2025 Federal Budget - Impact on Clients
Tax Relief Tailored to Your Financial Plan
The 2025 Federal Budget introduces meaningful tax relief for individuals, especially those in the middle-income bracket. The lowest federal income tax rate will drop from 15% to 14.5% starting July 1, 2025, and to 14% in 2026. This change will increase after-tax income for many of our clients. To preserve the value of non-refundable credits, the government has introduced a Top-Up Tax Credit, ensuring that credits retain their full 15% value. These changes align with our approach at Latta Wealth Management to optimize your tax strategy and ensure you’re keeping more of what you earn.
Supporting Caregivers and RDSP Investors
A new refundable tax credit for personal support workers, worth 5% of eligible earnings, up to $1,100 annually, recognizes the essential role of caregivers. Additionally, RDSPs can now hold small business and venture capital investments, expanding the opportunity set for long-term growth. This change complements our commitment to building customized portfolios that reflect your values and goals, especially for families managing disability-related planning.
Business Owners: Capital Investment Just Got Easier
For our entrepreneurial clients, the Budget’s immediate expensing of manufacturing and processing buildings, effective for assets acquired after November 4, 2025, offers a powerful incentive to invest in infrastructure. Combined with the Productivity Super-Deduction and enhancements to the SR&ED tax credit (now capped at $6 million annually), these measures reduce the cost of expansion and innovation. At Latta Wealth, we help business owners align capital decisions with tax efficiency as part of your strategic planning.
Clean Tech and Resource Sector Tailwinds
The Budget introduces a suite of clean economy tax credits, including 30% for clean-tech machinery, 60% for carbon capture, and expanded eligibility for critical mineral projects. These incentives support ESG-aligned investing and resource sector growth. For clients interested in sustainability or resource-based portfolios, we can evaluate how these credits can enhance long-term returns and align with your investment philosophy.
Trust Planning and Estate Strategy Updates
The Budget expands anti-avoidance rules for trusts and defers bare trust reporting to 2027, providing clarity and time for compliance. These changes are particularly relevant for clients with complex estate structures or intergenerational wealth plans. Our team will be reviewing trust arrangements to ensure they remain tax-efficient and compliant, while continuing to protect your legacy.
Housing and Inflation
With the launch of Build Canada Homes and the elimination of GST for first-time buyers, the Budget aims to double housing construction and ease affordability pressures. Inflation remains within the Bank of Canada’s target range, and interest rates have been cut to 2.25%. These developments affect mortgage planning, real estate investment, and overall household budgeting, if you’re considering a home purchase or refinancing.
Portfolio Strategy: Navigating Volatility and Opportunity
The Budget’s fiscal discipline, cutting operational spending while increasing capital investment, signals a long-term growth strategy. While U.S. tariffs and global uncertainty have slowed GDP growth, Canada is projected to have the second strongest growth in the G7 by 2026. For investors, this means staying diversified and selective. At Latta Wealth Management, we continue to favour quality positions across sectors, balancing growth with income and risk management.
Bottom Line
Budget 2025 is designed to stimulate investment, support households, and build long-term resilience. For our clients, it presents opportunities to reduce taxes, invest in growth sectors, and strengthen estate and business planning.
Your unique circumstances and risk tolerance are key factors in the ongoing management of your portfolio. To discuss how this or other financial opinions may affect your investments, please don't hesitate to contact me.
Sincerely,
Marc Latta
SOURCES:
1. Official Budget 2025 Document
2. Raymond James Budget 2025 Highlights