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What You Need to Know About Tax Planning in 2025

Uncertain Future of the Proposed Capital Gains Tax

2025-01-29, Vanessa McNabb



With the sudden prorogation of Parliament, many Canadians are left wondering how the unpassed bill to increase the capital gains inclusion rate from 50% to 66.7%1 will impact their personal tax situation.

Despite the bill not yet receiving Royal Assent, as per standard practice, the Canada Revenue Agency (CRA) pre-emptively rolled out the tax increase effective June 25th, 2024. With speculation as to whether the governing Liberal party, who backed the bill, will stand to see it passed in Parliament, there’s uncertainty whether it will hold or not.

Regardless of when Parliament resumes, the CRA has confirmed that it intends to uphold the tax increase until such time that it is either passed into law or otherwise extinguished. Further, the CRA has advised that it will support taxpayers in seeking corrective action, should the bill not be reintroduced.

How will the Increased Capital Gains Inclusion Rate Impact your QV Tax Reporting?

Our pooled fund administrator, RBC Investor & Treasury Services (RBC IS), has opted to apply the increase on a pro-rata basis to the capital gains realized as a result of security sales within the funds. As such, our funds will be subject to a 50% inclusion rate for 48% of the year and a 66.7% inclusion rate for the remaining 52% of the year. This will be detailed in tax reporting distributed to clients by RBC IS directly.

If you’re interested in learning more, this recent Financial Post article by Jamie Golombek provides an excellent summary of various potential tax outcomes given the current legislative uncertainty.

RRSP Contribution Limits

For the 2024 tax year, the maximum RRSP contribution amount is the lower of 18% of your earned income during 2023 and $31,560. The deadline for making RRSP contributions for the 2024 tax year is March 3, 2025. QV will gladly accommodate RRSP contribution requests until 12:00 PM MST on that day.

Looking ahead, the maximum RRSP contribution for the 2025 tax year is $32,490. Please note, any unused RRSP room can be carried forward into future tax years.

TFSA Contribution Limit

This year, the annual contribution limit remains at $7,000.

In addition to the 2025 TFSA contribution limit, any unused TFSA contribution room from previous years may be carried forward. If you have never made a TFSA contribution and have been eligible since its inception in 2009, your cumulative TFSA contribution room is $102,000.

Details on the rules surrounding the timing of withdrawals and re-contributions to your TFSA can be found here.

Where Can I Find My Contribution Room?

You can verify your available contribution room for both TFSA and RRSP accounts online using CRA’s My Account or by calling the CRA at 1-800-267-6999. Please keep in mind that the CRA’s records are not updated in real time. Any contributions made during 2024 may not yet be reflected in your reported contribution allowance. It’s important to carefully review your contribution history to avoid overcontributing, which may result in punitive taxation.

How to Contribute

As a reminder, you can contribute to your TFSA and RRSP accounts by transferring funds from a non-registered account. Alternatively, we can arrange for a withdrawal of funds from your bank account upon verification of banking information. Note that QV will not be held liable for charges resulting from insufficient funds. RBC Investor & Treasury Services no longer accepts cheques.

Tax Reporting Timelines

Below we have outlined important dates and information to help guide you through the upcoming tax season.

Clients invested in the QV Pooled Funds should expect to see 2024 tax slips delivered according to the following estimated schedule:

Clients invested in segregated securities should expect to receive tax slips in early March 2025 from the custodian directly.

Wondering How to Best Prioritize Contributions Across Various Registered Plans?

While there is no silver bullet for optimizing tax efficiency, some of our previous commentaries provide practical guidance on how to determine your ideal contribution strategy. Please reach out to your QV Investment Counsellor to discuss your personal tax situation in detail. We are always happy to work collaboratively with you and your tax professional to help you navigate your most optimal outcome.

  1. For corporations and individuals with capital gains greater than $250,000 ↩︎

All views and projections are the expressed opinion of QV Investors Inc. and are subject to change without notice. This Update is provided for informational purposes only. QV Investors takes no legal responsibility from any losses resulting from investment decisions based on the content of this Update.

ABOUT THE AUTHOR

Vanessa McNabb | Chief Operating Officer

Vanessa supports QV’s organizational vitality by navigating matters of process, people and strategy.