Alternative Minimum Tax (AMT) ensures that high-income individuals pay a minimum amount of personal income tax. The 2023 Federal Budget proposed several important changes to AMT, including increasing the rate from 15% to 20.5%, raising the exemption from $40,000 to $173,205 (for 2024), and broadening the definition of adjusted taxable income. Adjusted taxable income now includes a greater portion of capital gains and restricts certain deductions available under the regular tax system. For example, deductible expenses such as interest and financing costs to earn property income are limited to 50% of the amount otherwise deductible. These changes were passed into law on June 20, 2024 and are effective beginning with the 2024 taxation year.
Draft legislation released on August 12, 2024, proposes to limit the deduction of investment council fees to 50% and to allow a full deduction for resource expenditures renounced to individuals who invest in flow-through shares.
The Canada Revenue Agency has confirmed to us that neither of these proposed changes are being administered at this time. Individuals who file their personal income tax returns based on the existing legislation may need to amend their T1 returns should these changes be enacted.
Originally posted on LinkedIn on January 31, 2025
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Ryan Minor
Chartered Professional Accountants of Canada
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