Filing your 2024 taxes? If you have capital gains, it’s essential to understand the latest updates. While significant changes are coming in 2026, 2024 capital gains tax changes still impact how you report your investments. Here’s what you need to know.
No Change to Capital Gains Inclusion Rate for 2024
The Government of Canada has delayed the planned increase in the capital gains inclusion rate until January 1, 2026. For the entire 2024 tax year, the inclusion rate remains at 50%, meaning that only half of your capital gains are taxable. This provides stability for investors and business owners filing their 2024 returns.
Reporting Capital Gains in Two Periods
For those who sold qualified small business corporation shares (QSBCS) or qualified farm or fishing property (QFFP), the Canada Revenue Agency (CRA) has introduced two reporting periods:
- Period 1: Before June 25, 2024
- Period 2: After June 24, 2024
This aligns with the increase in the Lifetime Capital Gains Exemption (LCGE) to $1.25 million, effective June 25, 2024. Tax slips may list transactions from both periods separately, so ensure you report them correctly.
Administrative Updates for 2024 Tax Filings
- Lines 12701 & 25999 remain in tax returns but should not contain reported amounts, as the 50% inclusion rate applies throughout 2024.
- T4 Slips & Security Options: If your T4 includes security options in boxes 91 and 92 after June 24, 2024, they may reflect a 33.3333% deduction rate. To correct this, report these at line 24900 and claim the additional security options deduction at line 24901 to maintain a 50% deduction.
New Capital Gains Deduction for Business Transfers
A new Capital Gains Deduction applies to qualifying business transfers (QBT) under specific conditions:
- Eligible individuals can deduct taxable gains up to $10 million.
- Gains can be spread over 10 years, with at least 10% reported annually.
- Requires filing Form T24EOT and Form T2048 to elect and calculate the deduction.
Lifetime Capital Gains Exemption (LCGE) Increase
Effective June 25, 2024, the LCGE limit increased to $1.25 million for QSBCS and QFFP. This change allows business owners and investors to shelter more capital gains from taxation. Starting in 2026, the exemption will be indexed for inflation, further increasing potential savings.
Preparing for Your 2024 Tax Filing
With these 2024 capital gains tax changes, taxpayers should review their investment sales and deductions carefully. For full details, visit the Canada Revenue Agency’s official guidance on capital gains. If you’re planning to sell an investment property or business in East Toronto, consulting a tax professional can ensure you maximize deductions and exemptions.
