What Didn’t Happen in the Economic Update?

Beth Graddon

The December 14 Economic Update from the Federal Government primarily focused on pandemic recovery and healthcare sector as we’re entering a new wave of pandemic response. But there is some really good news to offset this reality. What was noticeably absent from the Update?  Investors and high-income earners will be pleased. But, will we see them addressed in the next federal budget?

Capital Gains Inclusion Rates. Good news: there have still been no changes to capital gains inclusion rates. With both financial and real estate markets continuing to rise in value, profit taking is clearly on the table for many clients.

New News on Minimum Taxes for High Income Earners. The September Federal Election saw a number of proposals that may still arise in the next budget:  for example, a minimum tax rate of 15% for those with taxable incomes about $222,661 in 2022.  This provision with claw back benefits received from certain refundable and non-refundable tax credits not caught by the existing Alternative Minimum Tax.  Similar to the AMT, the tax would replace the regular federal tax calculations when those results are lower.  In addition, the new minimum tax would allow the foreign tax credit to avoid double-taxation, as well as the refundable Quebec abatement. 

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