The federal government has announced changes to the capital gains tax rates and exemptions, which will take effect on June 25, 2024. Here's a summary of the key points:

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• The inclusion rate for capital gains above $250,000 realized annually by individuals will increase to two-thirds from the current one-half. For capital gains up to $250,000, the inclusion rate will remain at 50%.

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• For corporations and trusts, the inclusion rate for all capital gains realized will increase to two-thirds.

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• The lifetime capital gains exemption (LCGE) will be raised to apply to $1.25 million of capital gains, up from the previous amount of $1,016,836 for 2024. This change will apply to dispositions on or after June 25, with indexation resuming in 2026.

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• The proposed changes present an opportunity for investors to consider realizing a significant amount of gains before June 25 to take advantage of the lower 50% inclusion rate on certain parts of their portfolio.

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• Individuals who may exceed the $250,000 threshold due to the sale of assets such as vacation properties or businesses may be affected by these changes.

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• Investors will need to assess whether holding investments in a corporation still makes financial sense, considering the additional tax costs that will apply to corporate gains in comparison to gains earned personally.

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• The $250,000 threshold for individuals will apply to capital gains realized directly or indirectly through a partnership or trust, after applying any capital losses from the current year or from previous years.

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These changes will likely lead investors to re-evaluate their investment strategies and consider potential tax implications. It is recommended for individuals to consult with their financial or tax advisors to better understand the impact of these changes on their specific financial situation.