Lifetime capital gains exemption to top $1M in 2024

In 2024 the lifetime capital gains exemption (LCGE) amount on the sale of qualified small business corporation (SBC) shares, or on farming or fishing property, will rise above $1 million for the first time, pushed higher by inflation.

It will also be the first time since April 2015 that the LCGE amount on the sale of SBC shares and on farming or fishing property match.

In 2024 the LCGE on the sale of SBC shares will be $1,016,836, up from $971,190 in 2023, an increase of $45,646 or 4.7%, which is next year’s federal indexation rate.

The LCGE on the sale of farming or fishing property will also be $1,016,836 in 2024, up from $1,000,000 in 2023, an increase of $16,836 or 1.7%.

Some financial advisors and clients may have mistakenly concluded “that the [LCGE] limit would stop at $1,000,000” once it reached the threshold for farming and fishing property, said Aaron Hector, private wealth advisor with CWB Wealth in Calgary. “But it will not.” From 2024 onward, the LCGE for SBC shares and farming or fishing property will match.

In the 2015 federal budget, the Conservative government raised the LCGE on the sale of farming or fishing property to the higher of either $1 million or the LCGE for SBC shares from budget day (April 21) forward. In 2015 the LCGE on the sale of SBC shares was $813,600.

A Canadian resident for tax purposes is entitled to a cumulative LCGE on net gains realized on the disposition of qualified property, including dispositions of qualified SBC shares and qualified farming or fishing property. This exemption also applies to reserves from these properties brought into income in a tax year.

Since 2015 the LCGE amount has been indexed to inflation. Individuals who sell qualifying property and claim the LCGE can take advantage of any unused increased amount on any subsequent qualifying sale.

The LCGE represents a capital gains deduction equal to half the LCGE amount.

Rudy Mezzetta

Rudy is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on tax, estate planning, industry news and more since 2005. Reach him at rudy@newcom.ca.