Upcoming changes to the alternative minimum tax system could impact high\u002Dincome earners, and those with once\u002Din\u002Da\u002Dlifetime gains. Read on.
Under the regular tax calculation, taxable income is calculated using deductions, exemptions and credits that are likely familiar to you. Under the AMT system, taxable income is recalculated using only deductions, exemptions and credits that are permitted for AMT purposes, which is called “adjusted taxable income.”
Currently, most common deductions are permitted in calculating the adjusted taxable income for AMT. Starting in 2024, the AMT base will be broadened by disallowing 50 per cent of certain deductions, including: employment expenses , moving expenses, child-care expenses, interest and carrying charges incurred to earn income from property, limited partnership losses of other years and non-capital loss carryovers.
The result of this change means that high amounts of capital gains realized in a single year may give rise to an AMT for individuals who pay tax at the top federal rate of 33 per cent, since the capital gains tax rate under the regular calculation is 16.5 per cent, and the AMT rate in 2024 is 20.5 per cent.Article content
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How changes to the alternative minimum tax system could affect CanadiansUpcoming changes to the alternative minimum tax system could impact high\u002Dincome earners, and those with once\u002Din\u002Da\u002Dlifetime gains. Read on.
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