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Federal Budget 2024: Changes in Capital Gains Inclusion Rate

In a significant move announced in Budget 2024, the federal government has proposed adjustments to the capital gains inclusion rate, impacting individuals, corporations, and trusts. Effective June 25, 2024, the inclusion rate on capital gains above $250,000 realized annually by individuals will increase from one-half to two-thirds. Moreover, all capital gains realized by corporations and trusts will also be subject to the new inclusion rate of two-thirds.

Implications for Individuals and Entities:

- For individuals, the inclusion rate for capital gains up to $250,000 remains at 50%. However, gains exceeding this threshold will now be taxed under the new two-thirds inclusion rate.

- Corporations and trusts will not benefit from the $250,000 threshold. Instead, every dollar of gain will be taxed at the new inclusion rate of two-thirds.

Considerations:

- Non-Registered Investments: Non-registered investments, especially those in corporate class accounts, should be reviewed for potential gains exceeding $250,000.

- Corporate-Owned Investment Accounts: It is advisable to review corporate-owned investment accounts in light of the new inclusion rate.

- Insurance Conversations: Business owners should engage in discussions regarding the benefits of life insurance proceeds and the capital dividend account.

Insights from Paul Thorne, Director of Advanced Planning at Sun Life:

Paul Thorne provides valuable insights into the implications of the new inclusion rate:

- Real Estate Holdings: Individuals and corporations holding real estate with accrued gains are advised not to rush into selling, considering potential tax implications and the possibility of future changes in the inclusion rate.

- Corporate Investment Portfolios: Corporations with investment portfolios should consider rebalancing before June 25, 2024, to benefit from the current inclusion rate.

- Long-Term Planning: Shareholders and individuals with significant passive investments are urged to undertake long-term planning to mitigate the impact of the new inclusion rate.

Federal Budget Highlights:

The Federal Budget, presented by Deputy Prime Minister and Minister of Finance Chrystia Freeland, outlines several key initiatives, including:

$53 Billion in new spending over the next 5 years.
Investments in housing, disability benefits, mental health, and education.
Increase in the taxable portion of capital gains and adjustments to taxation on cigarettes.

Conclusion:

The proposed changes in the capital gains inclusion rate signify a significant development in fiscal policy. As the budget unfolds, staying informed and proactive will be essential in navigating these changes effectively. For detailed information and personalized guidance, individuals and entities are advised to refer to the official budget documents and seek professional advice.

Sources:
https://www.cbc.ca/news/politics/trudeau-freeland-budget-taxes-1.7172635
https://www.cbc.ca/news/politics/federal-budget-2024-main-1.7175052

Final Day at 2024 Sun Life Convention.

As the Sun Life 2024 Convention drew to a close with the Elite Conference, I had the distinct honour of being among the 140 elite qualifiers across Canada. The culmination was an evening that transcended expectations, set against the backdrop of a historic Spanish monastery in Miami, complete with an unparalleled dining experience and heartwarming entertainment by the tenors.

This gathering was not just about business insights, but a celebration of excellence, dedication, and the human spirit. I was moved by the beauty of the night and the power of music to unite and inspire us. It was a poignant reminder of the importance of sharing such moments with those we love and cherish. While my wife, Tatiana, could not join me, her presence was deeply missed, and I look forward to making more memories together in the future.

To everyone who has been a part of this convention, from colleagues to clients, your engagement and trust fuel our commitment to providing solutions that truly make a difference. Thank you for being an integral part of our journey.

#SunLife2024 #EliteConference #Gratitude #SunLifeElite2024

The Sun Life Gala Dinner was a remarkable celebration of excellence and camaraderie, with over 800 professionals gathered in recognition of our shared values and achievements. It was a moment of pride to see Rob Sandberg inducted into the Hall of Fame, highlighting the pinnacle of dedication and community involvement that Sun Life champions.

Despite personal challenges, the evening was a testament to the resilience and spirit of the Sun Life family, culminating in a celebration that reflected our collective commitment to professionalism and client care. As the lead advisor at Reynolds Financial Solutions, I am deeply honoured to contribute to and grow within this esteemed community.

#SunLifeGala #ProfessionalExcellence #CommunityImpact #ReynoldsFinancialSolutions

🌟 **Day 2 at Sun Life Convention 2024: Lessons in Resilience and Wellness** 🌟

As we dove deeper into the heart of the Sun Life Convention in Miami, Tuesday brought us the invaluable opportunity to learn from two remarkable individuals, each an expert in their field, guiding us on our paths to personal and professional growth. ✈️🧘‍♀️

**Anthony A.B. Bork**, a distinguished jet fighter pilot turned keynote speaker, took us on a journey through the skies of resilience and adaptation. His message was clear and powerful: the importance of debriefing in our lives. Whether it's a pivotal meeting with clients, a change within our business, or a personal shift, taking the time to reflect, learn, and plan for improvement is key. It's not just about navigating through the storm but learning from the journey to soar even higher. 🚀

**Nicole Porter**, a beacon of wellness wisdom, shared her expertise on managing stress and embracing small yet significant lifestyle changes for a healthier existence. Her advice? Hydrate, rest, repeat. It's the simple, everyday choices that pave the way to a less stressed, more vibrant life. 💧💤

As we wrapped up another enlightening day at #SunLife2024, the messages from Anthony and Nicole resonate deeply. Reflect, adapt, hydrate, and rest - these are not just strategies but pillars for thriving in both our professional and personal lives.

