Capital Gains Tax and your Business
The 2024 Federal Budget has introduced an increase in the capital gains inclusion rate from 50% to 66.67%. This change can have a significant impact on the taxation of your corporate investment gains and the disposition of shares in your business.
| Capital gains subject to tax | |||
| Before June 25, 2024 | On or After June 25, 2024 | ||
| Investments inside a corporation | 50% | 66.67% | |
| Disposition of corporate shares | 50% | 66.67% | |
Understanding the tax implications for your business will help you plan accordingly. There are planning opportunities that can help mitigate some of the tax payable. My team specializes in the use of corporate-owned life insurance as a strategic financial tool for business owners. We will work with you and your advisors to review how the tax changes may impact your business and help you explore suitable options, such as incorporating life insurance into your financial plan.
Some of the benefits of corporate-owned life insurance include:
- Providing liquidity at death
- Opportunity to create cash value that grows on a tax-deferred basis
- Death benefit proceeds are received by the corporation tax-free
- Insurance proceeds paid into a corporation, create a credit to the corporation’s Capital Dividend Account (CDA)
- Insurance proceeds can be paid to your estate tax-free using capital dividends
