What's New?
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We're continually making improvements to Snap Projections and many of the changes originate from customer suggestions. We greatly value hearing your feedback and encourage you to let us know what would make Snap Projections more valuable for you. You can send your comments to [email protected] - we are listening!
April 22, 2024 - Release Notes - Capital gains inclusion rate settings
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The 2024 Federal Budget released on April 16, 2024, by the Government of Canada, proposed to increase the capital gains inclusion rate. If this measure is approved, the capital gains inclusion rate would increase from one-half to two-thirds for corporations, trusts, and any individual who earns more than $250,000 in capital gains in a single calendar year (the two-thirds rate would apply to the capital gains earned above the $250,000 threshold in that calendar year). The proposed change would take effect on June 25, 2024.
NOTE: The changes made within Snap (detailed below) are not intended to suggest that you and your clients should take action, or that the proposed change will pass. These settings have been added to Snap to provide you with additional tools to help your clients navigate the decision of what (if anything) to do.
- New Feature
To calculate the impact on your client's projections you can now enable a setting to apply the new capital gains inclusion rates. From the Scenario Setup -> Settings -> Income Taxes page. The Income Taxes page is only available from the individual client Scenario Setup flow, but the setting will apply to the individual client(s) and all corporations in the projection.
Once you've accessed the Scenario Setup -> Settings -> Income Taxes page, you can click the dropdown beside Apply proposed capital gain rules starting from and select 2024 or 2025.
The default setting for this feature is Never, so your existing projections will not be impacted unless you select 2024 or 2025.
Selecting 2024 assumes that all capital gains in the projection are taxed following the proposed changes, which applies an inclusion rate of two-thirds for corporations, and any individual who earns more than $250,000 in capital gains in a single calendar year (the two-thirds rate would apply to the capital gains earned above the $250,000 threshold in that calendar year).
Selecting 2025 assumes that all capital gains in 2024 would be realized before June 25, 2024, and would be subject to the current inclusion rates. With all subsequent years (2025 onwards) following the proposed changes.
You will see the increased capital gains values in the Taxable Income Details and Taxable Investment Income Details tables on the personal and corporate Planning pages.
This new feature can allow you to quantify the impact of the proposed change on your client (for instance on their final estate after-tax value). The first scenario below assumes the current capital gains inclusion rate and the second scenario shows the impact to the client's final estate of the proposed changes.
This client had a starting corporate investment balance of $2,500,000 with a cost basis of $1,600,000. Your client's circumstances will determine the magnitude of the changes. This feature will allow you to model this on a personalized basis.
You can also use this feature to illustrate the pros and cons of implementing a change to the client's strategies before June 25, 2024.
- Other Updates
| Assumption Details Page Format Update | We've updated the layout and terminology of the Assumption Details page available in the Client Report.
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| Consistent Corporate Terminology | We've updated corporate terminology throughout Snap to apply the same title when referring to the same value, and to align the language with CRA documentation. For instance, the term RDTOH refund in the Estate Summary table has been changed to Dividend refund, which is used in the Taxable Investment Income Details table. |
- Have questions?
Join us at one of our upcoming Q & A sessions, where we typically review new features and create a basic plan.
We're also available for one-on-one support by phone, email, and screen sharing. Reach out to us at [email protected] or 1-888-758-7977 Option 2.
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