Budget 2025 doesn’t include the Liberals’ election promise to reduce the mandatory minimum RRIF withdrawal by 25% for one year.
It’s “a bit disappointing” that the RRIF measure isn’t mentioned explicitly in the budget, Brian Ernewein, senior advisor, national tax, with KPMG LLP in Ottawa, said. Given it’s not there, “I think you assume it’s gone,” he said.
Since the RRIF election promise was made, markets have recovered. However, a rebound and the election pledge aside, “RRIF minimums ultimately are too high,” Jamie Golombek, managing director and head of tax and estate planning with CIBC Private Wealth in Toronto, said. The high minimum withdrawal “forces retirees who don’t necessarily need all their money to withdraw funds sooner” than is ideal.
“This haste of the government to collect its revenue is costing individual retirees and investors the tax-deferred compounding that could have been available had the money stayed in the RRIF,” Golombek said.
Industry organizations have been calling on the federal government to reduce or eliminate the RRIF mandatory minimum withdrawal, or increase the age requirements to help prevent Canadians from outliving their savings.
“We’re hopeful that either this government or some future government does take a major look at RRIF reform,” Golombek said.
The budget also cancels the Canadian Entrepreneurs’ Incentive (CEI). The federal government had introduced the incentive in Budget 2024 along with the proposed increase to the capital gains inclusion rate, which was subsequently dropped. The CEI reduced the inclusion rate to one-third on a lifetime maximum of $2 million in eligible capital gains when an entrepreneur sells their business.
Dropping the CEI isn’t that surprising, Golombek said, given that the proposed increase to the capital gains inclusion rate was dropped.
Further, “We have to keep in mind that the government also is continuing the increase of the lifetime capital gains exemption to $1.25 million, which will help qualifying small businesses and farm and fishing corporations,” Golombek said.
The budget was also silent on a review of the corporate tax system — another Liberal election promise.
The government is “focusing right now on trade, the economy, tariffs,” Golombek said. “These are bigger worries right now for the government than a comprehensive tax reform — either corporate or personal.” Hopefully, a review will be on a future agenda, he said.
A corporate tax system review “probably has to be announced and moved on in the first mandate of a government,” Ernewein said, so that the review is completed ahead of the election cycle. With no mention of the review in the budget, it may not be in the works anytime soon.
A number of other Liberal platform measures aren’t mentioned in the budget, Ernewein said. For example, for individual investors, there was no mention of flow-through shares to the Canadian startup ecosystem or multi-unit residential housing. Ernewein further cited patent boxes to attract talent and an AI deployment tax credit.