Impacting Tax Updates
What This Covers
Key 2024 tax changes in Canada affecting:
Short-term rental income (e.g., Airbnb)
Alternative Minimum Tax rules
CPP (Canada Pension Plan) increases
Capital gains, dividends, and employee stock options
Strategic considerations for corporate and personal wealth planning
Why This Matters
Clients actively investing or earning through real estate, salary, or corporations need to adapt their wealth-building strategies to stay compliant and tax-efficient in light of recent federal policy changes. These updates could significantly reduce net returns if not properly accounted for.
Key Insights by Timestamp
(00:00 – 02:08) Short-Term Rental Expense Deductions Eliminated
Beginning January 2024, short-term rental income (like Airbnb) can no longer be reduced by expenses for tax purposes.
Example: Earning $100,000 with $20,000 in cleaning/maintenance expenses, previously deductible, is now fully taxed on $100,000.
This change does not affect long-term rentals, which remain exempt from charging GST/HST.
(02:15 – 06:40 mins) Enhanced Alternative Minimum Tax (AMT)
AMT ensures a minimum tax is paid, even if deductions or credits are claimed.
Rate increased from 15% to 20.5%.
Capital gains, employee stock options, dividends, and other deductions now receive reduced or no preferential treatment under AMT.
Capital gains now 100% taxable (vs. 50%) under AMT.
Dividend tax credits and stock option deductions now cut to 50% or removed entirely.
(06:42 – 10:08) CPP Contributions Increased (CPP1 + New CPP2 Layer)
CPP1 remains at 5.95% on salaries up to $68,500.
New CPP2 layer adds 4% on income between $68,500 and $73,800.
Self-employed individuals are hit harder, paying both employer and employee sides, effectively doubling the burden.
Effective total CPP rate on higher salaries is now approximately 6.5% or more.
(11:12 – End) Strategic Wealth Capture Reminder
Encouragement to revisit policy-based financial strategies.
Emphasizes the importance of reclaiming control over cash flow, especially for corporate owners navigating new tax limitations.
Clients are urged to speak with their coach to adapt strategies in light of these updates.