Unpacking the Budget: Your Top Questions on Canada's Latest Financial Moves

Alright, so Canada's latest federal budget dropped, and honestly, it left a lot of us with our heads spinning, didn't it? It's always a big deal, of course, but this one felt particularly dense, especially with those capital gains changes grabbing most of the headlines. The Globe and Mail's personal finance gurus—Rob Carrick, Rita Trichur, and Erica Alini—sat down to tackle some of the most pressing questions from you, our readers. And, you know, it's a good thing too, because some of this stuff is, frankly, pretty intricate.

Let's dive right into what everyone seems to be talking about: the capital gains inclusion rate. For quite a while, it’s been 50 per cent. Meaning, if you sold an investment property or a stock for a profit, you’d pay tax on half of that gain. But that's changing. As of June 25, 2024, it jumps to 66.7 per cent for individuals on gains above $250,000 in a year, and for corporations and trusts, well, it's 66.7 per cent on all their capital gains. That's a pretty substantial shift, you could say. Naturally, the first thing people ask is about their homes. And, thankfully, your primary residence? Still completely exempt. That's a relief for many, myself included!

But what about those who have, say, a cottage or an investment property? Or perhaps shares in a small business? Ah, here’s where it gets a little more nuanced. Cottages and investment properties, yes, they're definitely caught in this net. However, if you're selling qualified small business corporation (QSBC) shares, there's a lifetime exemption of $1.25 million. And stock options? Well, it’s a bit of a maze, but generally, the first $250,000 of gains annually are still included at the old 50 per cent rate, even if you’re exercising options. Beyond that? The new rate applies. It’s definitely something to discuss with your financial advisor, because, honestly, the specifics can really make a difference.

Moving on, the Alternative Minimum Tax (AMT), which actually started January 1, 2024, is another significant piece of the puzzle. This isn't exactly new from this budget, mind you, but it's designed to ensure high-income earners pay at least a minimum amount of tax, even if they have a lot of deductions or tax credits. Essentially, more 'tax preference items' (like certain deductions) are now fully included when calculating your AMT, and the basic exemption has gone up to $173,205. The goal? To catch those who might otherwise slip through the cracks with too many tax breaks. It's a way, perhaps, to ensure fairness in the system, or at least that's the intention.

And then there's the Canada Carbon Rebate (CCR). You might remember it as the Climate Action Incentive; it's just got a new name, really. This is money that gets paid out quarterly, typically via direct deposit, to help offset the cost of the federal carbon tax. You don't need to apply, which is nice for a change. It’s available to residents in specific provinces – Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador. So, if you're in one of those spots, keep an eye on your bank account for those payments.

The First Home Savings Account (FHSA) has been quite popular, and for good reason. It lets you save up to $8,000 a year, with a maximum lifetime contribution of $40,000, for your first home. Unused contribution room? It carries forward, which is a neat feature. You can open one if you’re a Canadian resident between 18 and 71 and haven't owned a home in the last four years. It’s a genuinely useful tool for aspiring homeowners, providing both tax-deductible contributions and tax-free withdrawals for a qualifying home purchase. A bit of a win-win, really.

Healthcare was another big theme, with the rollout of the Canadian Dental Care Plan (CDCP). It's happening gradually, starting with seniors, and it's income-tested – no premiums required. If you're a Canadian resident, don't have private dental insurance, and your household net income is under $90,000, you might be eligible. It’s a significant step towards more accessible dental care, certainly. Plus, the Pharmacare Program is making foundational strides, starting with coverage for contraception and diabetes medications. Big steps, albeit slow, toward a more universal system.

Finally, the Mortgage Charter. Now, this isn't legislation, remember, but rather a set of expectations the government has for banks. Things like offering temporary amortization extensions, waiving fees for advice, and not requiring homeowners to 'qualify' at higher rates when renewing an existing mortgage. It's meant to give some relief to those grappling with higher interest rates. It's not a silver bullet, but it's an attempt, at least, to provide some breathing room. So, while the budget did bring a lot of changes, especially on the capital gains front, it also touched on housing, healthcare, and some ongoing support programs. Navigating it all? Well, that's where a little expert insight really comes in handy.