Skip to content.

Federal Government proposes to increase the capital gains inclusion rate, with a consequential change to employee stock option deduction

On April 16, 2024, Canada’s Deputy Prime Minister and Minister of Finance, Chrystia Freeland, delivered the Liberal Government’s federal budget, Fairness for Every Generation (Budget 2024). The most notable tax measure in Budget 2024 is the proposal to increase the capital gains inclusion rate from one-half to two-thirds, for capital gains realized on or after June 25, 2024. This measure will apply to all capital gains realized by corporations and trusts, but only will apply to individuals in respect of the portion of capital gains realized in the year that exceeds $250,000.

As a consequence of the above, the deductions for employee stock option benefits will be reduced from one-half to one-third. However, qualifying employees will remain entitled to the one-half deduction to the extent that their combined employee stock option benefits and capital gains realized in the taxation year total to $250,000 or less.

For a discussion of these tax measures and others in Budget 2024, please see McCarthy Tétrault’s Budget 2024 Commentary.



Stay Connected

Get the latest posts from this blog

Please enter a valid email address