2025 Federal Budget: “Canada Strong”

Balancing Growth and Fiscal Discipline

The 2025 federal budget, titled “Canada Strong,” outlines a multi-year plan focused on long-term growth through strategic investment, targeted tax relief, and public-sector reform.

The government projects a $78.3 billion deficit in FY2025/26, declining to $56.6 billion by FY2029/30, with a goal to balance the operating budget by 2028. Fiscal discipline will be driven by $60 billion in cost-saving measures over five years, achieved mainly through modernization and workforce reductions.

Key Highlights

1. Major Capital Investments

• $115 billion for infrastructure

• $110 billion for productivity and competitiveness

• $30 billion in defence

• $25 billion in homebuilding

These initiatives aim to unlock $1 trillion in private capital to expand housing, trade corridors, and national defense capabilities.

2. Fiscal Discipline and Workforce Reform
A 10% reduction in the federal workforce is planned, trimming about 40,000 positions by 2029. The focus remains on efficiency while protecting defense and Indigenous-service roles.

3. Tax Measures

• The first federal income-tax bracket will fall from 15% to 14%, saving households up to $840 annually.

• A full GST rebate applies on new homes priced up to $1 million.

• Immediate expensing for critical-mineral and manufacturing facilities brings effective tax rates close to zero, enhancing industrial competitiveness.

• The proposed Digital Services Tax has been dropped, aligning Canada more closely with U.S. trade policy.

4. New Initiatives and Reforms

• The Canada Digital Payments Act will regulate stablecoins and crypto-based payments under the Bank of Canada and OSFI.

• A revamped Export Diversification Strategy 2.0 will expand trade ties beyond the U.S.

• Climate policy shifts from an industrial emissions cap to market-driven carbon pricing.

• Immigration levels will be recalibrated in 2026, with lower permanent-resident targets and a $1 billion investment to attract high-skilled talent from the U.S.

What It Means for Investors

This year’s budget underscores Canada’s commitment to growth through infrastructure, innovation, and productivity, while maintaining fiscal restraint.

For investors, key themes like capital investment, tax relief, and industrial competitiveness present opportunities in housing, infrastructure, clean technology, and advanced manufacturing.

If you would like to discuss how these developments could affect your portfolio, please contact us at 604.643.0101 or cashgroup@cgf.com.

Book a meeting today with our of our advisors: https://calendly.com/cashgroup-cgf