Year End Tax Tips for Canadians: What to Do Before December 31, 2025

As we approach the end of 2025, now is an excellent time to review your tax‑planning strategies and ensure you’re taking advantage of opportunities that could reduce your 2025 tax bill and strengthen your financial position heading into 2026. Many year‑end strategies must be completed before December 31, 2025, so acting early is key.

Here are several timely tips—especially for those with non‑registered investment accounts, education savings goals, or first‑time home‑buying plans.

 

Tax‑Loss Selling

If you hold investments in a non‑registered account that are currently worth less than their adjusted cost base, selling those investments before December 31, 2025 could trigger a capital loss. This loss may be used to offset:

• Capital gains realized in 2025, or
• Gains from the prior three years (2022, 2023, or 2024)

If you decide to use this strategy, be aware of the “superficial loss” rule, which applies if you (or a spouse or corporation you control) repurchase the same investment within 30 days. Always speak with an advisor before executing loss‑selling strategies.

 

Maximize Your TFSA Contributions

The TFSA contribution limit for 2025 is $7,000.
If you have never contributed and were eligible since 2009, your total room is now $102,500 by 2025.

If you have TFSA room, you may consider transferring investments from a non‑registered account into your TFSA to shelter future growth. However:

• This transfer is considered a deemed disposition, which may trigger capital gains
• Capital losses cannot be claimed if the transfer results in a loss

Review your contribution limits and tax position to determine whether contributing before year‑end makes sense.

 

RRSP Deadline & Planning for Those Turning 71

You have until March 2, 2026, to contribute to your RRSP and apply the deduction against your 2025 income.

If you are turning 71 in 2025, your RRSP must be converted to a RRIF before December 31, 2025, and you can no longer contribute after conversion.

For individuals turning 71 this year:

• If you have earned income in 2025 but no RRSP room remaining, you may consider a strategic over‑contribution in December
• You may pay a 1% penalty for December only, but achieve a larger deduction once new contribution room opens January 1, 2026

This strategy requires precise calculation and should be reviewed with an advisor.

 

RESP Contributions

• Lifetime limit per child: $50,000
• Government matching (CESG): 20% on the first $2,500 contributed annually per child
• A $2,500 contribution before December 31, 2025 earns the full $500 CESG for the year
• If the child has unused contribution room, you can catch up one extra year at a time by contributing up to an additional $2,500 annually for that child, for a total annual maximum of $5,000 that could collect $1,000 in CESG

Anything above $5,000 does not receive additional grant funds, even if room exists.

 

Maximize Your FHSA Contribution Room

The First Home Savings Account (FHSA) continues to be a valuable tool for Canadians saving for a first home.

• Annual contribution limit: $8,000
• Lifetime limit: $40,000
• Contributions are tax‑deductible (like RRSP)
• Withdrawals used to purchase a first home are tax‑free (like TFSA)
• Unused room carries forward
• Funds can be transferred to an RRSP or RRIF tax‑free if not used for a home purchase within 15 years

If you hold cash or investments in a non‑registered account and are saving for a home, contributing before December 31, 2025 may reduce taxable income.

 

Charitable Giving

Donating before December 31, 2025 allows you to claim the charitable tax credit for the 2025 tax year.

• The first $200 receives a lower credit rate
• Donations above $200 receive a higher federal credit of 29%

Consider donating appreciated securities directly rather than cash:

• Capital gains on donated publicly traded securities are not taxable
• You receive a tax receipt for the full fair market value

Ensure timing is built in—transferring securities can take several business days.

 

Final Thoughts

Year‑end planning is a valuable way to reduce tax pressure and position your finances for long‑term success. These strategies can be complex, and the best approach depends on your personal situation.

If you'd like support reviewing your investments, contribution room, or year‑end opportunities, our team is here to help ensure you enter 2026 with clarity and confidence.