New 2024 federal budget | General financial discussion | Discussion forum

Please consider registering
guest

sp_LogInOut Log In sp_Registration Register

Register | Lost password?
Advanced Search

— Forum Scope —




— Match —





— Forum Options —





Minimum search word length is 3 characters - maximum search word length is 84 characters

No permission to create posts
sp_Feed Topic RSS sp_TopicIcon
New 2024 federal budget
April 16, 2024
5:15 pm
Briguy
Member
Members
Forum Posts: 717
Member Since:
March 17, 2018
sp_UserOfflineSmall Offline

So with new budget, anyone making over 250K profit on sale of a rental unit will now pay 67 percent capital gains tax, not 50 percent. I didn't see in the budget when this will start. I would assume this will increase inheritance taxes too on sale of last parent's residence and stocks outside RRSPs and TFSAs.

They are also planning to investigate taxing vacant lots.

Plus many other changes.

https://www.cbc.ca/news/politics/federal-budget-2024-highlights-need-to-know-1.7175062

April 16, 2024
5:46 pm
Bill
Member
Members
Forum Posts: 3935
Member Since:
September 11, 2013
sp_UserOfflineSmall Offline

Higher inclusion rate starts for gains on or after June 25 this year.

April 17, 2024
4:34 am
savemoresaveoften
Member
Members
Forum Posts: 2898
Member Since:
March 30, 2017
sp_UserOfflineSmall Offline

Really only affects senior executives who gets stocks option etc, or those who makes a killing on their rental properties, I am ok with both and think it is actually a welcome initiative.
As for some of the spending initiative, not so much. A government (any government) just isn’t competent enough to spend in any responsible / sensible fashion. It does make a difference when one is not spending one’s OWN money. It’s hard wired into human behavior.

April 17, 2024
5:04 am
mordko
Member
Members
Forum Posts: 848
Member Since:
April 27, 2017
sp_UserOfflineSmall Offline

savemoresaveoften said
Really only affects senior executives who gets stocks option etc, or those who makes a killing on their rental properties, I am ok with both and think it is actually a welcome initiative.
As for some of the spending initiative, not so much. A government (any government) just isn’t competent enough to spend in any responsible / sensible fashion. It does make a difference when one is not spending one’s OWN money. It’s hard wired into human behavior.  

Screws incorporated professionals. Doctors, lawyers, accountants, engineers, etc. Also, people who die unprepared.

Affects people who don’t enjoy even longer waiting times or might be looking for a family physician.

Sends a message that Canada does not want anyone to put too much effort and too many years into education.

Potential to further demotivate people from getting into small business.

Not quite sure what effect this will have on renters, but could reduce the number of rentals and hence jack up the rents.

April 17, 2024
5:25 am
Alexandre
Member
Members
Forum Posts: 1125
Member Since:
November 8, 2018
sp_UserOfflineSmall Offline

mordko said
Screws incorporated professionals. Doctors, lawyers, accountants, engineers, etc.

Are you talking about capital gains tax or about some other part of the budget?

Capital gains tax structure is unfair to almost everyone. Why am I, salaried employee of a company, taxed at 100% of my income, while CEO whose primary income is stock options taxed at 67% of their income with first $250K excluded?

A fair tax system should tax capital gains as any other income. The fact that not even NDP dare to fix capital gains taxation unfairness says a lot about who every mainstream Canadian party caters to.
They would rather run budget deficit than eliminate tax loopholes favoring wealthy and influential.

Perhaps, with capital gains taxed as ordinary income, more people will prefer honest salaried employment to making living by speculating on stock market.

April 17, 2024
5:27 am
AR
Member
Members
Forum Posts: 65
Member Since:
August 20, 2019
sp_UserOfflineSmall Offline

Be prepared for the same rate for all schedule 3 items, etc, etc, and et cetera. It's coming unless stopped.

April 17, 2024
5:29 am
MattS
Member
Members
Forum Posts: 148
Member Since:
January 11, 2020
sp_UserOfflineSmall Offline

The title of this thread is click bait.. a projected 40 billion deficit like it’s the new normal is not a budget at all. Anyone who manages their families finances knows that. The continuation of driving the 18 wheeler off a financial cliff will continue and at the bottom of the big fall is Klaus Schwab waiting with open arms. Enjoy your crickets and earth worms with your mash potatoes folks.

April 17, 2024
5:35 am
mordko
Member
Members
Forum Posts: 848
Member Since:
April 27, 2017
sp_UserOfflineSmall Offline

Alexandre said

mordko said
Screws incorporated professionals. Doctors, lawyers, accountants, engineers, etc.

Are you talking about capital gains tax or about some other part of the budget?

Capital gains tax structure is unfair to almost everyone. Why am I, salaried employee of a company, taxed at 100% of my income, while CEO whose primary income is stock options taxed at 67% of their income with first $250K excluded?

