DO Wealth’s Comprehensive Financial Guide to the 2025 Canadian Election

As Canada approaches the federal election on April 28, 2025, it's essential to understand how proposed policy shifts may impact your financial landscape. At DO Wealth, we are committed to providing you with clear, actionable insights to help you navigate these changes effectively.​

Understanding the Political Landscape

The two leading parties have outlined distinct economic policies:​

Liberal Party – Led by Prime Minister Mark Carney

• Personal Income Tax: Proposes reducing the federal tax rate for individuals in the lowest tax bracket (earning up to $57,375 per year) by one percentage point to 14%. This move aims to save two-income families up to $825 per year. ​Investment Executive

• Carbon Tax: Plans to eliminate the consumer carbon tax, shifting towards incentivizing green choices and maintaining taxes on large industrial emitters. ​WSJ

• Housing: Proposes eliminating the Goods and Services Tax (GST) on new home purchases under $1 million for first-time home buyers to improve housing affordability. ​Wikipedia

  
  

Conservative Party – Led by Pierre Poilievre

• Personal Income Tax: Proposes reducing the lowest income tax bracket from 15% to 12.75%, aiming to provide significant tax relief to lower and middle-income earners. ​

• Tax-Free Savings Account (TFSA): Suggests increasing the annual contribution limit by $5,000, provided the additional investment is directed towards Canadian businesses. ​

• Housing: Plans to eliminate the GST on new home purchases under $1.3 million for all buyers, aiming to stimulate the housing market and improve affordability. ​

• Capital Gains Tax: Proposes deferring tax on capital gains if the proceeds are reinvested within six months, encouraging domestic investment and economic growth. ​CTV News

  
  

Potential Financial Implications

Understanding these proposed policies is crucial for effective financial planning:

1. Personal Income Taxes

• Liberal Proposal: A reduction in the lowest tax bracket from 15% to 14% could result in modest tax savings for individuals earning up to $57,375 annually. ​

• Conservative Proposal: Lowering the same bracket to 12.75% may offer more substantial savings for lower and middle-income earners. ​CCPA
  

Action Steps:

• Income Timing: Consider deferring income or bonuses to benefit from potential lower tax rates post-election.​

• Withholding Adjustments: Review and adjust tax withholdings to align with anticipated changes, ensuring optimal cash flow.​
  

2. Tax-Free Savings Account (TFSA) Contributions

• Liberal Proposal: Prime Minister Mark Carney, has not announced any specific plans to modify the Tax-Free Savings Account (TFSA) program. 

• Conservative Proposal: An increased TFSA contribution limit by $5,000, contingent on investments in Canadian businesses, could enhance tax-free growth opportunities. ​Wikipedia

  
  

Action Steps:

• Maximize Contributions: If eligible, plan to utilize the increased TFSA room, focusing on qualifying Canadian investments to benefit from tax-free growth.​

  
  

3. Housing Market Dynamics

• Liberal Proposal: Eliminating the GST on new home purchases under $1 million for first-time buyers may reduce upfront costs and enhance affordability. ​Wikipedia

• Conservative Proposal: Eliminating the GST on new home purchases under $1.3 million for all buyers could further stimulate the housing market. ​Wikipedia

  
  

Action Steps:

• Buying Decisions: If considering purchasing a new home, evaluate the potential benefits of GST elimination on properties under the specified thresholds.​

• Selling Strategy: Assess how increased housing demand and policy changes may affect property values and market conditions.​

  
  

4. Capital Gains Tax Deferral

• Liberal Proposal: The Liberals have canceled a previously proposed increase in the capital gains inclusion rate. This proposal aimed to raise the taxable portion of capital gains from 50% to 66.7% for gains exceeding C$250,000. The cancellation is intended to encourage investment and support economic growth driven by entrepreneurs. ​Reuters

• Conservative Proposal: Deferring tax on capital gains if reinvested within six months aims to encourage domestic investment. ​CTV News

  
  

Action Steps:

• Investment Planning: Consider strategies for reinvesting capital gains to take advantage of potential deferrals, aligning with your financial goals.

  
  

Strategies for Financial Preparedness

To navigate these potential changes effectively:

1. Stay Informed: Regularly monitor updates on policy proposals and election outcomes to make timely financial decisions.​

2. Consult Professionals: Engage with your DO Wealth financial advisor to understand how specific policy changes may impact your personal financial situation.

3. Review Financial Plans: Assess and adjust your financial strategies—including budgeting, investing, and retirement planning—in light of potential policy shifts.

4. Tax Planning: Explore strategies such as income splitting, tax-loss harvesting, and maximizing deductions to optimize your tax position.

5. Estate Planning: Ensure your estate plan reflects current laws and consider how proposed changes may affect wealth transfer to beneficiaries (read our comprehensive estate planning article here).

   
   

Conclusion

The 2025 Canadian federal election presents opportunities and challenges that could significantly impact your financial well-being. By understanding the proposed policies, assessing their potential effects, and implementing proactive strategies, you can position yourself to navigate these changes effectively. At DO Wealth, we are dedicated to guiding you through this evolving landscape, ensuring your financial plans remain robust and aligned with your goals.​

For personalized advice and to discuss how these potential changes may affect your financial situation, please contact a DO Wealth advisor.