trusts alike, as part of efforts to manage the country's public debt, which currently stands at 107% of GDP. This drastic increase in the capital gains tax may deter investment in Canadian markets as investors seek to minimize their tax exposure, potentially leading to capital flight and reduced foreign direct investment. Robert Kavcic of BMO Economics provides insights into the broader economic implications of these tax adjustments, noting that these changes arrive at a challenging time for the Canadian economy. The tax policy shift is indicative of broader fiscal strains faced by many governments, reflecting a global trend. Stay informed and consider the implications of these developments in your fiscal strategies and forecasts. #taxpolicy #investment #economy #globaltrend #fiscalstrains

Canada’s recently unveiled 2024 federal budget proposes to adjust the capital gains inclusion rate. When you sell an asset like a secondary home or investment property for more than it cost you, you have a capital gain Today, 50% of capital gains are taxable for all individuals and businesses Here’s a rundown of the changes: ✅For all corporations and trusts, the capital gains tax inclusion rate will increase to 66.67% – up from 50%. ✅For individuals with gains over $250,000, the capital gains tax inclusion rate will increase to 66.67% – up from 50%. ✅For individuals with gains under $250,000, the capital gains tax inclusion rate will stay the same, 50%. If adopted, the changes will take effect on June 25, 2024. Capital gains and losses do not apply to your primary residence. #capitalgaintax #torontohomes #homesinthesix #gracelewicki #bhhstoronto

#Canadian2024FederalBudget Debate: My take: The $53B in new spending, contributing to ballooning deficits, seems inflationary and unproductive My question: How does raising the tax on capital gains aim to bridge the wealth gap among generations in Canada? Specifically, a higher tax rate applied to individual taxpayers with annual capital gains over C$250,000 could encourage short-term real estate speculation (unlikely to trigger the C$250,000 capital gains threshold) while penalizing long-term real estate investors who hold properties as rental units (more likely to exceed the capital gains threshold). Does the government believe short-term property flipping is more conducive to solving Canada’s housing crisis than long-term investment in rental properties? What are your thoughts on this approach? Disclaimer: Garros’s LinkedIn activities, whether in the form of comments or sharing, do not constitute an endorsement. Unless otherwise credited, all views and opinions expressed are purely his own and do not represent the views/opinions/strategies of Scotiabank or its affiliates. All LinkedIn activities are for information only and are not intended to be or to replace investment advice. Please consult your advisor before making investment decisions.

By raising capital gains taxes, the government risks reducing the attractiveness of Canadian investments, which could lower equity values and raise the cost of capital for Canadian companies. https://lnkd.in/gjUgatzx

Kim G C Moody’s perspective on the capital gains inclusion rate is compelling and well-articulated. His emphasis on the importance of recognizing the unique risks taken by entrepreneurs and investors is crucial. By advocating for a lower inclusion rate, he highlights how such policies can incentivize investment and entrepreneurship, ultimately benefiting the broader economy. His argument that different types of income should be treated differently for tax purposes due to the varying levels of risk involved is a valid point that deserves consideration. Encouraging entrepreneurship through favorable tax treatment of capital gains can indeed drive economic growth and productivity in Canada. 😎

🚀 Big Tax Changes Ahead! Canada's government is shaking up capital gains taxation, raising inclusion rates and adjusting exemptions. Effective June 25, 2024, capital gains exceeding $250K annually for individuals and all gains for corps/trusts will be taxed at a higher rate. Investors, take note: thinking of selling that cottage or non-primary resident, consider accelerating gains before the change kicks in.Stay tuned for more updates as the transition unfolds. #TaxReform #CapitalGains #Investing 💼📈🇨🇦 #Canada #2024Budget

My latest Financial Post article provides rebuttals for some of the common platitudes that are used to try to support a capital gains inclusion rate increase in CDA: “Last week, I appeared as a witness before the House of Commons Finance Committee regarding the proposed capital gains inclusion rate increase, and it was not surprising to hear the Liberal and NDP committee members, and their witnesses, go on about how great the capital gains inclusion rate proposal is. Frankly, it’s exhausting to listen to such nonsense. Some of that nonsense? “Studies have concluded that a high capital gains inclusion rate — or full taxation — of capital gains has no impact on a country’s economic results.” Yeah, right. For every such study, I’ll show you three that say otherwise… Others go on and on about “tax breaks” or “fairness” when it’s obvious they do not have a fulsome understanding of our country’s tax system. But my favourite is “a buck is a buck is a buck.” That line is a summarized phrase from the recommendations of the Royal Commission on Taxation.. …the commission said the following with respect to capital gains: “A dollar gained through the sale of a share, bond or piece of real property bestows exactly the same economic power as a dollar gained through employment or operating a business....” Thus, the famous “a buck…” line was born…I do agree that the result of various economic activities, “a buck,” is the same, but the efforts that go into creating that buck are certainly not… In 1969, the government of the day — gasp…the Liberals — agreed that capital gains should indeed be taxable, but rejected the commission’s logic.. “The government rejects the proposition that every increase in economic power, no matter what its source, should be treated the same for tax purposes. This proposition, put forward forcefully by the Royal Commission on Taxation, has often been summarized rather inelegantly as ‘a buck is a buck is a buck.’..” I agree that phrase is rather inelegant and…too simplistic... “Put me on record as an advocate for a low inclusion rate…since that lower inclusion rate provides incentive and acknowledgement of a key issue that most people experience when they originally invest capital to generate such gains. That key differentiator is ‘risk,'” I said in my opening remarks at the recent committee meeting. Employment risk is not entrepreneurial or investor risk..For those who say it is, I often challenge them to “put their money where their mouth is” and become an entrepreneur…Sweat a bit about making payroll or the mortgage payments on your building. Take some real business risk. If you accept my challenge, I’m guessing you’ll soon stop trumpeting your former rallying cries of “fairness” and “a buck is a buck is a buck.” You might then truly understand why it’s important to have governments that encourage entrepreneurship, with preferential treatment of capital gains being one of those policy tools to provide such encouragement.”

As I have said before, I always enjoy reading Kim Moody's thoughts. He knows better than me the analysis the Minister and Ministry of Finance put into changing the Income Tax Act. One hopes it goes beyond the soundbite to garner votes from an electorate who does not understand the economic impact of income tax changes. Changing the capital gains inclusion rate is much more than a small amendment to the Income Tax Act to change 50% to 66.66%. The September 23, 2-24 Notice of Ways and Means to amend the Income Tax Act to make this change is 41 pages long if you consider only the English changes. The explanatory notes are 85 pages long. This came out almost three months after the legislation came into effect. On August 12, 2024, the Department of Finance released 158 pages of proposed changes to the Income Tax Act and its Regulations (506 pages, including Explanatory Notes) impacting large and small companies, individuals, partnerships and Trusts. There are also new tax legislation or changes to existing tax legislation dealing with Global Minimum Tax, Alternative Minimum Tax, the Canadian Entrepreneurs Incentive (capital gains that retain the 50% inclusion rate), limitations in the deductibility of interest and financing costs, and at least a dozen other areas of the Income Tax Act or its Regulations. Some of these changes affect specific industries or investments, but many have broad application. Did the Department of Finance consider the ability of tax practitioners to absorb this many changes in the Income Tax Act coming at once or did they not care? It makes me hope for a tax case where the Count finds in favour of the taxpayer because the changes in the Income Tax Act were overwhelming, making it impossible for the taxpayer to comply, even with the help of a knowledgeable tax practitioner. (One is entitled to hope, even if the hope is unrealistic.)