A fair tax system should tax capital gains as any other income. The fact that not even NDP dare to fix capital gains taxation unfairness says a lot about who every mainstream Canadian party caters to.
They would rather run budget deficit than eliminate tax loopholes favoring wealthy and influential.

Perhaps, with capital gains taxed as ordinary income, more people will prefer honest salaried employment to making living by speculating on stock market.  

Yes, about capital gains. Capital gains taxes apply to post salaried income. There is a good reason the inclusion rate is lower: to offset the impact of inflation.

Hypothetically, if I invested $100 30 years ago and doubled my investment, in real terms I gained nothing but my capital increased by $100. When the taxman takes a cut, he is inflicting a loss on investor.

Unfairness exists but its in relation to interest income when CRA inflicts a loss in real terms by ignoring inflation.

I understand none of this makes sense to someone who thinks that investing = gambling. You are not alone. Thats why we have low productivity as a country.

April 17, 2024
5:42 am
nerdralph
Member
Members
Forum Posts: 8
Member Since:
February 11, 2023
sp_UserOfflineSmall Offline

Briguy said
So with new budget, anyone making over 250K profit on sale of a rental unit will now pay 67 percent capital gains tax, not 50 percent. 

When I first heard the NDP grumblings about capital gains a couple years ago, I told my wife we need to start planning for the sale of our rental properties. High interest rates have already cut our ROE in half.

Here in NS, when single-unit rental properties are sold, most purchasers live in them, instead of continuing to rent them out. Fewer units available for rent = higher rent prices.

April 17, 2024
5:51 am
savemoresaveoften
Member
Members
Forum Posts: 2898
Member Since:
March 30, 2017
sp_UserOfflineSmall Offline

mordko said
Hypothetically, if I invested $100 30 years ago and doubled my investment, in real terms I gained nothing but my capital increased by $100. When the taxman takes a cut, he is inflicting a loss on investor.

Well its a bad investment because it fails to earn u a return that beats inflation AND tax, no different from those who wants 100% security and only buys GIC, and then complain inflation and interst income tax too high...

I am always a proponent of flat tax system, but Canada is a socialist free country, and most will not agree when it comes to election time.

April 17, 2024
6:12 am
mordko
Member
Members
Forum Posts: 848
Member Since:
April 27, 2017
sp_UserOfflineSmall Offline

savemoresaveoften said

mordko said
Hypothetically, if I invested $100 30 years ago and doubled my investment, in real terms I gained nothing but my capital increased by $100. When the taxman takes a cut, he is inflicting a loss on investor.

Well its a bad investment because it fails to earn u a return that beats inflation AND tax, no different from those who wants 100% security and only buys GIC, and then complain inflation and interst income tax too high...

I am always a proponent of flat tax system, but Canada is a socialist free country, and most will not agree when it comes to election time.  

Of course its a bad investment. Also a hypothetical one especially designed to illustrate the impact of inflation and why CRA should not tax 100% of cap gains.

April 17, 2024
6:26 am
Alexandre
Member
Members
Forum Posts: 1125
Member Since:
November 8, 2018
sp_UserOfflineSmall Offline

mordko said
Yes, about capital gains. Capital gains taxes apply to post salaried income.

Interest income is post salaried income, too. Not taxed at generous Capital Gains schema.

There is a good reason the inclusion rate is lower: to offset the impact of inflation.

This is the only type of income where such excuse applies, why?

Your $40,000 salary from 30 years ago is taxed at the same rate now, even if you make more now. Today you will be taxed on all your salary income including first $40,000 of it.
Considering increases in such salary taxes as CPP and what else, that your employer and you will pay on first $40,000 you earn, you may even be taxed higher on $40,000 salary today than 30 years ago.

my capital increased by $100. When the taxman takes a cut, he is inflicting a loss on investor.
Thats why we have low productivity as a country.  

Using an example:
You (farmer in Canada) bought one share of an American public company from Peter (mechanical engineer employed by Canadian automotive industry) in January 2023 for $10 and sold it to Paul (Canadian software developer employed by Blackberry) in December 2023 for $110, making $100 profit.

Suppose, when you file tax return in 2024 CRA taxes you at regular income rates for this profit.
Suppose, at your income tax rate you would have had to pay $35 in taxes for $100 capital gains. You are left with $65 after tax profit on your original investment of $10. Still not bad, if you ask me.

Please explain how that will impact productivity in Canada. Which Canadian industry productivity will be impacted: farming, IT or automotive industry?

April 17, 2024
6:51 am
mordko
Member
Members
Forum Posts: 848
Member Since:
April 27, 2017
sp_UserOfflineSmall Offline

Alexandre said

mordko said
Yes, about capital gains. Capital gains taxes apply to post salaried income.

