2025 Federal Budget's Impact on Investment and Wealth Management

The federal government delivered its first budget under the leadership of Mark Carney on Tuesday November 4, 2025. The focus of this budget is on strengthening the Canadian economy and making it more resilient in these challenging times of economic and trade uncertainty.

There have been many articles written which summarize the contents of “Budget 2025”. In this blog post, we are focusing on providing highlights of the proposed changes which have the most relevance to investment and wealth management.

RRIF Reform

Budget 2025 did not include any reforms to the rules governing RRIF withdrawals. There was hope that the budget would contemplate increasing the age one must convert their RRSP to a RRIF and / or reduce the mandatory annual minimum RRIF withdrawals. However, the budget was silent on RRIFs resulting in many retirees continuing to be required to withdraw funds from their RRIFs sooner than otherwise makes sense.

Qualified Investments for Registered Plans

Registered plans, which include RRSPs, RRIFs, TFSAs, RESPs, RDSPs, FHSAs and DPSPs are only permitted to invest in Qualified Investments. Budget 2025 proposes a series of amendments to the Qualified Investments rules to simplify and streamline them and to harmonize the rules between the various types of registered vehicles with the goal of reducing both complexity and duplication.

Of note, the shares of certain eligible corporations and interests in small business investment limited partnerships and small business trusts will no longer be qualified. Those purchased prior to January 1, 2027 will be grandfathered in. RDSPs will now be permitted to acquire shares of small business corporations, venture capital corporations and specified cooperative corporations (to be consistent with the other registered vehicles).

The budget proposes to replace the current registered investment regime with two new categories of qualified investments. As part of this, the budget generally expects that units or shares of funds and income trusts that are qualified investments under the existing rules will continue to qualify in one or both of the new categories.

What is important for clients and potential clients of Mirador: The proposed changes to the Qualified Investment Rules will not impact any of the securities that Stan is buying and selling in the Mirador Income and Stability Fund (“MISF”). In addition, MISF will still be considered a Qualified Investment and can continue to be held in your registered accounts.

The 21 Year Rule for Personal Trusts

The 21 Year Rule for personal trusts states that trusts are deemed to have disposed of their capital property at fair market value on the 21st anniversary of the date the trust was created and every 21 years thereafter. This deemed disposition often results in taxes owing as a result of the gains that are triggered.

Currently there are anti-avoidance provisions in place to preclude transferring assets directly to another trust to push out the date of the 21st anniversary. Budget 2025 tightens these anti-avoidance provisions to include indirect transfers of property to ensure that the 21 Year Rule is not circumvented.

Bare Trusts

This budget announced that the government intends to proceed with previously announced bare trust reporting rules. However, the rules have been deferred such that they now apply commencing with taxation years ending on or after December 31, 2026.

Tax Deferral Through Tiered Corporate Structures

Budget 2025 limits the opportunity to defer tax on investment income that was gained by using tiered corporate structures with different year ends. This may impact clients with more than one personal corporation.

Lifetime capital gains exemption

Eligible individuals are entitled to a cumulative lifetime capital gains exemption (LCGE) on gains realized from the disposition of qualified property (generally qualified small business corporation shares and qualified farm and fishing property). The budget confirms the previously announced increase in the LCGE to $1.25 million (from just over $1 million) for dispositions that occur on or after June 25, 2024.

Canadian Entrepreneur’s Incentive

Budget 2025 cancels Canadian Entrepreneur’s Incentive which was tabled in the 2024 budget. This incentive, which was intended to be in addition to any available LCGE, would have decreased the inclusion rate of capital gains to 1/3 up to a lifetime maximum of $2 million when an entrepreneur sells their business. It was intended to partially offset the proposed increase in capital gains inclusion rate which was also included in the 2024 budget.

Changes to capital gains

Budget 2025 was silent on the proposed changes to the inclusion rate for capital gains which were tabled in 2024 (the 2024 budget proposed that the inclusion rate be increased from 50% to 2/3 for all corporations and trusts and for capital gains over $250,000 for individuals, for all capital gains realized after June 25, 2024). Earlier this year the government said the proposed increase in inclusion rate would be cancelled. Although this Budget does not specifically state that an increase in capital gains inclusion rate is off the table, it is implied by the cancellation of the Canadian Entrepreneur’s Incentive. For the time being the capital gains inclusion rate remains at 50%.

Alternative Minimum Tax

Alternative minimum tax (AMT) is a parallel tax calculation that allows fewer tax credits, deductions, and exemptions than when utilizing the personal income tax rules. Taxpayers pay the higher of regular taxes and AMT.

Budget 2025 confirmed that the government will proceed with previously announced changes to the Alternative Minimum Tax rules including developments since their initial release.

Personal and Corporate Income Tax Rates

There are no changes to the personal or corporate income tax rates. The budget has proposed a non-refundable Top-up tax credit to maintain the current 15% non-refundable tax credit claimed on amounts in excess of the first income tax bracket threshold.

Business Tax Incentives

There are many business tax incentives and tax credits announced in Budget 2025 to encourage and promote Canadian businesses to focus on investing in manufacturing and processing, critical minerals, clean technology and electricity , carbon capture, utilization and storage. While these incentives do not have a direct impact on wealth management, as portfolio manager it is something that Stan remains aware of as it has the potential to influence his decisions regarding sector allocation.

We can help! If you have any questions or concerns about how the recent budget may impact your overall wealth or estate plans, please do not hesitate to reach out to Joyce at 403-978-6798.

Joyce Clarke, CPA, CA

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