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Finance recently released draft legislation to implement the Canadian Entrepreneurs’ Incentive, which will allow individuals to apply a reduced 1/3 inclusion rate on certain capital gains from qualifying dispositions, beginning in 2025. The draft legislation reflects several changes to the original budget proposal, including expanded eligibility for the new incentive and an accelerated five-year phase-in period. In addition, Finance released updated draft legislation that clarifies certain aspects of the proposed change to increase the capital gains inclusion rate for capital gains realized on or after June 25, 2024. Although this draft legislation is largely the same as the previous draft released on June 10, 2024, taxpayers may be interested in several welcome changes included in the latest release, including new transitional rules affecting the capital dividend account (CDA) and hybrid surplus.
Finance is accepting comments on the draft legislation for capital gains until September 3, 2024, and on the Canadian Entrepreneurs’ Incentive until September 11, 2024.
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