Interest income is post salaried income, too. Not taxed at generous Capital Gains schema.

There is a good reason the inclusion rate is lower: to offset the impact of inflation.

This is the only type of income where such excuse applies, why?

Your $40,000 salary from 30 years ago is taxed at the same rate now, even if you make more now. Today you will be taxed on all your salary income including first $40,000 of it.
Considering increases in such salary taxes as CPP and what else, that your employer and you will pay on first $40,000 you earn, you may even be taxed higher on $40,000 salary today than 30 years ago.

my capital increased by $100. When the taxman takes a cut, he is inflicting a loss on investor.
Thats why we have low productivity as a country.  

Using an example:
You (farmer in Canada) bought one share of an American public company from Peter (mechanical engineer employed by Canadian automotive industry) in January 2023 for $10 and sold it to Paul (Canadian software developer employed by Blackberry) in December 2023 for $110, making $100 profit.
Suppose, when you file tax return in 2024 CRA taxes you at regular income rates for this profit.

Please explain how that will impact productivity in Canada. Which Canadian industry productivity will be impacted: farming, IT or automotive industry?  

In my opinion it is unfair to tax interest at 100% inclusion rate. That said, there is a valid reason for incentivizing investments over lending, which effectively what interest is.

The example you described is a pricing mechanism which rewards successful companies and ensures that capital flows to them rather than the unsuccessful ones. Successful companies with growing share prices get the ability to raise more in capital markets and can incentivize key staff better.

It also incentivezes people taking risks, start-ups, etc. Governments love talking about “investing”. Like this budget commits government to investing in AI. Its a joke; a soundbite and more useless spending. Economic studies across jurisdictions tell us that government “investment” is inefficient in generating returns for the overall economy and that private money is far, far more efficient at directing money in a way that improves productivity and improves overall growth. Conversely falling share prices ultimately leads to failure and effective culling of uncompetitive companies.

Canada already has a major problem with underinvestment. Capital is flowing elsewhere because as a country we are messaging that capital isn’t wanted. And thats why we are stagnating, productivity is flagging and our incomes arent growing.

April 17, 2024
7:10 am
Alexandre
Member
Members
Forum Posts: 1125
Member Since:
November 8, 2018
sp_UserOfflineSmall Offline

You are not explaining how would your or someone productivity will suffer if your capital gain is taxed at regular income rate, in an example I provided.

I would say, it could be the opposite, if using my example. Paying CRA $35 on $100 from stock speculations might force you, the farmer, work harder in fields to compensate for that.

While it is not illegal to earn income from stock speculations, that will not put food on people's tables.

Gaining tax free income from buying and selling stocks and bitcoins disincentivizes people from doing something productive. These activities take their time from doing something productive.

Get rid of capital gain generous tax avoidance schema and productivity will increase, because suddenly people will find that employment in industries that are actually producing something gets same tax treatment as speculations on stocks and bitcoins.

April 17, 2024
7:11 am
savemoresaveoften
Member
Members
Forum Posts: 2898
Member Since:
March 30, 2017
sp_UserOfflineSmall Offline

mordko said
In my opinion it is unfair to tax interest at 100% inclusion rate. That said, there is a valid reason for incentivizing investments over lending, which effectively what interest is.
ready has a major problem with underinvestment. Capital is flowing elsewhere because as a country we are messaging that capital isn’t wanted. And thats why we are stagnating, productivity is flagging and our incomes arent growing.  

Interest income are mostly risk free, I have no issue it being taxed just like salary. Like you said, the whole concept of dividends and capital gain having a tax advantage is to encourage investment, and helps to offset our progressive tax rate system to a certain degree.
As for targetting incorporated lawyers, doctors and such per ur early comment, the foundation of Canada's tax system is to target the high inome earners, thats why we have progressive tax based on income level, tax breaks and welfare handout that becomes non existent once you make a certain income. Worst of the worst is the roll back on OAC in my mind. If you think anyone incorporated is wrong, look a high salary earners that have zero tax breaks they can use, they "suffer" the most !

April 17, 2024
7:14 am
savemoresaveoften
Member
Members
Forum Posts: 2898
Member Since:
March 30, 2017
sp_UserOfflineSmall Offline

Alexandre said
You are not explaining how would your or someone productivity will suffer if your capital gain is taxed at regular income rate, in an example I provided.

I would say, it could be the opposite, if using my example. Paying CRA $35 on $100 from stock speculations might force you, the farmer, work harder in fields to compensate for that.

While it is not illegal to earn income from stock speculations, that will not put food on people's tables.

Gaining tax free income from buying and selling stocks and bitcoins disincentivizes people from doing something productive. These activities take their time from doing something productive.

