SCL Tax Newsletter Feb 2025 Updates

🤯 RRSP/TFSA/FHSA – Huh/What?

📌 Takeaway #1: What’s the Difference?

📈 Takeaway #2: Please Actually INVEST Your Money

February is here, and so are a few key tax reminders! Let’s keep it quick:

 For Employers & Business Owners: Time to check those T4s and T5s off your to-do list! The deadline for filing is February 28, 2025.

 For Individuals: Thinking about topping up your RRSP for the 2024 tax year? The deadline is March 3, 2025— run a quick tax estimate and determine the appropriate number while mindful of your contribution limit. But wait, is RRSP the best route to go? ..while you're at it, make sure you remember the differences between Canada’s powerful tax advantageous accounts ( RRSP, TFSA, and FHSA) —each has its own perks. Need a quick refresher? Keep reading!

RRSP/TFSA/FHSA – Huh/What? 

Takeaway #1: What’s the Difference?

 RRSP – The OG (est. 1957)

• The most popular but sometimes misunderstood.

• Your contributions = TAX DEDUCTION NOW, but withdrawals = TAX LATER (it’s tax-deferred, not tax-free).

• Great if you expect to be in a lower tax bracket in retirement than you are now.

 TFSA – The Rockstar (est. 2009)

• No tax deduction when you contribute, but all growth + withdrawals are 100% tax-free LATER.

• CRA has been watching these accounts closely, so keep things reasonable—this isn’t meant for day trading.

• Missed contributions? No worries! Unused room carries forward, so if you turned 18 in 2009, your 2025 TFSA limit = $102,000. Now imagine growing that to $1M... tax-free.  At that point, remember little ol’ Sarah who never says no to a free THANK YOU coffee. 

 FHSA – The Underrated Gem (est. 2023)

• Designed to help first-time homebuyers save for their future residence.

• Contributions = TAX DEDUCTION NOW, & withdrawals for a qualifying home = TAX-FREE LATER (this is the best of RRSP & TFSA combined)

• Why isn’t this more popular? Bad marketing? Skepticism? If you qualify, book a free meeting with your financial institution and consider opening an account NOW—please, please, please!

• 2025 max contribution = $8,000 (lifetime max = $40,000).

• I wish I could participate. Truly.

Takeaway #2: Please Actually INVEST Your Money 

Depositing cash ≠ investing. It hurts my soul when people say they "invested" but just left cash sitting in the account. This is NOT investing (I’ll save the full rant for another day).

 Once you contribute, BUY something:

• Stocks, ETFs, mutual funds, bonds, GICs—you name it (remember, to research first)

• Example... CAD-hedged S&P 500 ETF (like VSP.TO) can be held in any of these accounts (be it, the RRSP, TFSA, FHSA).

• 
  

The account is like your favourite mall, you still need to buy something at the local shop. 

Quick Capital Gains Inclusion Rate Update

If you caught the January newsletter, you already know how I feel about this one.  But here’s the latest…

The plan to increase Corporation’s taxable portion of capital gains from 50% to 66.67% has been delayed to January 1, 2026—thanks to political back-and-forth. For now, we wait. But don’t get too comfortable—this is still very much on the table, so keep it in mind for future tax planning. 

Disclaimer: This content is for educational purposes only and should not be considered financial, tax, or legal advice. Everyone’s situation is different—before making any decisions, consult a qualified tax professional or financial advisor to ensure it aligns with your specific circumstances. 🚨