Should you sell assets before June 25th? Large capital gains could trigger Alternative Minimum Tax, says Ben Felix in this piece
The federal budget’s proposed increase to the capital-gains inclusion rate, effective June 25, raises the question of whether investors should sell taxable assets before the new rate kicks in. Currently, 50 per cent of capital gains are included in taxable income. Under the budget proposal, that inclusion rate would increase to 66.7 per cent in some cases.
While the capital-gains inclusion rate is set to increase, the first $250,000 of gains earned by an individual will be taxed based on the current inclusion rate of 50 per cent. Corporations – which are where many small business owners and professionals do their investing – are getting hit harder. They will pay tax based on the new higherwill ultimately leave a shareholder in that province taxed at a total rate of 38.
For smaller capital gains, many individuals will be unaffected by the changes owing to the $250,000 limit, but those selling or otherwise disposing of larger assets will likely be affected.An important consideration before selling any assets is the Alternative Minimum Tax . The Canadian tax system runs two parallel calculations. One is the regular taxation framework that most people are familiar with.
Amt Tax Cent Rate Capital Capital Gain Income Inclusion CRA Ontario Canada
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