Get rid of capital gain generous tax avoidance schema and productivity will increase, because suddenly people will find that employment in industries that are actually producing something gets same tax treatment as speculations on stocks and bitcoins.  

well some may specualte in stocks, some use stocks as an instrument to invest and diversify, and well deserve the capital gain break. A capitalist free economy needs capital, not interest only earners !

April 17, 2024
7:40 am
mordko
Member
Members
Forum Posts: 848
Member Since:
April 27, 2017
sp_UserOfflineSmall Offline

Alexandre said
You are not explaining how would your or someone productivity will suffer if your capital gain is taxed at regular income rate, in an example I provided.

I would say, it could be the opposite, if using my example. Paying CRA $35 on $100 from stock speculations might force you, the farmer, work harder in fields to compensate for that.

While it is not illegal to earn income from stock speculations, that will not put food on people's tables.

Gaining tax free income from buying and selling stocks and bitcoins disincentivizes people from doing something productive. These activities take their time from doing something productive.

Get rid of capital gain generous tax avoidance schema and productivity will increase, because suddenly people will find that employment in industries that are actually producing something gets same tax treatment as speculations on stocks and bitcoins.  

I am not talking about bitcoins so thats a red herring.

If you think buying and selling shares disincentivizes productive work then it sounds like you prefer the North Korean model where most people productively dig potatoes. You are talking like we don’t have many decades of capitalism plainly demonstrating that investing efficiently directs capital flows to innovative and productive companies and drives productivity growth. I am obviously not going to persuade an economic flatearther but nor will you change how economies actually function.

April 17, 2024
7:52 am
Lodown
Member
Members
Forum Posts: 204
Member Since:
January 10, 2017
sp_UserOfflineSmall Offline

The point of why a tax break on Capitol gains exists is being missed in these posts.

The PRIMARY reason for a CG tax break is to support businesses by incentivizing people to buy company common stock which is a low to no cost method for the company to raise money to conduct their business.

When people buy common stocks they are taking a BIG RISK, as they might lose their entire investment. That is why the CG tax break exists relative to Interest income which has NO RISK via CDIC.

What needs to change is company executives who are allowed to abuse the CG system and take their income as stock which is taxed as CG so the most they pay is a 25% marginal tax rate even if they make 50 million or more per year. This is decidedly unfair to all salaried employees who pay a 53% marginal tax rate on just a few hundred thousand dollars of income.

The Liberals said they would stop this Company executive practice in their runup to the 2015 election, but were talked out of it....by Company executives ! Now after 10 years, this is the Liberal response....hit everyone with a CG tax increase on CG income over $250k. Yet, the 50 Million dollar company executives will still only pay 33.3% in marginal tax....a full 20% lower than 200k salaried employees. Less unfair but still GREATLY unfair.

April 17, 2024
8:18 am
Alexandre
Member
Members
Forum Posts: 1125
Member Since:
November 8, 2018
sp_UserOfflineSmall Offline

Even if I accept "productivity" argument, it still does not explain why Canadian taxpayers must pay from Canadian budget for American companies' productivity.

There is no productivity gain for Canada if Canadian buys share of an American company and sells it with profit to another Canadian.
If there is, for Canada, where is it? Use my example to demonstrate.

I can accept that when Canadian taxpayer buys shares of Canadian company with headquarters in Canada and most workforce in Canada, then maybe such taxpayer deserves a bit of a tax break from the Canadian government.

I do not see good reason why Canadian government should pay with tax breaks to people speculating with shares of foreign companies.
These tax breaks come from Canadian budget deficit, which is inflation impacting mostly poor and middle class Canadians. Also, from higher taxes on Canadians who earn living by actually being employed and producing something.

April 17, 2024
8:39 am
mordko
Member
Members
Forum Posts: 848
Member Since:
April 27, 2017
sp_UserOfflineSmall Offline

Alexandre said
Even if I accept "productivity" argument, it still does not explain why Canadian taxpayers must pay from Canadian budget for American companies' productivity.

There is no productivity gain for Canada if Canadian buys share of an American company and sells it with profit to another Canadian.
If there is, for Canada, where is it? Use my example to demonstrate.

I can accept that when Canadian taxpayer buys shares of Canadian company with headquarters in Canada and most workforce in Canada, then maybe such taxpayer deserves a bit of a tax break from the Canadian government.

I do not see good reason why Canadian government should pay with tax breaks to people speculating with shares of foreign companies.
These tax breaks come from Canadian budget deficit, which is inflation impacting mostly poor and middle class Canadians. Also, from higher taxes on Canadians who earn living by actually being employed and producing something.  

If Canada starts punishing people who invest in this “American company” then the US government will reciprocate. We depend on investments from outside Canada. Which right now are flowing out because our country is unfriendly to investors. And thats why our productivity is low and falling compared to the US.

Money will always find a nice, warm and welcoming place. And that place will get a boost.

No permission to create posts

Please write your comments in the forum.