On Dec. 16 the federal government released the 2024 Fall Economic Statement which includes a number of measures of interest to advanced planners and their clients. To draw attention to these, the Conference for Advanced Life Underwriting (CALU) has issued a statement discussing the issues it considers to be of interest and relevance.
They note, however, that the measures announced, despite being of interest, may not be of the highest priority given the current political climate in Canada. “Of note, the future of these announcements remains unclear given the leadership politics in the federal government, the upcoming six-week Parliamentary recess, the politics of minority governments and an election in 2025,” they write.
The association goes on to discuss the measures of greatest interest to its members, including the small business share rollover, the Canadian Entrepreneurs’ Incentive, funding for Canada Revenue Agency tax evasion detection measures and moves to exempt the Canada Disability Benefit from being treated as income under the Income Tax Act (ITA).
Of note, they say the economic update does not contain any personal tax rate increases, wealth or estate taxes. It also includes no new changes to the taxation of group insurance, exempt life insurance or corporately owned insurance policies.
Rollover rule
The economic statement, they say, proposes to amend sections of the ITA to expand what qualifies as an eligible small business corporation share and to relax some of the conditions for the rollover rule to apply.
“In particular, it is proposed that preferred shares also be allowed qualify for the rollover increase the asset limit of eligible small business corporations that qualify for investment to $100-million, and increase the length of time to acquire new investments to be within the year of disposition and one full calendar year following the year of disposition,” they note, adding that the changes would apply to qualifying dispositions which occur on or after January 1, 2025.
The Canadian Entrepreneurs’ Incentive, meanwhile, announced in Budget 2024, is expected to reduce the inclusion rate on capital gains realized on the disposition of eligible business shares. According to CALU, this mention in the fall economic statement reaffirms the government’s plan to proceed with enacting the legislation, effective for dispositions taking place after 2024.