Armed with these insights, we're not just growing as advisors; we're evolving as individuals committed to better serving our clients and enriching our lives. Here's to embracing resilience, fostering wellness, and continuing our journey of growth and excellence. 🌱🌟

#Resilience #Wellness #ProfessionalGrowth #HealthyLiving #SunLifeConvention2024 #SunLife

Honoured to Join the Ranks of Triple Crown Achievers at Sun Life

I am thrilled to announce that I have qualified for the prestigious Triple Crown at Sun Life - a recognition of excellence and outstanding performance among advisors and field leaders. Achieving this milestone is not just a testament to individual commitment, but also to the support, guidance, and collaboration of my amazing team and clients who have been instrumental in this journey.

Receiving the custom jacket symbolizes our consistent success and dedication to excellence in everything we do. This achievement motivates me to continue striving for excellence, pushing boundaries, and making a positive impact in the lives of those we serve.

Celebrating Women's Empowerment in Finance this International Women's Day at RFS

At Reynolds Financial Solutions, we believe in the power of women to shape the future of finance. This International Women's Day, we are proud to highlight our celebration of the incredible women on our team. These talented professionals represent 75% of our workforce and are at the heart of our success.

During our last team meeting, we honoured our female colleagues with a rose pot - a symbol of growth, resilience, and beauty, much like their contributions to our field. Their dedication not only drives RFS forward but also inspires a brighter, more inclusive future in finance.

As we celebrate this special day, let's reaffirm our commitment to empowering women in finance, recognizing their vital role in economic development and personal growth. At RFS, we're here to support women at every step of their financial journey.

Passionate about creating positive health outcomes, we’re launching our Diabetes Care Program. A free, personalized care program that helps with diabetes management. This is Sun Life’s first solution helping Clients manage this chronic disease. An exciting milestone for Sun Life Health!

https://sunlife.co/diabetes-care-program

What you need to know about RRSP

As each February concludes and RRSP contribution season ends, investors across Canada exhale feel a sense of relief and accomplishment. RRSPs are an extreme example of deferred gratification; doing something good now for a benefit that occurs much later.

As the North American society has moved away from employment-based pension plans everyone is responsible to save for their retirement, and Registered Retirement Savings Plan is a fundamental tool to save. This is especially true when publicly managed pensions like Canada Pension Plan (CPP) and Old Age Security (OAS) do not provide enough income for most.

Saving for retirement takes planning and discipline, it is not easy to manage the important (retirement savings) with the urgent (immediate expenditures).

An RRSP allows Canadians to defer income tax on both the initial deposit and any growth those assets generate. Making the maximum contribution could save you almost $15,000 on this year’s tax bill depending on your income level and associated tax rate.

What you need to know

• Contributions to your RRSP are deducted from your taxable income. If you earn $100,000 and make a $24,000 deposit, you are taxed on $76,000 for that year.

• Contributions and earnings are subject to income tax when withdrawn, or at death (unless the RRSP is transferred to a surviving spouse).

• Contribution amounts are based on your income level. 18% of your income can be deposited into your RRSP with the annual limit of $29,210 for 2022, $30,780 for 2023 and $31,560 for 2024.

• Contribution room from previous years that has not been used is carried forward.

• Contributions can be made at any time during the year, and until the end of February for the prior year’s tax return. This allows the prior year to conclude before the contribution amount is fully calculated.

• Contributions can be managed based on your unique situation, current and potential earnings and the tax brackets that you fall into. For an Ontario resident paying the highest marginal tax rate of 53.53%, a $24,000 deposit will reduce your income taxes by $12,874.

• Contributions can be managed between years to reduce overall taxes. Unused contribution room can be utilized for years when a higher tax bracket is being applied to your income. Depending on your situation it might be better to wait or make a deposit now.

• Contributions often generate a tax refund. When your payroll deductions are accurate most people will not pay or get a refund when filing their taxes. An RRSP is not typically factored into these calculations, and the tax savings generated by an RRSP deposit often appears as a refund!
And finally:

Contributions that are made monthly typically grow larger than the same yearly amount deposited annually after each year has concluded.

$2,000 deposited at the start of each month for 25 years grows @ 6% to $1,385,988

$24,000 deposited at the end of each February for 25 years grows @ 6% to $1,316,748

Without any additional deposits that’s a difference of $69,240!!

This is often a conservative estimate. The difference is usually much larger because an investor who commits to monthly contributions and agrees to a PAC (Pre-Authorized Contribution) is much more disciplined. An annual, large payment is more susceptible to the negative effects of variations in year-end bonuses and a year of day-to-day spending. The temptation is to believe that, if skipped, payments can be caught-up later, which the effects of compound interest make it difficult to achieve.

The Bottom Line

Setting up an RRSP with a monthly PAC can help you retire sooner, because we cannot save what we have already spent.