Blog
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Federal Government Defers Capital Gains Inclusion Rate Hike Until 2026
Ottawa, Canada – The federal government has announced a deferral in the implementation of a planned increase to the capital gains inclusion rate, pushing it from June 25, 2024, to January 1, 2026. Finance Minister Dominic LeBlanc made the announcement on Friday, stating that the delay aims to provide certainty for Canadians, particularly as tax season approaches.
LeBlanc also revealed that the government intends to introduce new exemptions alongside the changes to prevent middle-class Canadians from facing higher taxes should the policy become official. He assured that forthcoming legislation would include an increase to the lifetime gains exemption and a new incentive for entrepreneurs.
“The deferral of the increase to the capital gains inclusion rate will provide certainty to Canadians, whether they be individuals or business owners, as we quickly approach tax season,” LeBlanc stated. “Given the current context, our government felt that it was the responsible thing to do.”
The proposed hike, initially introduced in the Liberals’ latest federal budget, aims to raise the taxable portion of capital gains for corporations from one-half to two-thirds. For individuals, the policy would apply to capital gains earnings exceeding $250,000. However, despite being tabled as a ways and means motion, the changes have yet to pass through Parliament, which is currently prorogued until March 24.
Despite the legislative delay, the Canada Revenue Agency (CRA) had already begun preparations to administer the changes. Parliamentary convention dictates that taxation proposals take effect as soon as the government tables a notice of ways and means motion, prompting early adjustments by the tax agency.
With the deferral in place, businesses and investors will have more time to prepare for the potential tax changes, while the government works to finalize exemptions and incentives aimed at mitigating the impact on middle-class Canadians and entrepreneurs.
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When a Key Person Leaves, Can Your Business Survive It?
Prepare your business to run smoothly even if a top employee or founder can’t work.
Learn how Key Person Insurance and Overhead Expense Coverage protect your team, cash flow, and reputation. -
What Happens If a Business Partner Passes Away?
Avoid ownership disputes, financial strain, and chaos with a funded Buy/Sell Agreement.
This guide explains how to build and fund a plan so your business ends up in the right hands. -
Is Your Business Sitting on Too Much Cash?
Holding surplus funds inside your company can trigger big taxes.
Find out how to shelter that money with insurance-based strategies and protect it for the future. -
Comprehensive Financial Planning for Business Owners : Secure Your Future Today
As a business owner in Canada, you pour your heart and soul into growing your company—but have you aligned your personal financial goals with your business success? Comprehensive financial planning ensures that your business works for you, not just the other way around.
At WiseInvest®, we help business owners take a strategic, tax-efficient approach to managing their corporate and personal finances, so they can build long-term wealth, protect their legacy, and secure their family’s future.
Why Every Business Owner Needs a Financial Plan
Running a business without a financial roadmap can lead to missed opportunities, excessive taxes, and financial uncertainty. A comprehensive plan ensures:
✅ Personal & Business Finances Are Aligned
Your business is more than an income source—it’s a powerful financial tool. Structuring your finances wisely helps you reduce taxes, maximize savings, and convert business wealth into personal security.
✅ You Maximize Tax-Efficient Investing
Instead of leaving profits idle, smart investing within your corporation can help grow wealth in a tax-efficient way. Strategies like corporate-owned life insurance and investment holding companies can reduce tax burdens while increasing long-term gains.
✅ You Have a Plan for Business Continuity & Succession
What happens to your business if you step away or retire? A succession plan ensures your company’s longevity while protecting your financial interests. Whether you plan to sell, transfer, or pass it on, having a structured exit strategy is key.
✅ Your Family’s Future is Secure
Your business should provide financial security—not stress—for your loved ones. Planning for income protection, retirement, and estate planning ensures that your hard work benefits your family for generations to come.
Take Control of Your Financial Future
Financial success isn’t just about making money—it’s about keeping more of it, investing wisely, and securing your future. At WiseInvest®, we specialize in helping Canadian business owners build tailored financial plans that maximize tax savings, grow wealth, and protect their legacy.
📞 Contact WiseInvest® today for a free consultation. Let’s build a stronger financial future—together.
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How Are Businesses Taxed in Canada?
As a business owner in Canada, understanding how your corporation is taxed is crucial. Taxes can significantly impact your profits, and knowing the rules can help you plan effectively. Whether you’re running a small business or a large corporation, the Canadian tax system categorizes income in specific ways, each with its own tax treatment.
