The federal government presented Budget 2024 as a plan to bring “fairness for every generation” of Canadians. It contains a range of tax changes—many aimed at higher-income earners—along with measures to help renters, first-time homebuyers, small businesses and people who rely on federal benefits. Below is a clear summary of the key items and what they mean for households and businesses.
The new capital gains inclusion rate
One of the most significant tax changes announced in Budget 2024 is an adjustment to the capital gains inclusion rate for certain taxpayers. Historically, 50% of a capital gain has been taxable (a 50% inclusion rate). The budget raises that inclusion rate to two-thirds (approximately 66.7%) for capital gains realized by corporations and trusts. It also applies to individuals with capital gains above $250,000 in a year.
As part of this change, stock option income for employees will be affected: the stock option deduction is reduced so that employees with option income exceeding $250,000 will effectively have only one-third of the gain excluded. These changes take effect on June 25, 2024.
Lifetime capital gains exemption
The Lifetime Capital Gains Exemption (LCGE), which provides a tax-free exclusion for qualifying small business shares, farm or fishing property, will increase. For sales after June 25, 2024, the exemption limit rises from $1,016,836 to $1,250,000 per taxpayer. After 2026, the limit will be indexed to inflation. This increase helps business owners who qualify to shelter a larger portion of gains on eligible property.
Canadian Entrepreneur’s Incentive
Budget 2024 introduces a Canadian Entrepreneur’s Incentive, effective January 1, 2025. This incentive reduces the taxable portion of certain capital gains for qualifying founding investors by half. Eligible investors must meet specific criteria and the incentive excludes certain professional corporations and businesses where the principal asset is reputation or personal skill. Sectors such as financial services, insurance, real estate, food and accommodation, arts, entertainment, consulting and personal care are excluded. The incentive is phased in: it begins with smaller amounts and grows in $200,000 increments each year until reaching a $2 million limit by January 1, 2034.
Alternative Minimum Tax
The Alternative Minimum Tax (AMT) changes from the 2023 budget were expanded. Taxpayers who face AMT calculations—and who claim large deductions or credits—will now be able to include 80% of the charitable donation tax credit in the AMT calculation, rather than only 50%. This adjustment is intended to avoid penalizing philanthropy and to encourage charitable giving.
Mineral Exploration Tax Credit
The 15% Mineral Exploration Tax Credit, which applies to investors who buy flow-through shares, is extended by one year. Instead of expiring on March 31, 2024, it will now remain available through March 31, 2025, giving resource-focused investors additional time to use the credit.
Business income tax measures
Beyond the higher capital gains inclusion for corporations, the budget does not introduce broad tax hikes targeted at most small business owners. Several incentives and clarifications aim to accelerate clean-energy and clean-technology investments—for example, tax credits for purchasing equipment that generates electricity from renewables or produces qualifying critical minerals.
Accelerated capital cost allowance (CCA) rules were announced to enable faster tax deductions for certain new purpose-built rental real estate projects that begin construction before January 1, 2031 and are available for use by December 31, 2035. The half-year rule will not apply in some cases, allowing larger first-year deductions. The budget also permits immediate expensing for certain productivity-enhancing assets purchased between the budget date and December 31, 2026, including patents (class 44), data network infrastructure equipment (class 46), and general-purpose electronic data-processing equipment and systems software (class 50).
For small and medium-sized businesses, a Canada Carbon Rebate for Small Businesses will return a portion of carbon pricing collected in several provinces to eligible corporations with fewer than 500 employees. The rebate calculation will be automatic and will consider the number of employees a business has in each participating province.
Building new homes
Budget 2024 dedicates billions in spending and loans to increase housing supply. Measures include building homes on federal properties such as Canada Post land and National Defence sites, converting underused federal office buildings into housing, and introducing incentives to develop vacant land. These actions are intended to stimulate construction and ease housing pressure over time.
Incentives for renters
The budget contains several renter-focused measures. A Canadian Mortgage Charter will let renters optionally report their rent payment history to lenders and credit bureaus, potentially improving credit scores when applying for a mortgage. A Tenant Protection Fund will finance legal and information services for tenants and support renters’ rights organizations. The federal government also proposed a Canadian Renters’ Bill of Rights to guard against unfair landlord practices and improve transparency in rental pricing, alongside the idea of a standardized national lease agreement.
Increased mortgage amortization
For first-time homebuyers purchasing newly constructed homes, the Canadian Mortgage Charter introduces 30-year mortgage amortizations for insured mortgages. This extends the maximum amortization by five years and is meant to lower monthly payments for eligible buyers, easing the transition into homeownership in a high-rate environment. These insured 30-year mortgage products will be available beginning August 1, 2024, with possible future expansion to other borrower groups.
Home Buyers’ Plan increase
The Home Buyers’ Plan (HBP) withdrawal limit from registered retirement savings plans (RRSPs) rises to $60,000 from the previous $35,000. This larger withdrawal allowance is available immediately and, combined with the First Home Savings Account introduced in 2023, boosts tax-preferred options for buyers saving for a first home. The budget also temporarily delays the start of mandatory HBP repayments, so repayments will begin in the fifth year after withdrawal rather than earlier.
Qualified investments for registered plans
The government will consult on expanding the types of investments eligible in registered accounts (RRSPs, TFSAs, RRIFs, FHSAs, RESPs, RDSPs and DPSPs). Items under consideration include harmonizing rules for holding small businesses in registered plans, broader eligibility for annuities across registered accounts, and whether certain crypto-backed assets should qualify as registered-plan investments.
National Pharmacare Plan
The budget provides $1.5 billion over five years to begin implementing the recently passed Pharmacare Act. This initial funding marks the first phase of a National Universal Pharmacare program, focusing on essential medications and improving access to treatments such as contraceptives and diabetes medications like insulin.
Disabled Canadians
The government announced $6.1 billion in funding for the Canada Disability Benefit over the next six years. Eligible low-income adults aged 18 to 64 who qualify for the Disability Tax Credit could receive payments of up to $2,400 annually; the program is expected to help over 600,000 Canadians. The budget also aims to streamline access to the Disability Tax Credit and expand the Disability Supports Deduction to cover items such as service animals, assistive keyboards and braille displays, digital pens, speech recognition devices, ergonomic chairs and bed positioning devices.
CPP Death Benefit
The Canada Pension Plan death benefit would be increased for certain individuals—from the current $2,500 to $5,000—and children’s benefits would also be raised to provide additional support to survivors.
What does the 2024 federal budget mean for you and your finances?
The government projects a $40-billion deficit for 2024–25 and is funding many of the new housing, health and social measures through a combination of spending and tax changes, including higher taxes on high-income individuals, corporations and trusts. Because the budget targets housing supply, renter protections, health care affordability and supports for people with disabilities, it will have tangible effects across multiple generations of Canadians.
Read more about personal finance:
- It’s possible to be a first-time home buyer twice—here’s how
- TFSA contribution room calculator
- What’s my RRSP contribution limit?
- What is a non-registered account and how does it work?