What’s New for 2024 and Beyond
Tax laws continue to evolve, impacting both individuals and businesses. This update covers key changes for 2024, as well as a look ahead to 2025 and beyond.
Staying informed can help you plan effectively and avoid surprises.
New for 2024
Tax Rates, Basic Personal Amounts and Indexation
The 2024 top tax rates for BC residents are the same as for 2023 – 53.50% on regular income, e.g. wages, interest, and rental income, 48.89% on non-eligible dividends, 36.54% on eligible dividends and 26.75% on capital gains. These rates apply to income over $252,752 (2023 – $240,716).
The basic personal amount is increased to $15,705 for 2024 ($15,000 for 2023) for net income $173,205 or less. The amount is $14,156 for net income $246,752 or more.
Indexation for 2024 is 4.7%, another large increase after 2023’s 6.3% indexation. The indexation factor impacts various personal income tax and benefit amounts including tax bracket thresholds, amounts relating to non-refundable credits and certain income-tested benefits. As a result, the Old Age Security clawback threshold is $90,997 for 2024 (2023 – $86,912).
Prescribed Interest Rates
Prescribed interest rate on overdue taxes and insufficient instalments for the 1st two quarters of 2024 was 10% and for the remaining two quarters of 2024 was 9%. Given the high rates, it’s highly recommended that arrears taxes and insufficient instalments be paid as soon as possible.
Capital Gains Inclusion Rate
On January 31, 2025, the Department of Finance announced a delay in the proposed increase in the capital gains inclusion rate from 50% to 66.67% until 2026. This means that the inclusion rate for 2024 remains at 50%. On March 9, 2025, Prime Minister-designate Mark Carney says Liberals will kill the proposed capital gains inclusion rate increase.
Lifetime Capital Gains Exemption (LCGE)
The lifetime capital gains exemption (LCGE) on qualified farm or fishing property, or qualified small business corporation shares will rise to $1,250,000 for dispositions occurring from June 25, 2024 to December 31, 2025. Annual indexation for the $1,250,000 limit will resume in 2026. LCGE for dispositions occurring from January 1, 2024 to June 24, 2024 will be $1,016,836 (2023- $971,190).
Alternative Minimum Tax (AMT)
Significant changes to the Alternative minimum tax (AMT) regime for 2024 onward have increased the complexity of the AMT calculation and make it difficult to determine when AMT applies to you. The AMT rate has been increased to 20.5% from 15%. Items not attracting AMT prior to 2024 such as carrying charges, loss carry-forwards and gifts of publicly traded securities will attract AMT for 2024 onward. On the positive side, the basic exemption has been increased to $173,205 for 2024 (the 2nd top federal bracket) from $40,000 for 2023 and prior. Given that trusts (other than graduated rate estate and qualified disability trusts) do not have the basic exemption, these changes may create an AMT liability for trusts in situations where AMT never previously applied.
Bare Trusts
Bare trusts are not required to file a T3 return and Schedule15 for the 2023 and 2024 tax years unless the Canada Revenue Agency makes a direct request for these filings.
Underused Housing Tax (UHT)
For 2023 onward specified Canadian corporations, partners of specified Canadian partnerships and trustees of specified Canadian trusts are added to the list of excluded owners for underused housing tax (UHT) purposes and thus would no longer have UHT reporting obligations. An individual other than in the capacity of a trustee of a trust or a partner of a partnership, who is a Canadian citizen or permanent resident of Canada, has always been an excluded owner since the start of the UHT legislation.
Home Buyer's Plan (HBP)
The Home Buyers’ Plan (HBP) withdrawal limit has increased from $35,000 to $60,000 for withdrawals made after April 16, 2024. In addition, temporary repayment relief was introduced to defer the start of the 15-year repayment period by an additional three years for participants making a first withdrawal between January 1, 2022, and December 31, 2025. Accordingly, the 15-year repayment period will start in the fifth year following the year that the first withdrawal was made.
Residential Real Estate in BC
An expansion of the existing Property Transfer Tax (PTT) exemption amounts for first-time home buyers, newly built homes and purpose-built rental buildings. Previously, first time home buyers were not required to pay any PTT on the first $500,000 of the value of a home, provided that the home was not worth more than $500,000. Beginning April 1, 2024, the threshold for the PTT exemption will be extended to include homes with values of up to $835,000, such that additional first-time home buyers will be exempt from paying PTT on the first $500,000 of the value of a home. PTT will, however, be payable for the portion of the value between $500,000 and $835,000.
Speculation and vacancy tax (SVT) – Effective Jan. 1, 2024, the Province has expanded the speculation and vacancy tax to 13 new communities, which are Vernon, Coldstream, Penticton, Summerland, Lake Country, Peachland, Courtenay, Comox, Cumberland, Parksville, Qualicum Beach, Salmon Arm and Kamloops. Residential property owners in these communities will need to declare for the first time in early 2025 once receiving declaration letter.
Beginning January 1, 2024, persons who have leases registered in the Land Title Office will be responsible for declaring the SVT rather than the owners of the property by March 31, 2025 if the property is located in a designated taxable area.
Land transfer tax – An exemption from the 2% property transfer tax that applies to the fair market value of the residential component of a taxable transaction that exceeds $3 million on the purchase of new qualifying purpose-built rental buildings was effective January 1, 2024.
Clean buildings tax credit – Claim this new 5% refundable tax credit if you incurred and paid (before April 1, 2025 under a contract entered into after February 22, 2022) eligible retrofit expenditures that improve the energy efficiency of multi-unit residential buildings with four or more dwellings (and certain prescribed types of commercial buildings) in British Columbia. Budget 2025 proposes to extend the deadline for qualifying expenditures by one year to March 31, 2026 and the qualifying retrofit to be completed to March 31, 2027. Budget 2025 also proposes to extend the deadline to apply for a retrofit certificate to September 30, 2028, and the deadline to have a building’s energy usage intensity measurement completed to March 31, 2028.
