April 30, 2024 • 6 mins
WATCH
▶️ Watch this episode on Youtube
***
EPISODE DESCRIPTION
In this episode, Tom & Brandon break down the new proposed increase in capital gains taxes set to come into affect in June (if it passes), and provide an example to help this make sense to the average Canadian.
What was discussed: → How the new capital gains tax will work. → An example scenario of the old capital gains tax versus the new capital gains tax. → Who this will affect most.
***
MORTGAGE INQUIRIES
📞 Book a Call 📧 Email us→ experts@northshoregroup.ca 📝 Start an Application
***
CONNECT
📸 Connect on Instagram (Brandon)
***
SAY THANKS
🙏 Leave a review on Apple Podcasts
***
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:07):
dive into what the federalgovernment is proposing with this
change in capital gains rates witha quick brief overview of how
capital gains work.
It's important to note that this
hasn't been passed.
It's going to come into effect
June 25th if agreed upon.
Right now, there is a coalition
government with the Liberals andNDP, with the NDP and Jagmeet
(00:29):
Singh basically supportinganything Trudeau does.
So strong chance this ishappening.
So it's best to prepare for theworst case and then hope for the
best case So how capital gainsworks is you're taxed at 50% of
any profit you make on the sale ofany asset or investment that you
have.
So this can include anything from
real estate to stocks, bonds, andone tricky one that you should
(00:49):
watch out for is eventuallythey'll probably be able to tax
your crypto investments as well.
So Brandon and I, we're going to
dive into a case study on someonethat makes 100K of income per year
that has a 40% marginal tax rate.
So we're going to dive into a case
study specifically on a cottageproperty purchased 10 years ago
and if you were to sell today.
Okay, so let's take our beloved
(01:10):
cottage.
We all love spending time up
there.
So of course, the government's
going to come after those.
So take a cottage bought in 2014
for 400K.
Don't wish you could do that right
now.
But now, you know, life's caught
up with you.
Family doesn't go there as much.
You decide we're going to sell itand free up some cash.
You're now selling it for 700k fora $300,000 profit.
Okay, so take the old rules here.
(01:32):
Let's say you're a teacher, you'll
probably earn about $100,000 ayear.
So you have the $300,000 profitfrom the family cottage.
You would have an average tax rateof 40%.
So you would take the first 50%wasn't taxed.
The tax would be on that remaining50% or $150,000 worth of profit.
So the total tax that you wouldpay on that would be $60,000.
(01:52):
So you're doing pretty well.
You sell for $700,000, you get
$300,000 difference, $60,000 ontax, you walk away with $240,000
surplus in your pocket, and yougot to enjoy the property for 10
years.
So still using the $100,000
earner, you're going to have that$300,000 profit from the sale of
the cottage.
So the first $250,000 is taxed at
(02:14):
that 50% marginal tax rate, whichequals that 125.
Now you take that 125, and you'retaxed at the 40% income tax rate,
which equals 50k.
Now here's the difference.
The second component, which isover 250, so you have the
difference of 250 to 300k, whichis that 50k, that's now taxed at
66% versus the 50% in the oldrules.
Now that's going to equal 33K,which then we're still taxing that
(02:38):
at your income tax rate of 40%,which then equals 13,200.
So now we're going to add theinitial 50K to that 13,200, which
gives you a grand total of $63,200based off of that 300K capital
sure.
So it's not a huge jump from 60K
to 63,200.
But the difference here is you're
a 100K earner and you're nowpaying 3,200 more tax.
(03:01):
That's 3.2 in additional tax.
So why do they need this?
For more haircuts for Trudeau orhandouts for other Canadians who
don't own assets and they'retrying to buy their votes?
Who this really impacts is goingto be corporations.
Corporations from day one aregetting taxed this new percentage.
(03:22):
They don't get this $250k buffer.
And you have to realize when you
say corporations, and liberalslove to do this, they like to bake
an image of this really bigbusiness.
