Canada´s Budget for 2024 Exclaims Tax Fairness 

TAX FAIRNESS

Lowering taxes on the middle class:

• Cutting the second income tax bracket rate to reduce the tax burden on middle-class Canadians.
• Increasing the basic personal amount, ensuring more income remains untaxed for middle-income earners.
• Expected savings for over 20 million middle-class Canadians, averaging more than $450 in 2024.

Introducing a top tax bracket:

• Implementing a 33 percent top tax bracket for the wealthiest Canadians, ensuring they contribute proportionately to their income.

Modernizing the Alternative Minimum Tax (AMT):

• The AMT has been updated to prevent excessive deductions, credits, and tax preferences by the wealthiest Canadians, ensuring they pay their fair share.

Boosting benefits through the tax system:

• Enhancing benefits like the Canada Child Benefit and Canada Workers Benefit to provide income support to families and low-income workers.

Tax measures for corporations:

• Introducing a two-per-cent tax on share buybacks by public corporations to encourage reinvestment in workers and businesses.
• Implementing a luxury tax on private jets, yachts, and luxury vehicles to generate revenue from high-end purchases.

Property flipping regulations:

• Capital gains from property flipping have been treated as business income since January 1, 2023, to discourage speculative real estate activities and prioritize housing for Canadians.

TAX-FREE SAVINGS FOR MIDDLE CLASS

Tax-sheltered savings plans:

• Canadians can earn investment income tax-free through Registered Retirement Savings Plans (RRSPs), Tax-Free Savings Accounts (TFSAs), and First Home Savings Accounts (FHSAs).
• Contributions to RRSPs and FHSAs are tax-deductible, reducing taxable income.
• Withdrawals from FHSAs are tax-free, providing financial flexibility for home purchases.

IMPROVING TAX FAIRNESS

Capital gains inclusion rate increase:

• Proposing an increase in the capital gains inclusion rate to address disparities in taxation between different income sources.
• Lifetime capital gains exemption raised to $1.25 million, benefiting entrepreneurs and investors.

Canadian Entrepreneurs' Incentive:

• Lowering the inclusion rate to 33.3 percent for eligible entrepreneurs, encouraging investment and business growth.
• Combined with the enhanced lifetime capital gains exemption, entrepreneurs can benefit from significant tax savings.

Expected revenue impact:

• Anticipated revenue increase of $19.4 billion over five years from proposed tax fairness measures.

ENSURING GLOBAL TAX FAIRNESS

OECD/G20 Inclusive Framework:

• Supporting international efforts to address base erosion and profit shifting, ensuring multinational corporations pay their fair share of taxes.

Digital Services Tax:

• Introducing a Digital Services Tax to ensure digital businesses operating in Canada contribute to tax revenues, preventing tax avoidance in the digital economy.

Estimated revenue impact:

• Anticipated revenue increase of $5.9 billion over five years from global tax fairness initiatives.

MODERNIZING TAX SYSTEM AND SERVICES

Automatic tax filing pilot:

• Launching a pilot program to simplify tax filing for low-income individuals, ensuring they receive entitled benefits without complex paperwork.

Preventing tax evasion:

• Taking measures to prevent wealthy Canadians from using foreign shell companies to evade taxes, ensuring fairness and compliance.

Improving service delivery:

• Investing in Canada Revenue Agency (CRA) resources to reduce call center wait times and enhance service efficiency for taxpayers.

Single sign-in portal:

• Establishing a modern portal for accessing government services, streamlining access, and improving user experience.

Expanding tax transparency:

• Enhancing transparency in reporting crypto-asset transactions to prevent tax evasion and ensure compliance with tax laws.

SOURCES:

• Chapter 8: Tax Fairness for Every Generation | Budget 2024 (canada.ca)

• Tax Measures: Supplementary Information | Budget 2024 (canada.ca)