Tax Developments for Canadian Businesses in 2024

November 2024

TaxMatters@EY – Canada

In this issue of TaxMatters@EY, we summarize key tax developments for Canadian businesses, including changes to the corporate tax rate, the capital gains inclusion rate, and the enhanced scientific research and experimental development tax credit.

We also highlight tax issues related to the impact of digitalization and the sharing economy, and provide insights on how businesses can prepare for the upcoming changes.

Corporate Tax Rate

The federal corporate tax rate will decrease from 15% to 14% effective January 1, 2024.

The reduction in the corporate tax rate is intended to make Canada more competitive with other jurisdictions and to encourage investment in Canada.

Capital Gains Inclusion Rate

The capital gains inclusion rate (CGIR) will increase from 50% to 75% effective January 1, 2024.

The increase in the CGIR is intended to generate additional revenue for the government and to reduce the tax advantage of investing in capital assets.

Scientific Research and Experimental Development Tax Credit

The enhanced scientific research and experimental development (SR&ED) tax credit will provide a refundable tax credit of up to 35% for eligible SR&ED expenditures incurred in Canada.

The enhanced SR&ED tax credit is intended to encourage businesses to invest in research and development in Canada.

Digitalization and the Sharing Economy

The tax implications of digitalization and the sharing economy are becoming increasingly important for Canadian businesses.

Businesses need to be aware of the tax rules that apply to the digital economy, including the taxation of e-commerce, digital goods and services, and the sharing economy.

Preparing for the Upcoming Changes

Businesses should start planning now for the upcoming tax changes in 2024.

This includes reviewing your tax planning strategies and making any necessary adjustments to ensure that you are taking advantage of the new tax rules.