But there's a lot of smallbusiness owners like Tom and
myself, like your mom and pop shopdown the street, your ice cream
store up at that beloved cottagethat have corporations set up.
And they've suffered through theyears of the pandemic.
(03:44):
They've suffered from othergovernment policies.
They now have employees who feelentitled and don't want to work as
hard as they used to.
And now they're getting this extra
layer of punishment.
And it's just icing on the shit
sandwich from the government.
man.
And you know what?There's a lot of doctors in this
country that are pissed off.
And rightfully so.
Like we are pissed off ourselvesbecause we have our business in
(04:05):
our own corporations.
And most doctors do as well.
So from day one, they're taxed at66%.
They don't have that leeway thatpersonal individuals do.
So, you know, I would much rathernot piss off doctors in this
country because, you know, thewait times for family doctors are
just insane.
And you don't want to diminish the
amount of doctors we have in thiscountry to flee to another
(04:26):
country.
So, you know, I really don't like
what they're doing here.
I think you're about the same.
Brandon, what's your thoughts?For sure.
You hit the nail on the headthere.
If I'm a doctor and I have areally desired skill set, why
bother staying here with highertaxes?
I can go to a different country.
I can go to the Middle East.
I could go to the States.
(04:46):
I could go to Europe.
Mind you, Europe's taxes arepretty shit too.
But you can go to another place,earn an insane amount of more
money, get treated better by thegovernment and by people, have a
better balance, probably live in abetter climate, and really have an
overall better quality of lifeinstead of staying here and being
treated like shit because you earna good living.
Realistically, you've worked hardto earn that living.
And this whole idea thateverything that people earn has to
(05:07):
get fed to the bottom feeders.
I'm just personally sick of it.
here.
And you know what, they missed the
mark on this entirely.
They had a chance to really
improve things.
And a lot of what they're trying
to do just goes against what youwant to do to build up a country
and really have it thrive.
(05:27):
Exactly.
So while you might see yourfavorite family doctor leave, you
can't blame them.
Tom and I are not leaving.
We're sticking around.
We're going to see things through
and hope for change in thiscountry.
And in the meantime, the CanadianMortgage Guide is going to cover
these changes and keep youinformed so that you can best plan
for your future in Canada.
dive into what the federalgovernment is proposing with this
change in capital gains rates witha quick brief overview of how
capital gains work.
It's important to note that this
hasn't been passed.
It's going to come into effect
June 25th if agreed upon.
Right now, there is a coalition
government with the Liberals andNDP, with the NDP and Jagmeet
(00:29):
Singh basically supportinganything Trudeau does.
So strong chance this ishappening.
So it's best to prepare for theworst case and then hope for the
best case So how capital gainsworks is you're taxed at 50% of
any profit you make on the sale ofany asset or investment that you
have.
So this can include anything from
real estate to stocks, bonds, andone tricky one that you should
(00:49):
watch out for is eventuallythey'll probably be able to tax
your crypto investments as well.
So Brandon and I, we're going to
dive into a case study on someonethat makes 100K of income per year
that has a 40% marginal tax rate.
So we're going to dive into a case
study specifically on a cottageproperty purchased 10 years ago
and if you were to sell today.
Okay, so let's take our beloved
(01:10):
cottage.
We all love spending time up
there.
So of course, the government's
going to come after those.
So take a cottage bought in 2014
for 400K.
Don't wish you could do that right
now.
But now, you know, life's caught
up with you.
Family doesn't go there as much.
You decide we're going to sell itand free up some cash.
You're now selling it for 700k fora $300,000 profit.
Okay, so take the old rules here.
(01:32):
Let's say you're a teacher, you'll
probably earn about $100,000 ayear.
So you have the $300,000 profitfrom the family cottage.
You would have an average tax rateof 40%.
So you would take the first 50%wasn't taxed.
The tax would be on that remaining50% or $150,000 worth of profit.
