Understanding the 2024 Canadian Federal Budget: A Guide for the Everyday Taxpayer

Apr 24, 2024

byNDAX Labs

The Canadian government has introduced the 2024 federal budget, which is packed with changes that could affect your wallet, especially if you are investing in assets or cryptocurrencies. Let us break down what these updates mean for you in simple terms.

Capital Gains: What’s New?

First, let us discuss capital gains. Capital gains are the profit you make when you sell an investment for more than you bought it for, like stocks, real estate, or Cryptocurrency. The big news is that the government is taking a bigger slice of that profit through the “inclusion rate” applied to gains more than $250,000 for individuals.

In Canada, the inclusion rate has been 50% since the year 2000. And, for the first $250,000 of your capital gains, its business as usual. You will be taxed on half of that gain, just like before. But here is the change: The inclusion rate jumps if your gains are over $250,000. Now, two-thirds (66%) of that excess gain will be considered taxable income.

Here is an example: Imagine you sold some Bitcoin and made a total capital gain of $325,000 (difference between your purchase price and sale price). Under the old rules, you would pay tax on $162,500 of that. With the new budget, you will pay tax on $175,000. That is an extra $12,500 in taxable income, which could mean around $3,750 more in taxes if you are taxed at a 30% rate.

And remember, this is not just for individuals. This new inclusion rate also affects corporations and trusts on all their capital gains.

Cryptocurrency: More Reporting Ahead

Cryptocurrency traders, listen up! Starting in 2026, Canada is getting stricter with crypto. They are rolling out the Crypto-Asset Reporting Framework, designed by the OECD.

What does this mean for you?

If you are a Canadian resident or carrying on business in Canada and use Crypto-asset service provider, they will be required to collect information about you (name(s), addresses, birth date, and taxpayer ID) and report to the Canada Revenue Agency (CRA) the annual value for:

Exchanges between crypto-assets and fiat currency;
Exchanges for other crypto assets; and
Transfers of the crypto-asset, including in situations where the crypto-asset service provider processes payments by a customer to a merchant supplying goods or services with a value exceeding US$50,000. The goal is to keep things transparent and ensure everyone pays their fair share of taxes.

Tax Enforcement: Stronger Than Ever

The CRA is also getting more muscle to ensure everyone follows the rules. They will have more power to ask for information, and if you do not comply, the penalties are getting steeper.

What does this mean for you?

The 2024 federal budget is shaking things up. It is all about modernizing tax laws and ensuring the tax system covers all assets. Whether you are selling assets or trading crypto, staying informed and understanding how these changes affect you is crucial.

It is also worth noting that the 2024 Federal budget has not passed yet, and the voting date is yet to be determined.

A Friendly Reminder: This is not professional tax advice. It is always best to chat with a qualified accountant for your specific situation.

Disclaimer: This article is not intended to provide investment, legal, accounting, tax or any other advice and should not be relied on in that or any other regard. The information contained herein is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of cryptocurrencies or otherwise.