2024 Fall Economic Update

DECEMBER 17, 2024

The 2024 Fall Economic Statement was tabled despite Chrystia Freeland's resignation. There were a few personal income and private corporations tax measures worthy of attention. The most notable are expanding eligible tax deferrals on the sale of shares of eligible businesses, increasing the refundable credit for Scientific Research and Experimental Development program and re-introducing the Accelerated Investment Incentive and Immediate Expensing measures providing increased write offs for eligible property available for use before 2034.

Personal Tax Measures

Capital Gains Rollover on Investments

Currently, an individual is allowed to defer the tax on selling eligible small business corporation common shares when the proceeds are invested in another eligible small business corporation common shares in the same year or up to 120 days following that year. An eligible small business corporation is a corporation whose asset’s carrying value and its related corporations’ assets must not exceed $50 million.

Proposed for sales after January 1, 2025, the definition of an eligible small business corporation is expanded to include both common and preferred shares and the carrying value of the corporate assets and its related corporations increases from $50 million to $100 million. The period for reinvesting the proceeds has been extended from 120 days to the entire calendar year.

Corporate Tax Measures

SR&ED Investment Tax Credit Changes

The SRED credit is becoming increasingly more advantageous for private Canadian controlled corporations. The proposal will increase the maximum refundable portion of the credit by $525,000.  Larger corporation’s will also now be eligible for the refundable portion because the taxable capital phase-out will increase from $10 million to $50 million to  $15 million to $75 million.

Accelerated Investment Incentive and Immediate Expensing Measures

The accelerated investment incentive and the immediate expensing rules for capital property, which were being phased out between 2024-2027, will be reinstated starting January 1, 2025, for property that is available for use before 2030. The rules will be phased out starting in 2030 and end after 2033.

A reminder that the main elements of these programs include:

- full write-off in the year of acquisition for equipment used in manufacturing and processing (these rules end in 2033)
- more rapid tax depreciation for most other equipment

Canadian Carbon Rebate

Some modest changes were announced for this program for 2024 calendar year.  Proposed is a minimum payment of $2,920 for Ontario corporations.  There will also be a phase out for corporations with employees between 300 and 500. RMR has written previously about this credit here. In order to claim this credit a corporation must file its 2023 tax return no later than December 31, 2024.

Non-Profit Organizations (NPO)

Reporting Requirements

All NPOs are now expected to make an annual information filing.

NPOs are currently only required to file annual returns if either; passive income exceeds $10,000, total assets at the end of the previous year exceed $200,000, or the NPO was required to file for a previous year.

Proposed for NPOs in 2026 and subsequent tax years, annual information filings are required where total gross revenues exceed $50,000.

If an NPO does not meet any of the above requirements, it is proposed that effective for 2026, it must instead file a new, short-form return which will contain basic information about the organization.

Please reach out if you have any questions.