Federal Budget 2024 – Reviewing your insurance planning in light of new tax measures introduced on April 16th federal budget
One of the most noteworthy measures introduced in yesterday’s budget that’s most impactful to our clients, and more specifically their estate tax, is the increased capital gains inclusion rate. The highlight being the capital gains inclusion rate is to increase from ½ to 2/3 on any capital gains realized on or after June 25, 2024 in corporations or trusts. And for individual taxpayers the increased rate for a particular tax year will only apply to capital gains in excess of a $250,000 threshold.
So, what does that mean for you? Think about what assets you hold that are subject to capital gains upon disposition such as second properties or non-registered investment assets with significant unrealized gains. How does your estate tax liability change with this new measure in place? And how have you funded it? If you’ve used insurance, do you need to up your coverage?
Insurance is commonly used to as an estate planning tool to provide immediate liquidity to fund estate tax liabilities. The increased tax that will result from the rate change might cause you to relook at your planning. Now is the time to sit down and review your estate with your advisor and ensure the planning you have in place is still adequate. Can you convert some term insurance to supplement the shortage?
If you’d like to review your planning, please don’t hesitate to reach out to our team at Family Wealth Coach.
Many firms have published their highlights and reviews on the full budget. Please see below for a few links for additional reading:
· KPMG
· MNP