Since the decrease in the capital gains inclusion rate to 50% in 2001, taxpayers, especially those who have significant capital gains, should review the impact of the Alternative minimum tax (AMT). As the tax-free portion of capital gains is included in the AMT calculation, you may have to pay unexpectedly high amounts of income tax.
Québec taxpayers may have to pay the Alternative minimum tax credit sooner because the minimum tax rate is 20.75% and the basic deduction is only $25,000. Federally, the rate is 16% and the deduction is $40 000. A tax relief has been proposed to allow you to include only 70% of the gain on your provincial return and 80% on your federal return.
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