The New Alternative Minimum Tax (AMT): What High-Income Investors Should Know

What the new rules changed and who is affected

Scott Tang, CPAUpdated 2026-11-052026 rules4 min read

The alternative minimum tax (AMT) is a parallel calculation: certain tax breaks are added back, the tax is worked out again at a flat rate, and you pay whichever of the two amounts is higher. New rules took effect in 2024. The threshold went up a lot, so most people basically won't be affected; but people who have a large capital gain in one year, or donate a large amount of shares, are more likely to be caught by it.

20.5%

The federal AMT rate (previously 15%)

$181,440

The 2026 basic exemption ($177,882 in 2025; indexed to the start of the fourth federal tax bracket)

100%

In the AMT calculation, capital gains are fully included (normally only half)

7 years

Extra AMT paid can be recovered over the next 7 years, provided your regular tax in those years is high enough

What the new rules changed

Item	Old rules (2023 and earlier)	New rules (from 2024)Recommended
Basic exemption	$40,000	About $173,000 (2024), indexed to inflation each year
Rate	15%	20.5%
Capital gains	80% included	100% included
Gains on donated listed shares	Not included	30% included
Donation tax credit	Fully usable	Only 80% usable

Who is more likely to be caught

Selling an investment property or a business
A large capital gain in one year while your usual income is not high — AMT counts the full gain, so it may come out higher than your regular tax.
Large donations of listed shares
Normally the gain on this kind of donation is tax-free; under AMT, 30% of it is included and the donation credit is also reduced.
Selling small business shares using the lifetime exemption
For gains sheltered by the lifetime capital gains exemption, 30% is included under AMT.
Large investment expenses and losses
Part of items such as interest on investment loans and partnership losses can't be deducted under AMT.

If your income is only regular salary and pension income, the risk is usually lower; if you have large dividends and dividend tax credits, you should still run the numbers on Form T691.

Extra tax paid can be recovered later if you qualify

1
Calculate regular tax
The ordinary tax return calculation
2
Then calculate AMT
Add back the tax breaks and apply 20.5%
3
Pay the higher amount
For the year, you pay whichever is higher
4
Track the excess
The amount above your regular tax
5
Recover within 7 years
If you qualify; it can only be recovered in years when your regular tax is higher than AMT, and there is no guarantee you will recover all of it

So the key is this: in a year with a large gain or a large donation, run the numbers first. If the gain can be realized over several years, you can sometimes avoid a high AMT in one year that you then can't recover later.

Points to watch

Run the numbers before selling a property or business
In a year with a large transaction, include AMT in the calculation, then decide whether to do it all in one year or spread it over several.
Run the numbers before a large donation
Donating shares or cash, in one year or over several years — the results can differ under AMT.
Individuals and some trusts only
AMT does not apply to corporations. The provinces also have their own minimum tax, so the actual rate is more than 20.5%.
Not just one more simple form
AMT is calculated on Form T691, and tax software will do the calculation, but you need to know in advance whether you will be caught by it.

How Sheng Qian CPA can help

Projections for big years
Before you sell a property or a business, or make a large donation, we calculate both your regular tax and AMT.
Planning the timing
Where gains can be realized over several years, we lay out an option that suits you better.
Tracking AMT carryforwards
We keep a record of the extra AMT you paid and claim it back in the years when you qualify; for prices, see "What Sheng Qian CPA Can Do for Investors: Tax Returns, Accounts and Annual Planning" in this series.

Sources

CRA: Line 41700 – Minimum tax · Form T691
Department of Finance Canada: Budget 2024 – Alternative Minimum Tax

Disclaimer

This article is general information only and is not tax advice. Everyone's situation is different; please consult a CPA about your specific arrangements. Service fees are as set out in our written quote.