Since the announcement of the 2024 Federal Budget, I have delved into various research papers and reports to grasp the full scope of the changes. Given that there are quite a number of updates this year, I want to highlight some key changes here that may be helpful to the planning of your finances.
For Individuals with Disabilities: The budget has expanded the Disability Supports Deduction to cover more items. This includes service animals trained for specific tasks, alternative computer input devices like assistive keyboards, braille displays, and speech recognition devices, as well as ergonomic work chairs and bed positioning devices, including related assessments. These changes aim to provide comprehensive support for those with severe impairments.
For Families with Young Children: Significant enhancements have been made to the Registered Education Savings Plan (RESP) to bolster education savings. The introduction of automatic enrollment in the Canada Learning Bond for eligible children will help secure educational funds, simplifying savings for future educational expenses.
For First-Time Home Buyers: The Home Buyers’ Plan now allows a withdrawal of up to $60,000 from RRSP to facilitate your first home purchase, an increase from the previous $35,000. Additionally, for those purchasing new builds, there’s the introduction of 30-year amortization options, which can make monthly payments more manageable.
For Business Owners: the 2024 Federal Budget brings a notable increase in the Lifetime Capital Gains Exemption, now boosted to $1.25 million from the previous $1,016,836. This change is specifically for gains on qualified small business shares and farm or fishing property. This design allows larger gains to be exempt from taxes, facilitating smoother succession planning and enhancing retirement savings. This updated exemption applies to dispositions made on or after June 25, 2024.
Some Thoughts: One change that really caught my attention in this Federal Budget is the bump up in the capital gains inclusion rate. Now, if your gains are over $250,000, you’ll be taxed on two-thirds of them instead of just half. This makes tax-efficient investing even more important than before, which is also part of the planning for my clients.
These changes represent a range of opportunities and considerations for your financial landscape. Let’s discuss how we can leverage these developments to optimize your financial planning.
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Sources:
- Mackenzie Investments – Federal budget 2024 analysis (source)
- SunLife Global Investments- Federal Budget 2024 (source)
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