Capital Gains Tax Hike Cancelled – What It Really Means for Your Wealth Strategy
The federal government has officially cancelled the proposed increase to the capital gains inclusion rate. The rate will remain at 50%, alongside the 2024 Lifetime Capital Gains Exemption (LCGE) increase to $1,250,000 for qualified small business shares and farming or fishing property.
This is a positive development—but don’t get comfortable. The risk to your estate, business, and legacy hasn’t gone anywhere.
Why This Matters
Even without the hike, capital gains taxes and deemed disposition at death can take a major bite out of your wealth. For business family leaders, incorporated professionals, and high-net-worth individuals, this is a wake-up call to sharpen your estate and succession planning.
A key issue remains: under Canada’s deemed disposition rules, all capital assets are treated as if they’ve been sold at fair market value when you die. This can create a substantial tax bill, due immediately—often before heirs are ready to manage or liquidate the estate’s assets. And while the LCGE provides relief for certain small business or farm properties, it doesn’t apply universally. Without planning, your estate could face a liquidity crisis at precisely the worst time.
This isn’t just about reacting to tax changes—it’s about proactively protecting your wealth from the next one.
For Business Families & Incorporated Professionals
If you own a privately held company, succession planning must include strategies for minimizing the tax burden and creating tax-free liquidity. Deemed disposition can trigger hundreds of thousands—if not millions—in taxes upon your passing.
Our planning tools include:
- Corporate-owned life insurance, which provides a tax-free death benefit directly to the corporation. This cash can then be paid out tax-free to shareholders through the Capital Dividend Account (CDA), providing heirs with funds to pay taxes or continue operations.
- CDA maximization, which turns insurance proceeds into tax-free shareholder payouts—crucial in preserving the business without forced sales.
- LCGE optimization, ensuring your business qualifies and the exemption is fully utilized across shareholders, especially in multi-generational transitions.
With proper planning, life insurance becomes more than a contingency tool—it becomes a central component of tax-efficient wealth transfer.
For Investors & Real Estate Owners
Non-registered investments and real estate portfolios are especially vulnerable to capital gains tax. While RRSPs and TFSAs offer shelter during life, their protections don’t extend to taxable assets at death.
A well-designed personal or jointly held life insurance plan can:
- Create guaranteed liquidity for tax bills
- Protect appreciated assets from forced liquidation
- Equalize inheritances among heirs with differing needs or roles
- Minimize disruption to real estate holdings or investment strategies
Unlike selling assets to raise cash, life insurance proceeds are delivered tax-free, on time, and outside the estate—helping avoid probate and keeping the distribution of wealth private and efficient.
This makes insurance a cornerstone of intergenerational planning, especially when real estate or concentrated investment positions are involved.
Bottom Line: The Hike Was Cancelled. The Risk Wasn’t.
The capital gains inclusion rate stays at 50%, and the enhanced LCGE creates valuable new opportunities—but death taxes still loom large. And tax policy can shift again at any time.
Without a tailored strategy—and the right insurance foundation—your estate, business continuity, and wealth transfer and preservation plans remain vulnerable.
Now is the time to stress-test your plan.
👉 Contact us today to ensure your wealth is protected—no matter what changes come next.