Budget 2024 implications and your wealth
The federal government’s 2024 budget includes measures that could impact your wealth – and your legacy. Learn more about the implications and actions you can take.

Why proposed changes mean you should take another look at life insurance.
Whether it’s a cottage or corporate shares, life insurance can play a key role in how you transfer assets to the next generation. With the federal Government enacting measures from two separate budgets (as in, changes proposed in the 2023 budget, and more recent changes proposed this year), there’s a flurry of questions including how the proposed increases to the capital gains inclusion rate (CGIR) and the alternative minimum tax (AMT) will impact Canadians’ wealth. Revisiting your insurance strategy on a regular basis is always a good idea, and the present focus on the budget proposals makes now an even more important time to review your goals and plans.
Here are some issues to consider. Note that this is a much-simplified list: the proposed changes are significant and complex enough that you should discuss the implications with an advisor.
- Do I still have enough life insurance? When you die, the government considers that you have disposed of all your property right before death. This is called a deemed disposition, and if you own property (real estate, investments, belongings) at death, the deemed disposition can result in a capital gain or loss. If you previously bought life insurance to cover estate tax obligations, and the budget’s proposed changes would further impact the assets you have — a family cottage, for example — then the death benefit may no longer be adequate. With the proposed CGIR increase from 50% to 67%, and the AMT’s rate increase from 15% to 20.5%, the enlarged tax liability could eat into the amount you are leaving to loved ones. It’s time to reevaluate your insurance coverage, to determine whether you are sufficiently covered.
- If you have set up a trust, does it have adequate insurance of the right type? Trust arrangements can provide significant flexibility and protection to beneficiaries, and so combining them with life insurance is a popular wealth transfer strategy. Just as with individual’s insurance coverage, you should consider supplementing existing life insurance since what was purchased to provide-for a trust’s originally envisioned tax obligations may no longer be sufficient. And because a trust’s structure may not allow it to pay ongoing premiums, careful selection of the policy type is essential for trust-owned insurance.
- If you are considering life insurance for a corporation, do you need to adjust the corporate-owned asset mix or capital dividend account? While corporations are not subject to the AMT's increased tax and inclusion rates, they would still be subject to the proposed CGIR increase. If passed, the proposed budget measure would mean less after-tax money when capital assets are sold to finance business challenges (e.g., the interim period following the death of key personnel, ownership changes upon a shareholder’s death, etc.). By reallocating their asset mix to include life insurance, corporations can secure faster and more tax-efficient cash flows to see them through these very real business lifecycle events.

If and when the proposed changes are passed, several of them may be retroactively applicable. That means the time to take stock of your situation — whether it’s personal, for a trust, or a corporation — is right now. This an excellent time for you and trusted advisors to review the attributes and strategies that make life insurance feature so prominently in Canadian decisions about entity structure, asset transfer, and estate planning. Looking for a more in-depth discussion of these issues? Please refer to Budget 2024: Implications for Canadian Life Insurance.
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Have questions?
Information contained in this article is general in nature and should not be construed as legal or tax advice. You are encouraged to seek the advice of other professionals such as legal and tax experts. Please consult the appropriate policy contract for details on the terms, conditions, benefits, guarantees, exclusions and limitations. The actual policy issued governs. Each policyholder’s financial circumstances are unique, and they must obtain and rely upon independent tax, accounting, legal and other advice concerning the structure of their insurance, as they deem appropriate for their particular circumstances. BMO Life Assurance Company does not provide any such advice to the policyholder or to the insurance advisor.
983E (2024/07/05)