On April 16, 2024, the Canadian federal budget was tabled. How does this budget affect the charitable sector?

Alternative Minimum Tax (“AMT”) Reform

In effect for almost forty years, AMT was introduced as a means for the government to ensure individuals and certain trusts pay at least a minimum amount of tax. AMT is an alternative tax regime where high income earners and trusts calculate their income tax liability based on rules that allow for fewer tax deductions, exemptions, and credits than under the regular tax rules. The higher of the two tax liabilities becomes the amount these taxpayers are required to pay. Additional tax paid as a result of AMT can be carried forward for seven years and used against regular tax to the extent regular tax exceeds AMT in those years.

Last year’s federal budget proposed reforms to the existing AMT tax rules which have been in place since 1986 with nominal changes. This was followed by draft tax legislation being released on August 4, 2023, and then a month-long public consultation period. Unlike the existing AMT tax rules, the proposed amendments to the AMT rules have the potential to negatively impact charitable giving by high income earners. The 2023 Fall Economic Statement did not table the tax measure changes related to AMT as the government suggested further study was required. (...)

Read the full article on the CAGP Blog.