So the total tax that you wouldpay on that would be $60,000.
(01:52):
So you're doing pretty well.
You sell for $700,000, you get
$300,000 difference, $60,000 ontax, you walk away with $240,000
surplus in your pocket, and yougot to enjoy the property for 10
years.
So still using the $100,000
earner, you're going to have that$300,000 profit from the sale of
the cottage.
So the first $250,000 is taxed at
(02:14):
that 50% marginal tax rate, whichequals that 125.
Now you take that 125, and you'retaxed at the 40% income tax rate,
which equals 50k.
Now here's the difference.
The second component, which isover 250, so you have the
difference of 250 to 300k, whichis that 50k, that's now taxed at
66% versus the 50% in the oldrules.
Now that's going to equal 33K,which then we're still taxing that
(02:38):
at your income tax rate of 40%,which then equals 13,200.
So now we're going to add theinitial 50K to that 13,200, which
gives you a grand total of $63,200based off of that 300K capital
sure.
So it's not a huge jump from 60K
to 63,200.
But the difference here is you're
a 100K earner and you're nowpaying 3,200 more tax.
(03:01):
That's 3.2 in additional tax.
So why do they need this?
For more haircuts for Trudeau orhandouts for other Canadians who
don't own assets and they'retrying to buy their votes?
Who this really impacts is goingto be corporations.
Corporations from day one aregetting taxed this new percentage.
(03:22):
They don't get this $250k buffer.
And you have to realize when you
say corporations, and liberalslove to do this, they like to bake
an image of this really bigbusiness.
But there's a lot of smallbusiness owners like Tom and
myself, like your mom and pop shopdown the street, your ice cream
store up at that beloved cottagethat have corporations set up.
And they've suffered through theyears of the pandemic.
(03:44):
They've suffered from othergovernment policies.
They now have employees who feelentitled and don't want to work as
hard as they used to.
And now they're getting this extra
layer of punishment.
And it's just icing on the shit
sandwich from the government.
man.
And you know what?There's a lot of doctors in this
country that are pissed off.
And rightfully so.
Like we are pissed off ourselvesbecause we have our business in
(04:05):
our own corporations.
And most doctors do as well.
So from day one, they're taxed at66%.
They don't have that leeway thatpersonal individuals do.
So, you know, I would much rathernot piss off doctors in this
country because, you know, thewait times for family doctors are
just insane.
And you don't want to diminish the
amount of doctors we have in thiscountry to flee to another
(04:26):
country.
So, you know, I really don't like
what they're doing here.
I think you're about the same.
Brandon, what's your thoughts?For sure.
You hit the nail on the headthere.
If I'm a doctor and I have areally desired skill set, why
bother staying here with highertaxes?
I can go to a different country.
I can go to the Middle East.
I could go to the States.
(04:46):
I could go to Europe.
Mind you, Europe's taxes arepretty shit too.
But you can go to another place,earn an insane amount of more
money, get treated better by thegovernment and by people, have a
better balance, probably live in abetter climate, and really have an
overall better quality of lifeinstead of staying here and being
treated like shit because you earna good living.
Realistically, you've worked hardto earn that living.
And this whole idea thateverything that people earn has to
(05:07):
get fed to the bottom feeders.
I'm just personally sick of it.
here.
And you know what, they missed the
mark on this entirely.
They had a chance to really
improve things.
And a lot of what they're trying
to do just goes against what youwant to do to build up a country
and really have it thrive.
(05:27):
Exactly.
So while you might see yourfavorite family doctor leave, you
can't blame them.
Tom and I are not leaving.
We're sticking around.
We're going to see things through
and hope for change in thiscountry.
And in the meantime, the CanadianMortgage Guide is going to cover
these changes and keep youinformed so that you can best plan
for your future in Canada.
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
The Breakfast Club
The World's Most Dangerous Morning Show, The Breakfast Club, With DJ Envy, Jess Hilarious, And Charlamagne Tha God!