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Your Estate Matters Newsletter

Your Estate Matters Podcast

Episode 31: The Best Strategies for Young Canadians to Build Wealth

In this week's episode, we speak with Madison Mailey, a wealth and insurance advisor at Scotia McLeod. Madison, an Olympic gold medalist in rowing, shares her journey into wealth management, emphasizing the importance of financial literacy and proactive planning. The discussion covers strategies for young Canadians to build wealth, including the use of financial tools like the First Home Savings Account and the Home Buyers Plan. Madison also addresses the impact of technology and social media on financial decisions, advocating for informed, professional advice over online trends.

Your Estate Tip

Short-Term Relief, Long-Term Uncertainty: Tax Information Canadians Need to Know Now

In a move that offers modest short-term relief but significant long-term uncertainty, Prime Minister Mark Carney has announced a delay in the federal budget until fall 2025. However, one tax measure will proceed as planned: the lowest personal income tax rate will drop from 15% to 14%, effective July 1, 2025.

While this cut will be welcome news for many Canadians, the broader tax and estate planning landscape remains murky. If you’re a professional guiding clients - or a Canadian trying to plan your affairs - here are the five most important developments to understand right now:

1. ⚖️ Legislative Whiplash: Capital Gains, LCGE, and Entrepreneurs’ Incentive

• Capital Gains Inclusion Rate: A proposed increase to 66.67% was withdrawn in March after intense pushback. Status quo: 50% inclusion rate remains.
• Lifetime Capital Gains Exemption (LCGE): Raised to $1.25M, with indexation resuming in 2026, but enabling legislation has yet to pass.
• Entrepreneurs’ Incentive: Still in draft form. Would reduce the inclusion rate to 1/3 on up to $2M of eligible gains, phased in over five years.

📌 Uncertainty reigns. Be cautious with planning based on measures that remain in draft.

2. ⚠️ AMT and Mandatory Disclosure: A New Era of Risk

• Alternative Minimum Tax (AMT) now applies more broadly—with a higher rate (20.5%) and fewer exemptions. Trusts, gifts, and estate freeze strategies are all impacted.
• Mandatory Disclosure Rules: Sweeping new reporting obligations apply to “reportable” and “notifiable” transactions. Penalties can apply to both clients and advisors.
• GAAR Reform: A new “main purpose” test and automatic penalties unless the transaction is pre-disclosed. CRA discretion has grown—but so has advisor liability.

📌 If you’re unsure whether a transaction needs to be reported, seek legal advice—now.

3. 🔍 CRA Powers: Expanded and Enforced

• CRA now has authority to compel oral testimony under oath.
• Failure to comply with information requests can result in $50/day penalties.
• Non-compliance during audits could trigger an automatic 10% penalty on tax owing above $50,000.

📌 Document everything. Assume audit-readiness.

4. 🛠️ Systemic Filing Problems

• Ongoing administrative dysfunction: duplicate T-slips, LCGE denials, e-file rejections.
• Some 2025 filing deadlines were extended due to government error.
• Practitioners are advising defensively in the absence of stable administrative guidance.

📌 Plan early and prepare for delays. Have your team triple-check filings.

5. 🏠 BC Home Flipping Tax: Executors Beware

• In force January 1, 2025: 20% tax on residential property gains within 2 years, separate from federal rules.
• Applies to estate sales unless an exemption is claimed.
• Executors must file a dedicated return to claim exemption—failure to do so may trigger tax and penalties.

📌 If you’re an executor in BC, this needs to be on your checklist—immediately.

📣 Final Word: Defensive Planning Is the Only Safe Planning

With no federal budget until fall, major reforms still in draft, and CRA applying policies administratively before legislation passes, advisors are being asked to guide clients in a legal fog.

Whether you’re advising others or managing your own affairs, the key theme for 2025: Document, disclose, and delay action where clarity is lacking.

Here are some ways you can work with us: ​Book a free consultation with Heritage Trust. Download our free checklist “Essential Steps for Estate Planning.” Purchase our course "The Estate Organizer for Canadians." Join the waitlist for the Canadian Estate Club membership here: https://www.estateclub.ca/canadian-estate-club​ ​ Follow us on social: ​​​​

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