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Today, we’re going to cover what you need to know from a tax, investing, and financial planning perspective as all our taxes become due here in Canada on April 30th 2025, and as we get well underway with 2025 in general.
As you know, the government makes changes every year in these areas. The implications of these changes can have a pretty substantial impact on how much you pay in taxes, your net worth, and what government benefits you are eligible to get, and how much you get.
These can easily affect your net worth in the thousands of dollars every single year, so it’s definitely in your and my best interest to know about these changes and get a bit of a refresher, so that we can all better prepare, and also take advantage of any opportunities that arise, like any benefits that we might become eligible for.
About Our Guests:
To help me with the above, I have Certified Financial Planners Jason Heath and Paul McVean on the show. Jason is a popular returning guest on the show, definitely one of the more well-known and respected financial planners, here in Canada. Jason has been providing fee-only, advice-only financial planning since 2002, so over two decades. He is also a personal finance columnist for the Financial Post, MoneySense, and Canadian MoneySaver. He has a Bachelor of Economics degree from York University and holds the Certified Financial Planner designation.
In addition to being a Certified Financial Planner, our 2nd guest, Paul McVean is also a Senior Tax Accountant, he is a CPA, and he’s a Trust and Estate Practitioner (a TEP), so definitely very knowledgeable, especially on tax and how to save you money on tax where he has over 25 years of experience.
Jason and Paul are both fee-only financial planners here in Canada, which means they don’t sell any investments so there isn’t that potential conflict-of-interest that you see a lot of here in Canada where someone calls themselves a financial planner or a financial advisor, you think you’re getting a good financial plan and that they have your best interests at heart, but really they are just trying to get you to buy the investments that their firm sells so that they can earn a hefty commission.
None of that here, we’re going for purely unbiased financial education in this episode with Jason and Paul.
If you want to speak to Jason, Paul or someone from their team, you can reach them at buildwealthcanada.ca/jason.
Jason and his team have been increadible educational contributors to the Build Wealth Canada Podcast for multiple years now, their episodes are consistently some of the most popular on the show, and I did want to give a big thanks to Jason as he has once again agreed to continue giving Build Wealth Canada listeners a discount, if you do decide to work with them when it comes to your financial planning, optimizing your taxes, etc.
A big thanks to Jason for that, and that link again to speak to them to see if you are a good fit for each other, and to get a discount if you do decide to work together is buildwealthcanada.ca/jason.
And now let’s get into the show.
A Big Thanks to Our Sponsors:
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PolicyMe – Life Insurance
If you were to pass away, does your family have enough to pay off your mortgage and other depts? Will they have enough to keep the same standard of living with all your income gone? And, will your kids still have enough for post secondary education?
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“Views from the Desk” Podcast
On this podcast, we often cover best practices that can not only help you now, but will also be relevant throughout your investment lifetime. But what if you also want an update on what is happening with your investments, the markets, and the economy right now?
To help me stay up-to-date on these topics, a great Canadian podcast that I listen to weekly is called “Views from the Desk” (Apple, Spotify, Direct).
They provide timely information for us Canadians on what is happening to our investments right now, as well as other key factors affecting us like changes to our interest rates, our inflation, and regulatory changes that we should know about.
The podcast is hosted by BMO ETFs. I’m a huge fan of theirs, I own a lot of BMO ETFs myself, and it’s a great free resource for both new and existing ETF investors.
I hope you check them out. All episodes are available for free in your favourite podcast player. Just search for “Views from the Desk” or click one of the links below:
ETF Market Insights and BMO ETFs
Catch the latest episodes on YouTube Here.
There are so many opinions on how to invest your money today, but it can be hard to find credible voices to rely on in the world of finance and investing.
One resource I turn to every week is the ETF Market Insights YouTube channel, led by today’s episode sponsor, BMO ETFs.
