If you earn income through dividends, capital gains, or use strategic tax deductions, the updated rules for the alternative minimum tax in Canada could impact you in unexpected ways. Real estate investors and professionals need to be aware of these changes — especially now that the 2024 changes will be felt in spring 2025 tax filings. In this short video, I walk through what the AMT is, how it’s changed, and why you might still face a tax hit even with the new, higher threshold. Planning now can help avoid unpleasant surprises later, and avoid cash flow issues with this tax that you weren’t expecting.
Video Transcript: Will you be hit by Canada’s Alternative Minimum Tax in 2025?
The alternative minimum tax has changed for 2024, so we’ll first see it in the spring of 2025 when completing tax returns.
Without getting into all the mechanics, because there’s been several changes, the concept of the AMT is that if you are structuring your affairs so you’re receiving tax-favourable income — often in the form of dividends, capital gains — or you’ve used tax deductions that Revenue Canada is not keen on, such as the lifetime capital gains exemption, you may have extra tax to pay.
Revenue Canada has increased the tax rate for the alternative minimum tax, although they have also, on the plus side, increased the threshold before those taxes apply.
So that threshold went from $40,000 to just under $175,000 for 2024.
If you’re anywhere near that number, because of the various parts to the calculation, you may again be surprised to see that you have to pay this alternative minimum tax. But keep in mind, it’s normally a cash flow issue — which is important — but frequently, with other planning, we can get that refunded to you over the next few years.
I’m George Dube, saving the world from tax, one bow tie at a time®.
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Resources
For additional resources related to how to maximize tax deductions, see:
- 2025 tax season tips: How to save more this year
- Deducting interest expenses: The most missed tax deduction
More questions?
Still have questions? I want to help you Do wonderful things®, so please contact me today.
Remember – circumstances are unique! This information is summary in nature. Seek out advice from your tax advisor about your specific situation.
