The capital gains exemption on certain private corporation shares, qualified farming property and qualified fishing property (collectively, "Qualifying Property") will increase from $750,000 to $800,000 in 2014, and will be indexed to inflation after 2014. The potential extra income tax savings from the additional exemption at the highest marginal rate, depending on the province, range from $9,500 to $12,500 (and higher in years after 2014).
This amendment to the Income Tax Act is included in Bill C-4, the 2013 Budget second bill, which is currently before Parliament (First Reading October 22, 2013 and Second Reading October 29, 2013) and is expected to be enacted by late December.
Taxpayers who are contemplating selling Qualifying Property in late 2013 should consider whether to defer the sale until 2014 so as to benefit from the higher capital gains exemption. While the benefit of a single additional $50,000 exemption is modest, the amount is magnified in situations where multiple capital gains exemptions are available.
Here are some ideas to keep in mind:
If you have any questions on how these and other strategies may allow you to benefit from the $800,000 capital gains exemption for sales initiated in 2013, please contact your TSG tax advisor.
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