How Business Income is Taxed in a Corporation
Your corporation’s earnings generally fall into two categories:
- Active Business Income (ABI): This is the money your corporation makes from running its core business—selling products, providing services, or any operations that generate revenue.
- The good news? If your business qualifies for the Small Business Deduction (SBD), the first $500,000 of ABI is taxed at a lower rate (about 12-15%), depending on the province.
- Any income above $500,000 is taxed at a higher corporate tax rate (26-31%).
- Passive Income: This includes money earned from investments, rental properties, dividends, interest, or capital gains inside your corporation.
- The downside? Passive income is taxed at a much higher rate (about 50%).
- However, a portion of this tax is refundable when your corporation pays dividends to shareholders.
Why Business Owners Should Be Aware
If your corporation earns passive income, you need to be cautious. Once passive income exceeds $50,000 per year, it starts reducing your Small Business Deduction, meaning you could pay higher taxes on your active business income too!
Without a proper understanding of these tax rules, business owners may find themselves facing unexpected tax bills and reduced profitability.
How Corporate Taxes Affect Business Decisions
The way corporate income is taxed influences many aspects of business operations, including:
- How much profit is reinvested in the business
- The best way to pay yourself (salary vs. dividends)
- How and where to invest corporate funds
- Whether to hold investments personally or in the corporation
Understanding these factors can help business owners make informed financial decisions that align with their long-term goals.
Know the Tax Rules, Protect Your Profits
Canadian business taxation can be complex, but being aware of how your corporation is taxed is the first step to making informed financial choices. Whether you operate a small business or a growing enterprise, knowing the difference between active and passive income, corporate tax rates, and how different revenue streams are treated is essential for financial success.
At WiseInvest®, we believe knowledge is the first step toward financial success. Understanding business taxation is essential, but navigating it alone can be overwhelming.
📞 Curious about what these tax rules mean for your business? Let’s talk.
- Active Business Income (ABI): This is the money your corporation makes from running its core business—selling products, providing services, or any operations that generate revenue.
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Why Business Continuation Planning is Critical for Canadian Business Owners
Running a business is more than just day-to-day operations. It’s about securing your legacy, protecting your employees, and ensuring your hard work doesn’t go to waste in the face of unexpected events. Imagine what would happen if a key person in your business suddenly passed away or became disabled. Would your business survive? Would your family and employees be financially secure?
This is where business continuation planning comes in. It’s an essential part of responsible business ownership, ensuring that your company can withstand unforeseen challenges and continue thriving.
The Risks You Need to Plan For
Without a solid continuation plan, your business could face financial and operational turmoil in the event of:
1. Key Person Death or Disability
If a vital team member, such as an owner, executive, or key employee, were to pass away or become disabled, the impact could be devastating. Lost expertise, disrupted operations, and financial losses can cripple a company.
A key person insurance policy ensures that the business has the financial resources to recover, recruit, and train a replacement without struggling.
2. Partner Death or Disability
If you own a business with a partner, have you considered what would happen if they were no longer able to work? Would their family step in? Would you be forced to buy out their shares unexpectedly?
A buy-sell agreement funded by life and disability insurance ensures a smooth transition of ownership, protecting both the business and the surviving partners from financial strain.
3. Lack of an Exit Strategy
At some point, every business owner needs an exit strategy—whether through retirement, selling the business, or passing it down to the next generation. A proper continuation plan ensures the process is smooth, maximizing value while minimizing disruption.
How to Protect Your Business
Protecting your business from these risks isn’t complicated, but it requires proper planning. Here’s how WiseInvest can help:
- Key Person Insurance: Provides financial support to help the business recover from the loss of an essential team member.
- Buy-Sell Agreements: Ensures business continuity by pre-determining ownership transfer in the event of a partner’s death or disability.
- Corporate-Owned Life Insurance: Helps safeguard the company’s financial future while offering tax-efficient benefits.
- Disability Insurance: Protects business owners and employees from the financial impact of unexpected disabilities.
- Succession Planning: Helps business owners structure a smooth transition when it’s time to retire or exit the business.
Secure Your Business’s Future Today
Business continuation planning isn’t just about protection—it’s about peace of mind. Whether you’re a sole proprietor or have a team relying on you, ensuring your business can survive and thrive in the face of unexpected events is one of the most responsible steps you can take.
At WiseInvest™, we specialize in helping Canadian business owners create customized strategies to protect their companies.
📞 Don’t leave your business’s future to chance. Contact WiseInvest™ today and safeguard what you’ve built!