Mr. Speaker, the alternative minimum tax, AMT, introduced in 1986, is a parallel tax calculation that allows fewer deductions, exemptions and tax credits than under the ordinary income tax rules, to help ensure high-income Canadians who excessively use tax preferences are contributing a minimum amount of tax to support the vital public services on which Canadians rely. The taxpayer owes either AMT or regular tax, whichever is largest, and can carry forward the additional AMT paid over the next seven years to reduce tax payable, to the extent that regular tax exceeds AMT in those years. The AMT does not apply in the year of death.
Budget 2023 proposed changes to the AMT so that it would more precisely target the very wealthy. Under these reforms, more than 99% of the AMT paid by individuals would be paid by those with over $300,000 in income and around 80% by those with over $1 million in income.
The government is not proposing to change the general tax treatment of donations to registered charities in Canada. The new rules are limited to circumstances in which the AMT applies. Taxpayers impacted by the AMT would still be able to claim half of the charitable donation tax credit. This is the same treatment that would be accorded to the large majority of deductions and credits under the proposed AMT reform. Seventy per cent of capital gains on donations of publicly listed securities would remain exempt from tax, which is the same treatment that capital gains eligible for the lifetime capital gains exemption receive. It is also proposed that graduated rate estates, which are often used to make large charitable gifts, be exempt from the AMT.