Charitable Donations
Individuals may claim the eligible charitable donation amount of certain gifts made to charities up to February 28, 2025, on their 2024 return. The gift must be in the form of cash, or transferred by way of cheque, credit card, money order, or electronic payment. The gift cannot be made through a payroll deduction or by an individual’s will, if the individual died after 2024.
Non-compliant Short-term Rentals
As of January 1, 2024, individuals are no longer able to deduct expenses related to non-compliant short-term rentals. This change applies to all expenses, including interest expenses, incurred after 2023 to earn income from operating non-compliant short-term rentals, which means a short-term rental in a province or municipality that:
- does not permit operating the short-term rental at that location; or
- requires registration, a license, or a permit to operate the short-term rental, and the short-term rental does not comply with all the proper registration, licensing, and permit requirements.
Volunteer Firefighters' Amount (VFA) and Search and Rescue Volunteers' Amount (SRVA)
Volunteer firefighters’ amount (VFA) and search and rescue volunteers’ amount (SRVA) have increased from $3,000 to $6,000 for eligible individuals who performed at least 200 hours of combined eligible volunteer service during the year.
Immediate Expensing of Eligible Property for Self-employed Individuals
If you carried on an unincorporated business and acquired an eligible property available for use in 2022, 2023 or 2024, you are eligible to claim a 100% deduction of the expenditure for up to $1.5 million in the year the eligible property becomes available for use. Therefore, 2024 will be the last year to take advantage of this rule. The same rule applies to Canadian partnerships. For Canadian-controlled private corporations (CCPCs), the eligible property needed to be acquired and became available for use between April 19, 2021, and December 31, 2023.
Eligible Zero-emission Vehicles
The 100% first-year write-off of eligible zero-emission vehicles ended on December 31, 2023. The first-year write-off of these vehicles has been changed to 75% for 2024 and 2025, and 55% for 2026 and 2027.
Critical Mineral Exploration Tax Credit (CMETC)
Critical mineral exploration tax credit (CMETC) is a 30% investment tax credit for the exploration of specified minerals. The CMETC will only apply to expenditures renounced under eligible flow-through share agreements entered into after April 7, 2022, and before April 1, 2027.
Mineral Exploration Tax Credit
Eligibility for the mineral exploration tax credit has been extended to flow-through share agreements entered into before April 2025 for expenses that are incurred (or that are deemed to have been incurred) before 2026.
Digital News Subscription
Digital news subscription expenses (maximum $500) – For the 2020 to 2024 tax years, you can claim a non-refundable tax credit for expenses you paid in the year for a digital news subscription with a qualified Canadian journalism organization.
New for 2025 and Beyond
Top Tax Rates
The 2025 top tax rates for BC residents are the same as for 2024 which apply to income over $259,829.
Indexation for 2025
Indexation for 2025 is 2.7% (2024 – 4.7%). The indexation factor impacts various personal income tax and benefit amounts including tax bracket thresholds, amounts relating to non-refundable credits and certain income-tested benefits. As a result, the Old Age Security clawback threshold is $93,454 for 2025 (2024 – $90,997).
Prescribed Interest Rate
Prescribed interest rate to calculate taxable benefits for employees and shareholders from interest-free and low-interest loans is 4% for the 1st and 2nd quarters of 2025. The interest rate charged on overdue taxes for the 1st and 2nd quarters of 2025 is 8%. Given this high rate, it’s highly recommended that taxes be paid by April 30, 2025, even though your tax return is due by a later date.
Canadian Entrepreneurs’ Incentive
The Canadian Entrepreneurs’ Incentive is set to roll out in 2025, offering a 1/3 inclusion rate on up to $2 million of capital gains on qualifying disposition of shares of small business corporations and farm and fishing properties. The $2 million will be phased in over five years in annual increments of $400,000 (2025 to 2029) and will apply in addition to the lifetime capital gains exemption.
Canada Child Benefit
Starting in 2025, eligibility for the Canada child benefit (CCB) will be extended for six months after a child’s death if the individual claiming the CCB for that child is otherwise eligible. The individual receiving the CCB will still be required to notify the CRA of the child’s death before the end of the month following the death. The extended period will also apply to the child disability benefit.
The Tax-free Savings Account (TFSA)
The tax-free savings account (TFSA) limit is $7,000 for 2025, bringing the cumulative contribution limit to $102,000 for individuals who were born in 1991 or earlier.
Tax-exempt Allowances
Effective January 1, 2025, the limit on the deduction of tax-exempt allowances paid by employers to employees who use their personal vehicle for business purposes will increase by two cents to 72 cents per kilometer for the first 5,000 kilometers driven, and 66 cents for each additional kilometer. In the Northwest Territories, Yukon, and Nunavut, there is an additional 4 cents per kilometer.
Residential Real Estate in BC
To encourage the construction of new purpose-built rental buildings, an exemption from the general property transfer tax applies to purchases of new qualifying purpose-built rental buildings that take place between January 1, 2025 and December 31, 2030.
The introduction of a new Home Flipping Tax – effective January 1, 2025, for residential real estate sold within two years of the initial purchase, and apply to both residential properties and the assignment of purchase contracts for residential properties. Tax exemptions will be available to people facing difficult life circumstances, including divorce, death, disability and more. Profits will be taxed at a rate of 20% for the first year the property is owned and then the tax will phase out over the course of the second year.
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