Year End Tax Planning Quick Tips

With the holidays approaching, we know everyone is incredibly busy. However, this is also one of the most critical times for tax planning. 

To save you from digging through piles of information yourself, we have organized the tax-saving tasks that must be completed by December 31, 2025, into a simple checklist. This will save you time and protect your wallet.

📘 【Personal Tax-Saving Checklist】

  • 1. Open or Contribute to an FHSA (First Home Savings Account)
    • Contribution limit: Up to $8,000 per year.
    • Contributions are tax-deductible.
    • Investment growth is tax-free.
    • Withdrawals for a future home purchase are tax-free.
    • 👉 This is currently the most powerful personal tax-saving tool in Canada.
  • 2. Tax-Loss Harvesting (Sell losing stocks and watch the 30-day rule)
    • Offset your investment gains for this year with losses.
    • Or carry losses back 3 days to offset past capital gains.
    • Note: Do not buy back the same stock within 30 days (to avoid “Superficial Loss”).
    • 👉 If you want to maintain your position, consider buying a similar ETF (e.g., an alternative index).
  • 3. RRSP Contribution Planning (Plan now; deadline is next March)
    • Get a tax refund after contributing.
    • The earlier you deposit, the earlier it grows.
    • Especially suitable for T4 employees.
    • While the deadline is March, the earlier you plan, the better.
  • 4. Consider an Investment Loan if deductions aren’t enough for next year
    • Use a loan to invest and generate returns.
    • Interest expenses are tax-deductible (as long as it’s used for investing).
    • Ideal for high-income earners, business owners, and those looking to scale their investments.
    • Can be integrated with portfolio, corporate, or personal tax planning.
    • 📌 We can provide a professional analysis to see if this fits you. The best start date is in January.
  • 5. Prepay Medical Expenses / Donations (Must be done this year)
    • Organize your medical receipts.
    • Donations must be completed by December 31.
  • 6. Contribute to a Child’s RESP (Government Grants)
    • The government provides a maximum grant of $500 per year.
    • Unused room can be carried forward.
    • 👉 RESP is one of the most effective tools for saving your child’s future taxes.

👨‍👩‍👧 【Family Tax-Saving Checklist】

  • 7. Spouse Income Planning (Income Splitting)
    • Properly split family income to lower the overall family tax burden.
    • Common methods: Spousal RRSP or Prescribed Rate Loans between spouses.
  • 8. Organize Child Care Expense Receipts
    • Must be paid by year-end to be deductible.
    • Includes daycare, after-school programs, and camps.
  • 9. Review Major Medical Expenses (Combined family claims)
    • The CRA allows you to claim medical expenses under the most advantageous family member to maximize savings.

🏢 【Corporate / Small Business Tax-Saving Checklist】

  • 10. Check for Prepaid Expenses
    • Examples: Rent, insurance, equipment, or software subscriptions.
    • 👉 Paying certain expenses in advance can reduce this year’s profit.
  • 11. Check CCA Advantages before purchasing Equipment (Capital Assets)
    • Purchasing before year-end can accelerate depreciation.
    • Small businesses can use “Immediate Expensing” for up to $1.5M in full depreciation.
  • 12. T4 vs. T5 Issuance (Salary vs. Dividend Planning)
    • Determines the owner’s personal income for the year.
    • Affects RRSP room, CPP, and EI.
    • Impacts the corporate tax structure.
  • 13. Repayment of Shareholder Loans
    • Repay loans to the company to avoid them being treated as income by the CRA.
  • 14. Year-End Bonus Arrangements
    • Bonuses can be deducted from corporate tax.
    • However, they must be paid within a specific timeframe relative to the corporate year-end (if your year-end is Dec 31, plan now).
  • 15. Business Loss Planning
    • Business losses can offset current income, be carried back 3 years, or carried forward 20 years.
  • 16. Accounts Receivable (A/R) Management
    • Collecting payments before vs. after year-end may result in different tax outcomes.

📌 Would you like me to help check which tax-saving items apply to you?

Based on your specific situation, we can provide:

  • Personal tax-saving strategies
  • Corporate dividend vs. salary strategies
  • Family tax planning
  • Year-end corporate tax diagnostics
  • FHSA / RRSP / TFSA contribution analysis
  • Investment loss liquidation advice

📞 Schedule a one-on-one consultation

Let us help you save every dollar possible this year. Seize the final opportunities of 2024!

Wishing you and your family a happy holiday and all the best,

The Team at DZ Accounting