The 3 I’s
Inclusion Rate, Interest Rates and Inflation |
As June begins and summer starts to shine in the beautiful Okanagan, we hope you’re able to enjoy every moment! The season brings a sense of renewal and relaxation, and we’re excited to share some important updates that might impact your financial plans. Hot Topics this Month Capital Gains Inclusion Rate ChangesAs we discussed last month, in April, the government introduced a possible significant change in the new budget regarding the capital gains inclusion rate for taxes. Well, it was passed this week, so it is now going to take place. The change is an increase from the current 50% to 66.7%. For individuals, there is a threshold of $250,000.00, providing some relief. However, corporations are fully exposed with no threshold, meaning every dollar is affected. This change takes effect on June 25, 2024. We recommend all business owners with assets subject to capital gains to discuss this with your accountant soon to ensure you’re prepared. Interest Rate AdjustmentsThe Bank of Canada has made a notable move by lowering the interest rate by 0.25%. While this might seem minor, it’s a positive indication that inflation is declining, and there’s progress in the right direction. However, it’s important to remain cautious. A rapid reduction in interest rates could lead to issues similar to those experienced in the 1970s. A slow and steady approach is key to avoiding economic instability. Inflation UpdatesApril brought some promising improvements in Canadian inflation readings. Headline inflation slowed again in April despite higher energy costs, and grocery price growth also decelerated. The Bank of Canada’s closely monitored core inflation measures all showed year-over-year declines, significantly lower than the peak levels in mid-2022. Unit labour costs remain high but are expected to trend lower as wage growth slows. These developments indicate a gradual return to economic stability, though it’s crucial to remain vigilant and adaptable to any changes. We hope you find these updates helpful as you navigate your financial journey. Please don’t hesitate to reach out to us if you have any questions or need further assistance. Enjoy the summer, and let’s make the most of this wonderful season!Warm regards, Thank you for your continued trust and confidence, David Dodgson The Maccabee Financial Team |