Private Wealth 2025

CANADA Trends and Developments Contributed by: Ian Hull, Suzana Popovic-Montag and Nick Esterbauer, Hull & Hull LLP

Private Wealth in Canada: An Introduction In Canada, developments related to taxation and estate planning using inter vivos transfers, wills and Registered Retirement Savings Plans (RRSPs) remain particularly pertinent to private wealth management. The law pertaining to estate planning continues to evolve through a growing body of case law, and new tax measures are emerging in light of a recent federal election. Tax planning Because no budget was tabled in Canada in spring 2025, new proposals related to taxation are expected to be minimal this year. New tax measures are typically proposed and voted on through the federal budget. The government has only committed to a few new measures premised on campaign promises, which are expected to benefit the middle class and first-time home owners. Tax cut to marginal personal income tax rate As of 1 July 2025, the lowest marginal personal income tax rate for Canadians will be reduced from 15% to 14%. This reduction is intended to benefit the mid - dle class, with a maximum of CAD420 in annual tax savings for individuals or up to CAD840 for couples. First-time home buyers’ GST rebate Also effective 1 July 2025, first-time home buyers who purchase a newly constructed home or shares of a co-operative housing corporation valued at up to CAD1 million will receive a GST rebate. This meas - ure will also lower the GST payable on new homes valued between CAD1 million and CAD1.5 million in a linear manner, but there will be no rebate for new homes valued at or above CAD1.5 million. The rebate will be available to Canadian citizens and permanent residents. Retraction of proposed capital gains tax increase The federal government has cancelled an increase to Canada’s capital gains tax that was proposed in 2024, which would have increased the inclusion rate for annual capital gains received by individuals exceed - ing CAD250,000 from 50% to 66.7%. The same inclu - sion rate would also have applied to all capital gains received by corporations. Since the capital gains tax will not be increased, the inclusion rate for taxing capi -

tal gains for individuals and corporations will remain at 50% for the time being. Estate planning using inter vivos transfers This continues to be popular. Such transfers permit assets to pass outside of probate, thereby avoiding estate administration tax. Assets may be transferred directly from a donor to a donee, or placed in joint ownership so that both the donor and donee are con - sidered legal owners of the asset. An advantage of joint ownership is that the donor may continue to use the asset until the donor passes away. If a donee does not provide the donor with consid - eration for an inter vivos transfer, however, the law presumes that the donee holds either the asset or their interest in the asset in trust for the donor. This doctrine, known as the presumption of resulting trust, was confirmed by the Supreme Court of Canada in Pecore v Pecore (2007 SCC 17). If the donee is unable to establish that a gift was intended, this presumption will apply and the asset will revert back to the donor’s estate after the donor passes away. There is an exception to this presumption if the donee is the donor’s minor child. In this case, the presump - tion of advancement will apply instead, and a gift will be presumed unless the donor is able to prove that a gift was not intended. The legal implications of inter vivos transfers of two specific types of property – real property and mon - etary assets – are explored below. Gifting real property and a right of survivorship When gifting land by transferring it into joint owner - ship, the donee and donor may hold the property either as joint tenants or as tenants in common. Land held in joint tenancy includes a survivorship interest, meaning that if one of the owners dies, their estate will receive no interest in the land; instead, the land will revert to the surviving owner pursuant to the right of survivorship. On the other hand, if the land is held as tenants in common, neither owner will have a survivor - ship interest; when either owner passes away, their estate will receive their share of the property.

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