Navigating Tax Hikes: Implications of Capital Gains Changes
Adrian C. Spitters FCSI?, CFP?, CEA? President, Author, Private Wealth Advisor
I Execute Tax-Efficient Investment Portfolio Solutions So That Your Business, Family, And Estate Assets Are De-Risked And Protected Against Financial Risk, Economic Threats, Inflation And Higher Taxes.
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Source Article: Canadian, 93, wanted to give her kids a gift. Instead, she got slapped with $40K in capital gains tax bill
Gifts Turned Into Unexpected Tax Woes
Liz Diachun’s heartwarming intention to gift her family two lots of her farm property in Warkworth for establishing homes has hit a fiscal roadblock. Despite being a benevolent act, her lawyer dropped the bombshell: the gifted land must be appraised at fair market value for tax assessment purposes. The result? A hefty tax bill of approximately $40,000, a sum she, as a pensioner, finds impossible to pay.
Liz Diachun’s heartwarming intention to gift her family two lots of her farm property in Warkworth for establishing homes has hit a fiscal roadblock. Despite being a benevolent act, her lawyer dropped the bombshell: the gifted land must be appraised at fair market value for tax assessment purposes. The result? A hefty tax bill of approximately $40,000, a sum she, as a pensioner, finds impossible to pay.
“I’m on pension. How am I going to pay for that?” exclaimed the 93-year-old Diachun. “I’m not one of the wealthy. Who is going to give me a mortgage? Who is going to give me a loan?”
The impending deadline adds urgency to her situation. With the capital gains tax inclusion rate set to increase from 50 percent to 67 percent for amounts exceeding $250,000, Diachun faces a narrower window for resolving her tax dilemma.
Understanding Capital Gains Tax
Capital gains tax, a levy on profits from selling assets like stocks and real estate, is undergoing significant adjustments. Presently, only half of the capital gain is considered taxable income, and it is taxed at personal income rates based on individual earnings and tax brackets.
Under the new federal budget, effective June 25, the inclusion rate for capital gains surpassing $250,000 annually for individuals will climb to 66.5 percent. While the legislation is pending, this uncertainty leaves Canadians like Diachun grappling with pivotal financial decisions without concrete details on the potential tax ramifications.
For corporations and trusts, the 66.5 percent inclusion rate applies universally to all capital gains without the $250,000 threshold. Additionally, a one-time boost in the lifetime capital gains exemption for small business shares and qualifying farm or fishing properties, from $1 million to $1.25 million, aims to ease the burden for certain segments.
A Positive Outlook: Securing Financial Futures
Despite the evolving tax landscape and looming uncertainties, there are pathways to navigate the challenges and secure financial futures. Through strategic wealth planning, tailored investment solutions, and prudent asset protection measures, individuals can mitigate risks and preserve wealth for generations to come.
A Path Forward: Wealth Planning Solutions
To address the elevated tax challenges my clients face under the Trudeau Government and provide a more secure wealth management option,? I have partnered with one of Canada's leading independent private wealth management firms serving high-net-worth clients nationwide. This firm offers professional investment management and comprehensive wealth planning advice from a fiducially focused, client-first perspective, providing affluent Canadians access to sophisticated strategies and solutions usually reserved for the ultra-affluent.
Driven by a "capital preservation first" philosophy, the firm generates consistent, tax-efficient returns uncorrelated to public markets. Through my relationship with this firm and other key industry professionals and firms, my clients gain exclusive access to alternative investments such as private equity, private real estate, precious metals, commodities, government-sanctioned flow-through tax structures, and tax-efficient corporate insurance solutions offered through mutual life companies – all designed to fortify and de-risk a client's personal, family, business and estate assets against financial risk, economic threats, inflation and higher taxes.
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Protecting Wealth in Uncertain Times
In light of the revelations made in David Rogers Webb's book" The Great Taking ," to further safeguard wealth, the firm employs a custodial model, where client assets are held securely by an independent third-party custodian rather than commingled with the firm's assets. This crucial segregation of assets provides an additional layer of protection, reducing the risk of seizure or misappropriation in a financial crisis or institutional insolvency. The custodial model offers investors a safeguarded solution to help secure their wealth separately from the management firm.
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Secure Your Wealth: Consider Moving Your Assets to The U.S.
Faced with economic uncertainty and high taxes in Canada, many affluent Canadians are exploring relocating their wealth to the United States. The US offers a more favourable tax environment and stronger asset protection laws, making it an attractive option to shield their hard-earned money from risks and higher taxes.
Enter Peter J. Merrick, a renowned cross-border specialist who has dedicated his career to helping Canadians navigate the complexities of international wealth management. With over 25 years of experience, Merrick has facilitated seamless asset transfers for countless high-net-worth individuals and families seeking to diversify their holdings and safeguard their financial futures.
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Complimentary Portfolio Evaluation
As a valued reader, we are offering a complimentary portfolio evaluation to discuss how to fortify and de-risk your portfolio against financial institution risk, economic threats, inflation, and higher taxes. To schedule your complimentary portfolio evaluation, email us at [email protected] or use my Calendly Link .
As the financial landscape becomes increasingly complex and uncertain, the value of professional guidance and a diversified, risk-mitigated portfolio cannot be overstated.
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