Market Insights brings in industry experts and their weekly episodes cover the hottest themes like inflation, infrastructure, healthcare, and more. Tuning in helps me stay up-to-date on what’s happening so I can be a smarter investor. You can also submit your own ETF questions, to be answered on the show.
Do yourself a favour and subscribe on YouTube to ETF Market Insights, or visit ETFMarketInsights.com so you can be notified when future episodes go live.
BMO Asset Allocation ETFs:
Asset allocation explains over 90 per cent of the variation in a portfolio’s quarterly returns, so it’s no wonder Canadian investors are turning to these ETFs!
Today’s sponsor, BMO ETFs, offers these innovative all-in-one solutions with the BMO All-Equity ETF (ZEQT), BMO Growth ETF (ZGRO), BMO Balanced ETF (ZBAL), BMO Conservative ETF (ZCON), and more. BMO developed these to help provide investors with ETFs that offer broad diversification and are also low-cost and simple to use.
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BMO actually offers eight asset allocation ETFs. Learn more at BMOETFs.com.
Questions Covered:
- To kick things off, can you take us through any significant changes and things to keep in mind for 2025 when it comes to investing, taxes, and financial planning in general, here in Canada?
- One other thing that I wonder about is the importance of tax planning. I get the impression most accountants are tax preparers, not tax planners. Can you talk about the difference and why it matters?
- Let’s talk about the elephant in the room: The changes to the capital gains inclusion rate. This could have a major financial impact for many of us here in Canada, but I think there are also a lot of misconceptions of who this applies to and in what situations.
- One very attractive headline that I see here in Canada from time to time, is that for 2025 for example, Canadians can receive up to $53,375 in eligible Canadian dividends tax free, if the investments are in their taxable investment accounts (and if they have no other sources of income).
- Some retired couples, and aspiring early retirees will then reason that combined with their spouse, they can each earn that $53,375 tax free every year, so $106,750 together. They can then just live off their dividends in retirement, pay no income tax, and never have to sell anything.
- This strategy has a lot of different caveats and very easy mistakes to fall into. Can you unpack this for us so that we are all aware of this strategy, but also understand its risks and limitations.
- While on the subject of dividends, one big consideration for Canadians is that when we receive Canadian dividends in our taxable accounts, those dividends can increase the speed at which we start getting clawed back on our government benefits like the Canada Child Benefit (CCB) and Old Age Security (OAS) for example (i.e. the gross up).
One potential solution for this, is to use corporate class ETFs like HXCN from Global X for example (previously Global X was under the brand Horizons).
What are your thoughts on these ETFs and can you give us your thoughts on the extra risk that we are taking on by using this type of structure where our dividends are essentially being turned into capital gains so that we don’t have to worry about these clawbacks as much? - For anybody new to this world of Canadian financial planning and optimization, can you take us through what an advice-only financial planner is (what you are), compared to a more traditional financial advisor title/role here in Canada?
Disclaimer:
This podcast presentation is for informational purposes only. No part of this presentation may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, recording or otherwise, without the written permission of BMO Investments Inc. or BMO Asset Management Inc. (collectively, BMO GAM).
For greater certainty, no part of this presentation may be provided to investors and/or potential investors without the written permission of BMO GAM. The information contained herein is not, and should not be construed as, investment advice and or tax advice to any individual. Investments should be evaluated relative to the individual’s investment objectives and professional advice should be obtained with respect to any circumstance. This communication is intended for information purposes only. Any statement that necessarily depends on future events may be a forward-looking statement. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Although such statements are based on assumptions that are believed to be reasonable, there can be no assurance that actual results will not differ materially from expectations. Investors are cautioned not to rely unduly on any forward-looking statements. In connection with any forward-looking statements, investors should carefully consider the areas of risk described in the most recent simplified prospectus. BMO GAM undertakes no obligation to update publicly or otherwise revise any forward-looking statement or information whether as a result of new information, future events or other such factors which affect this information, except as required by law.
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