In this Q2 2024 Tall Oak Capital Advisor Client Report, we highlight the capital gains changes effective June 25, 2024, discuss market highlights, review the KKR Infrastructure Fund, and overall portfolio positioning.
At a glance
Capital Gains Changes
- Federal Budget Changes: Capital gains inclusion rate increased to two-thirds for corporations, trusts, and individuals with gains over $250,000, effective June 25, 2024.
- Current Taxation: Two-thirds of capital gains are now taxable, e.g., a $100,000 profit means $66,666 is taxable.
- Individual Threshold: Up to $250,000 in annual gains taxed at the old 50% rate; excess taxed at 66.67%.
- Corporate Impact: All corporate capital gains taxed at two-thirds rate, no $250,000 threshold.
- Exemptions: Principal residences and gains within RRSPs, TFSAs, etc., are tax-exempt.
- Affected Groups: Impacts those with large property gains, estates, corporate investors, and sellers of farms/businesses.
- Tax Strategies: Use TFSAs, insurance policies, and professional advice to reduce tax impact.
- Expert Assistance: Contact Tall Oak team for personalized guidance.
Market Highlights
- Favorable Inflation News: Increased investor confidence that the Fed will lower rates in September.
- AI Stock Performance: Continuation of the strong performance of AI-related stocks from 2023 and Q1.
- Tech and Growth Stocks Leading: Major tech and large growth stocks, driven by AI hype, dominated Q2 gains.
- Market Index Outperformance: The US Market Index outperformed the US Equal Weighted Index by nearly double since the start of 2023, indicating that higher-weighted stocks are fueling market gains.
Investment Highlight – KKR Infrastructure Fund
- KKR Overview: Founded in 1976, KKR is a global investment firm with over $500B in total client assets and $60B in infrastructure assets under management.
- Infrastructure Investment: KKR leverages decades of experience to identify opportunities in the current macroeconomic environment, focusing on digitization, decarbonization, and deconsolidation.
- KKR Advantage: Unique ability to source, structure, operate, and execute difficult-to-replicate infrastructure assets, with ~75% underpinned by long-term contracts or government regulation and ~80% sourced proprietarily or via limited procurement.
- Partnership with Tall Oak: Investing with KKR offers inflation protection, consistent distributions, and upside potential unrelated to traditional investments, aiding in managing portfolio volatility without sacrificing long-term returns.
The views expressed in this commentary are those of Tall Oak Capital Advisors as at the date of publication and are subject to change without notice. This commentary is presented only as a general source of information and is not intended as a solicitation to buy or sell specific investments, nor is it intended to provide tax or legal advice. Statistics, factual data and other information are from sources Tall Oak believes to be reliable but their accuracy cannot be guaranteed. This commentary is intended for distribution only in those jurisdictions where Tall Oak Capital Advisors are registered. Securities-related products and services are offered through Raymond James Correspondent Services Ltd., member Canadian Investor Protection Fund. Insurance products and services are offered through Gryphin Advantage Inc., which is not a member-Canadian Investor Protection Fund. This commentary may provide links to other Internet sites for the convenience of users. Tall Oak Capital Advisors is not responsible for the availability or content of these external sites, nor does Tall Oak Capital Advisors endorse, warrant or guarantee the products, services or information described or offered at these other Internet sites. Users cannot assume that the external sites will abide by the same Privacy Policy which Tall Oak Capital Advisors adheres to.
