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Practice Management Insights: What’s new for 2025

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What’s new for 2025

The “RSP season” is not just a period driven by a deadline – it is a pivotal time for investors to have meaningful conversations with their advisors about their financial goals.

olive-gold_bar_imageWith 44 per cent of Canadians identifying money as their primary source of stress1, the role that advisors play in providing guidance, clarity and actionable advice is crucial.

This annual window is the perfect time to discuss your retirement goals, tax strategy and other investment decisions.

Here are the Top 5 things to know in 2025:

number_one

RRSP, TFSA and FHSA contributions:

  • Consider the annual contribution limit and any unused contribution room that you may have accumulated. Your advisor can personalize a strategy to maximize your contribution this year including using spousal-RRSPs, tax refunds, bonuses, RRSP loans, or excess savings.
  • Contributions to your RRSP, TFSA and FHSA can create tax advantages including reducing taxable income and/or the benefits of tax-sheltering growth.
  • Early withdrawals from an RRSP are generally discouraged, but your advisor can advise you when a withdrawal might make sense such as by using the Home Buyers’ Plan (HBP), or the Lifelong Learning Plan (LLP).
  • Consider the option of carrying forward unused RRSP contribution room if you cannot maximize contributions this year but may want to in the future.
  • Deadline: The deadline to contribute to RRSPs is March 3, 2025 for the 2024 tax year.

Registered plan

2025 contribution limit

RRSP

$32,490

TFSA

$7,000

FHSA

 $8,000

number_two

Changes to the capital gains inclusion rate2

  • On January 31, 2025, the federal government announced that it is deferring the capital inclusion rate increase until January 1, 2026. On this date, the capital gains inclusion rate will increase from one-half to two-thirds (or 66.67 per cent) for corporations and trusts, and from one-half to two-thirds (66.67 per cent) on the portion of capital gains realized in the year that exceed $250,000 for individuals.
  • The lifetime capital gains exemption (LCGE) has gone up to $1.25 million on capital gains realized from the disposition of qualified small business corporation shares and qualified farm or fishing property. The increased limit applies to dispositions occurring on or after June 25, 2024, and indexation of the LCGE will resume in 2026.

number_three

Federal tax bracket thresholds for 2025

In 2025, the federal tax bracket thresholds will see an upward adjustment by 2.7 per cent, which is lower than the 4.7 per cent increase in 20243.

Impact: If you earned $100,000 in 2024, you would pay approximately $83 less in tax on the same amount in 2025 (excluding any effect of applicable tax credits).

The basic personal amount for 2025 is $16,129 for taxpayers with a net income of $177,882.01 or less. At income levels above $177,882.01, the basic personal amount is gradually reduced until it reaches $14,538 for a net income of $253,414.01.3

Tax rate  2025 taxable income2024 taxable income
33.0%Over $253,414.01Over $246,752
29.0%Over $177,882.01Over $173,205
26.0%  Over $114,750.01Over $111,733
20.5%  Over $57,375.01Over $55,867
15.0%Up to $57,375.01Up to $55,867

number_four

CPP contribution rates, maximums and exemptions

 

Beginning January 1, 2024, the Canada Pension Plan (CPP) has two thresholds.4 The first earnings ceiling is the Year’s Maximum Pensionable Earnings (YMPE), which is $71,300 in 2025. The second earnings ceiling is the Year’s Additional Maximum Pensionable Earnings (YAMPE) is $81,200 in 2025.4, 5

 

YearYMPE    YAMPEEmployee/ Employer contribution rateMax. annual employee/Employer contributionMax. annual self-employed contribution
2025  $71,300$81,2005.95%$4,034.10$8,068.20
2024$68,500$73,2005.95%$3,867.50$7735.00

number_five

OAS6 

Old Age Security (OAS) is a monthly pension available to Canadians aged 65 and older. The pension payment is income tested, and if your taxable income is higher than a certain threshold, you will have to repay part or all your OAS pension. This is known as “recovery tax,” or “clawback.” The clawback rate is $0.15 for every dollar of net income.

For the 2025 tax year, the recovery tax period is July 2026 to June 2027 (based on your 2024 income). The maximum income recovery threshold for the Old Age Security (OAS) clawback is:

  • Ages 65-75: $90,997-$148,451 (with benefits fully repaid if income exceeds $148,451)
  • Ages 75+: $90,997-$154,196 (with benefits fully repaid if income exceeds $154,196)
olivegold_bar_imageWorking with your advisor will help you stay on top of these updates and alleviate financial stress. A tailored strategy will ensure that you feel supported and confident as you navigate your financial journey.

This is not just a time to react to changes—it’s a time to work closely with your financial advisor: your indispensable partner for financial well-being.

 

 

1 FP Canada™. 2024 Financial Stress Index. https://www.fpcanada.ca/2024-financial-stress-index
2 Department of Finance Canada. Government of Canada announces deferral in implementation of change to capital gains inclusion rate. https:// www.canada.ca/en/department-finance/news/2025/01/government-of-canada-announces-deferral-in-implementation-of-change-to-capital-gains-   inclusion-rate.html
3 Government of Canada. Indexation adjustment for personal income tax and benefit amounts. https://www.canada.ca/en/revenue-agency/services/ tax/individuals/frequently-asked-questions-individuals/adjustment-personal-income-tax-benefit-amounts.html
4 Government of Canada. Canada Pension Plan (CPP) and the CPP enhancement. https://www.canada.ca/en/revenue-agency/services/tax/ businesses/topics/payroll/payroll-deductions-contributions/canada-pension-plan-cpp/cpp-enhancement.html
5 Government of Canada. CPP contribution rates, maximums and exemptions. https://www.canada.ca/en/revenue-agency/services/tax/businesses/ topics/payroll/payroll-deductions-contributions/canada-pension-plan-cpp/cpp-contribution-rates-maximums-exemptions.html
6 Government of Canada. Old Age Security pension recovery tax. https://www.canada.ca/en/services/benefits/publicpensions/cpp/old-age-security/ recovery-tax.html

 

Worldsource Wealth Management (WWM) is a fully integrated wealth management company focused on supporting Financial Advisors and building financial prosperity for Canadians. WWM is a wholly owned subsidiary of Desjardins Group, the leading financial cooperative in North America with over 100 years of dedication to the people and communities they serve. WWM is comprised of: Worldsource Financial Management Inc. (WFM) and Worldsource Securities Inc. (WSI), which are Dealer Members regulated by the Canadian Investment Regulatory Organization (CIRO) and Members of the CIPF (Canadian Investor Protection Fund), as well as IDC Worldsource Insurance Network Inc. (IDC WIN), one of Canada’s largest life insurance managing general agencies.

February 12, 2025