The Canadian Federal Budget 2024 and You: Navigating the New Economic Landscape 

May 24, 2024

The Canadian Federal Budget 2024 has arrived, bringing a host of new policies, tax adjustments, and funding allocations aimed at addressing the nation’s economic opportunities and challenges. In this article, we break down the key elements of the budget to help you understand its implications, especially as they pertain to Magenta investors.

Government policies can often be overwhelming, filled with complex details and a laundry list of exemptions and policies. It can be challenging at times to find what is and is not relevant to your day-to-day life. Our summary focuses on the most relevant points to make it easier for you to grasp what matters most to your financial decisions. Before making important financial decisions, use this article as a starting point to better understand the budget and to engage in informed discussions with your financial advisors.

Canadian Federal Budget Changes to the Capital Gains Tax

To reduce the appeal of real estate as a class of speculative asset, the federal government will be increasing the capital gains tax on June 25th with a view toward driving down the cost of housing. To break this down further, whenever you sell an asset or investment for more than you paid for it, that difference is a capital gain. Conversely, when you sell an asset for less than you paid for it, this is a capital loss. These assets or investments could take the form of:

  • stocks and bonds;
  • shares in a mutual fund; or
  • physical property (with the notable exception of gains from the sale of your primary residence), to name a few.

As an individual, the changes coming into effect on June 25th only apply if you stand to make more than $250,000 in a single year from capital gains (after taking into consideration capital losses)- up to that point, you will still pay the current capital gains tax of 50%. It is only for capital gains over $250,000 that the 66.67% rate comes into effect. On the other hand, all capital gains made by a corporation or trust will be taxed at the new rate of 66.67%.

Managing Your Tax Burden

You can take many steps to manage your finances when it relates to the 66.67% rate. For instance, income earned and funds withdrawn from a Tax-free Savings Account (TFSA) are not subject to the capital gains tax but do have strict annual contribution limits. Capital gains income placed in a Registered Retirement Savings Plan (RRSP) is not taxed until the funds are withdrawn, at which point they are taxed at your marginal tax rate. Your Magenta shares are both TFSA and RRSP eligible.

The federal government taxes based on your net capital gains, rather than your gross capital gains. Knowing when to sell an underperforming asset or investment for less than you paid for it (thus creating a capital loss) can be a great long-term strategy to keep your annual capital gains within a favourable tax bracket. This provided that the mitigation in potential additional taxes is greater than the immediate loss.

Capital gains related to the sale of qualified small business corporation shares or qualified farm or fishing property are considered tax-exempt up to a limit of one’s lifetime capital gains exemption (LCGE). As a Canadian, your LCGE will increase from $1,016,836 to $1.25 million on June 25th, alleviating capital gains taxation for those specific investment classes.

Looking Ahead

As a Canadian, your marginal effective tax rate (METR) is 14.5%, which is the lowest among all G7 counties. The international Organisation for Economic Co-operation and Development (OECD) calculates your METR. This calculation takes your federal and provincial income tax rates and combines them with the effective tax rate from government benefits, credits and tax deductions that are dependent on your income.

Canada’s inflation rate has decreased from 8.1% in June 2022 to 2.8% in February 2024. The introduction of the Canadian Entrepreneurs’ Incentive, offering a lower capital gains tax rate of 33.3% up to $2 million in lifetime capital gains from selling small business shares, positions Canada as an attractive destination for business growth and investment.

There have been many changes to the Canadian Mortgage Charter, namely:

  • new provisions that allow for 30-year amortizations for first-time home buyers purchasing newly constructed homes; and
  • expanded access to Halal mortgages among other alternative financing options.

This will allow younger Canadians and Muslim Canadians to participate in the housing market like never before- adding two untapped demographics of borrowers to Magenta’s diverse portfolio.

For more information on the federal budget, please visit the Government of Canada website.

For more information on investing in Magenta shares, please reach out to us.


The opinions and viewpoints presented in this document are exclusively those of the several writers and do not represent the perspectives of any associated individuals or organizations, including but not limited to the writers’ current or former employers. This article serves purely informational purposes, and the writers have made efforts to verify the accuracy of the information and analysis. The writers take full responsibility for any opinions, forecasts, or predictions made. They do not guarantee the precision or completeness of the document’s contents. This document does not offer professional or investment advice. The writers will not be liable for any consequences resulting from reliance on this piece. Readers should consult with a certified expert before making any financial decisions.