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Federal Government releases proposals to increase the capital gains inclusion rate and modify or announce details regarding certain clean economy and resource tax credits

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.

Additionally, among other things, Budget 2024:

  • provides design and implementation details of the Clean Electricity Investment Tax Credit for both public utility and non-public utility taxpayers;
  • expands the application of the Clean Technology Manufacturing Investment Tax Credit to polymetallic projects (i.e., projects that produce multiple minerals); and
  • extends eligibility for the Mineral Exploration Tax Credit for one year for flow-through share agreements that are entered into on or before March 31, 2025.

Budget 2024 also confirms the Government’s intention to proceed with various previously announced legislative proposals with respect to the clean economy and resource tax incentives, including the Clean Hydrogen Investment Tax Credit and measures in respect of flow through shares and the Critical Mineral Exploration Tax Credit.

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



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