Effective wealth planning takes place throughout the year. However, you can take some key steps before the end of the year and early in the new year from a tax-planning perspective that can make a positive impact on your overall finances.
While the following list is not exhaustive, here are some time-sensitive items to look at now for 2025 as well as proactive items for the new year.
If your 2024 tax return showed net tax owing (total tax liability less tax withheld at source) of over $3,000 ($1,800 for Quebec residents), you may have received a notification from the Canada Revenue Agency (CRA), or Revenu Québec (RQ) for Quebec residents, requiring you to pay quarterly tax instalments for 2025.
If you have not paid these instalments and expect your net tax owing in 2025 to exceed $3,000 ($1,800 for Quebec residents), you should make a payment as soon as possible. This will reduce or avoid instalment interest and penalties from being charged.
Note: Interest on instalments and amounts owing to the CRA compounds daily at the “prescribed rate” plus an additional 4%. Amounts owing to RQ are also subject to interest charges.
Consult with your tax and investment advisors to review your situation. For investments, trades must be entered on or before December 30, 2025 in order to be settled by year-end (under the T+1 settlement cycle).
Be aware of any other factors that may limit your ability to trade certain positions on short notice, such as liquidity constraints with alternative investments.
Be sure to factor in the impact of foreign exchange if investments are not denominated in Canadian dollars.
Note: In March 2025, the government cancelled the proposed increase to the capital gains inclusion rate. Therefore, the inclusion rate remains at 50%.
Consider the following strategies:
Note: If you are the owner of a spousal RRSP, you should be mindful of “income attribution” rules that may apply to withdrawals you make from the account, if your spouse had made contributions during the year or the two prior calendar years.
Example: Opening an FHSA by year-end would allow you to contribute up to $16,000 in 2026 (assuming no contributions are made this year), while opening an FHSA in 2026 would only allow you to contribute $8,000 in 2026.
Note: Some charities may require additional time to accept and process donations during this time. You should plan accordingly. The AMT could reduce the tax efficiency of making donations. In computing an individual’s minimum tax each year, the AMT limits the amount of donation tax credits that can be claimed to 80% of what can be claimed under regular income tax rules. It also requires 30% of capital gains from the donation of publicly listed securities to be included when computing taxable income (compared to 0% under regular income tax rules). Consult with your tax advisors to assess whether any of your donations could result in AMT implications.
These include but are not limited to:
If you anticipate your overall tax rate will be materially different between this year and next year, you may wish to intentionally recognize or delay items of income, deductions, and credits to take advantage of the anticipated tax rate differences. One example outlined earlier is the claiming of a capital gains reserve.
Interest on such loans must be paid on or before this date to avoid the application of income attribution rules.
Note: If your income-splitting loan was entered into during 2025, accrued interest must be paid on or before this date, even if the loan has not been outstanding for a full 12 months.
A RRSP or a spousal RRSP contribution made on or before this date will be deductible on your 2025 tax return, subject to your RRSP contribution limit. The RRSP dollar limit for 2025 is $32,490. Check with the CRA to verify your RRSP contribution limit.
Note: If you turned age 71 in 2025, you would only have until December 31, 2025 to make a final contribution to your RRSP.
If the minimum repayment amount is not made on or before this date, it will be taxable on your 2025 tax return.
Items to consider include but are not limited to:
Note: A taxable imputed interest benefit may be applicable when you repay all or a portion of an outstanding shareholder loan. Consult with your tax advisors on this matter.
Note: If it makes sense to implement tax-loss selling in your corporate investment portfolio, you may want to review whether there is a positive balance in the CDA and whether to declare a capital dividend prior to selling investments. This is because the non-deductible portion of capital losses realized will immediately decrease the balance in the CDA.
We recommend you discuss these strategies with your professional investment, tax, and legal advisors before implementation to make sure they fit within your overall wealth plan.
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