The government has just released literally hundreds of pages of new tax legislation, addressing a plethora of topics. These include:
- A second version of the capital gains changes, from the ½ to ⅔ inclusion rate
- The rules for the Canadian Entrepreneur’s Exemption (a ⅓ inclusion rate on certain capital gains)
- A host of other changes including a welcome surprise for estates
A Big Surprise
When an estate has a capital loss in its first taxation year, the loss can be carried back to offset capital gains on the taxpayer’s final tax return.
Many years ago, the period for a capital loss carryback for individuals was extended from one year to three years. The rule for a capital loss of an estate being carried back to offset capital gains of the deceased was left at one year. It is often difficult to carry out such planning in the first year of the estate.
The new legislation allows an estate to carry back capital losses realized in its first three taxation years. This long-sought change is a welcome relief and is important to estate planning for families, and even more important with the ⅔ inclusion rate.
The New Legislation Extends
This capital loss carryback approach can be greatly beneficial and will now become more widely used.
We cover the capital gains changes in Session 1 of our Tax Seminar Series. In Session 2, we cover AMT. Following on from this, we will cover changes to the capital gains exemption, the new Canadian Entrepreneur’s Exemption, and an in-depth look at post-mortem estate planning.
2024 is a year of tremendous change for the taxation of private business and family owners. This will be the main focus of our 2024 Tax Seminar Series. Learn the new rules, avoid the traps, and benefit from the planning ideas with dozens of examples and mini-case studies which are practical and reflect everyday real-life situations.