"Change is the law of life. And those who look only to the past or present are certain to miss the future."

- John F. Kennedy

As we enter the second half of 2025, it’s crucial to evaluate the economic landscape in Canada during the first half of the year. DEROTTO has had its ups and downs for the first half this year, but we have seen activity picking up with small businesses in Canada. This newsletter highlights key economic trends and discusses why leasing can be a beneficial strategy for businesses, including the associated tax benefits of equipment leasing.

Economic Overview: First Half of 2025

1. GDP Growth: The Canadian economy has demonstrated steady growth, with GDP increasing by approximately 2.4% in the first half of 2025. This growth has been supported by robust consumer spending, particularly in retail and services.

2. Labor Market Recovery: The unemployment rate has dropped to around 5.5%, indicating significant job creation across various sectors. Industries such as technology, healthcare, and renewable energy have led this recovery, addressing previous skill shortages.

3. Inflation Trends: Inflation has shown signs of stabilization, with the Consumer Price Index (CPI) reflecting modest increases. The Bank of Canada has maintained a cautious approach to interest rates, balancing inflation control with supporting economic growth.

4. Investment in Technology: Businesses have increased their investments in technology and innovation, driven by government incentives. This trend is particularly strong in sectors focused on sustainability and digital transformation.

5. Infrastructure Projects: Major infrastructure initiatives have been launched, including public transit improvements and renewable energy projects, contributing to regional economic development and job creation.

   
   

Why Leasing is a Good Strategy for Your Business in 2025

As businesses adapt to the changing economic environment, leasing equipment and technology can provide several strategic advantages:

1. Capital Preservation: Leasing allows businesses to conserve cash and lines of credit by avoiding large upfront costs. This preserved capital can be redirected toward growth initiatives, marketing, and other operational needs.

2. Flexibility and Scalability: Leasing agreements can be tailored to meet specific business needs, providing flexibility to scale operations up or down based on market conditions.

3. Stability: A fixed term lease removes the fear of cancellation or recalls like some bank borrowing options.

4. Lease-to-own: A lease is a rental agreement, and this is a concern of many business owners. Most people are unaware a lease can be structured so the business owns the equipment at the of the lease term.

Tax Benefits of Equipment Leasing

Leasing also offers significant tax advantages that can enhance overall financial performance:

1. Expense Deductions: Lease payments can typically be deducted as business expenses, leading to lower taxable income in the year the payments are made. This immediate tax relief can improve cash flow.

2. Incentives for Sustainable Equipment: Leasing environmentally friendly equipment may qualify for special tax incentives, such as accelerated depreciation or tax credits, encouraging businesses to invest in green technologies.

3. Tax Planning Opportunities: The predictable nature of lease payments allows for better tax planning and budgeting, as businesses can forecast their cash flow and tax obligations more accurately.

   
   

The first half of 2025 has shown promising economic growth in Canada, supported by a recovering labor market and increased investment in technology and infrastructure. As businesses navigate this landscape, leasing presents a viable strategy to optimize financial resources, enhance competitiveness, and take advantage of tax benefits.

For guidance on leasing options and the associated tax benefits, connect with our team.

Thank you for reading, and we look forward to providing more insights next month!