Your adjusted taxable income is then reduced by an AMT exemption amount and multiplied by the AMT tax rate. AMT may also apply to a business owner who realizes a gain on the sale of their qualifying small business corporation shares and claims the lifetime capital gains exemption.ĪMT liability is determined in a separate tax computation based on your “adjusted taxable income.” Adjusted taxable income is determined by taking your net taxable income and adjusting for certain “tax preference items.” Tax preference items include tax shelter deductions, interest expenses and/or carrying charges related to tax shelter loans, employee stock option deductions, the lifetime capital gains exemption, Canadian dividends and realized capital gains. AMT is more likely to be triggered in a year when you invest in tax shelters, such as flow-through shares and limited partnership units, which may allow you to take disproportionately high deductions when compared to your income that is subject to tax. You can carry forward the additional tax you pay as a result of AMT for seven years as a credit against your regular tax liability to the extent that your regular tax liability exceeds AMT. You pay the AMT or regular tax, whichever is highest. Personal tax measures Alternative Minimum Tax (AMT)ĪMT is a parallel tax calculation that prevents high-income earners and trusts from paying little or no tax as a result of certain tax incentives, such as claiming certain tax deductions and credits. The following is a summary of the most significant tax and wealth planning measures announced in the budget.
These amendments are estimated to generate $3.0 billion in revenues over five years, beginning in the 2024 taxation year. The government estimates that under the AMT reforms, more than 99 percent of the AMT paid by individual Canadians would be paid by those who earn more than $300,000 per year, and about 80 percent of the AMT paid would be by those who earn more than $1 million per year. However, the budget revises the Alternative Minimum Tax (AMT) regime to further focus on wealthy taxpayers. No changes to personal or corporate income tax rates, capital gain inclusion rates or other measures coveted by Canadians, such as the principal residence exemption, are proposed. Spending measures include stronger public health care and dental care, as well as measures to mobilize private investment in building Canada’s clean economy.
In light of the economic uncertainty, measures in the budget are targeted with the stated goal not to exacerbate inflation. The budget projects the federal debt-to-GDP ratio to rise slightly in 2023–2024 due to the global economic slowdown and lower forecasted GDP before continuing a declining path from 2024–2025 onward. Deputy Prime Minister and Minister of Finance Chrystia Freeland released the federal budget on March 28, 2023, against a backdrop of slowing global and Canadian economies, elevated interest rates and high inflation.
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