Some ideas are time-sensitive, while others can help you start the new year on the right foot.
Donations & Medical expenses
Tax credits like donations and medical expenses are good year-end expenses to consider so you can benefit from the tax savings next Spring when you file your 2025 personal income tax return.
Donations to Canadian Charities made by December 31 can be used on your 2025 tax return to reduce your taxes payable. However, if you are lower income and your taxes payable are zero, donations will not help you.
TFSA withdrawals
If you plan to move some or all of your TFSA from one financial institution to another, instead of transferring and paying fees, you can withdraw by December 31 and add to the new financial institution in January.
RESP contributions
Registered education savings plans (RESPs) are used to save for a child’s post-secondary education. Contributing to a RESP can give you access to government grants, including up to $7,200 in Canada Education Savings Grants (CESGs). The federal government provides matching grants of up to 20% on the first $2,500 in annual contributions. You can catch up on shortfalls from previous years to a maximum of $2,500 of annual catch-up contributions.
If your child is a teenager and there are a lot of missed contributions, the year-end could be a prompt to catch up before it’s too late. The deadline to contribute and be eligible for government grants is December 31 of the year that a child turns 17. Talk to your bank or credit union for all the rules.
RRSP spousal contributions
If you are considering registered retirement savings plan (RRSP) contributions to bring down your taxable income, year-end does not bring any urgency. You have 60 days after the end of the year to make contributions that can be deducted on your tax return for the previous year.
However, if you are close to retirement and contributing to a spousal plan, there are timing advantages to making the contribution in December instead of by March 2 2026 (the 2 calendar years of wait time for withdrawals to be made).
Convert a portion of your RRSP to a RRIF once you turn age 65
If you are at least 65 years of age but don’t have any pension income, consider moving $14,000 ($2,000 per year × 7 years) of your RRSP to a RRIF in the year you turn 65. You can withdraw $2,000 annually from age 65 through age 71 to take advantage of the annual pension income credit, so you’ll pay no tax on the income.
FHSA contributions and withdrawals
A First Home Savings Account (FHSA) is a great way to save for a home purchase. Unlike with an RRSP, there is no 60-day extension after year-end to contribute. So, year-end could be a prompt to try to maximize FHSA contributions. It may also be a good idea to open the account before year-end, even if you don’t intend to contribute right away.
The FHSA annual contribution limit is $8,000, but you can also catch up on up to $8,000 of missed contributions from previous years, subject to the lifetime maximum of $40,000 for the account. Contribution room only begins to accumulate once you’ve opened the account.
Tax installments
If you have not paid the installments requested by the Canada Revenue Agency and you expect to owe tax, you could be charged installment interest when you file your tax return. Review your required instalments for your 2025 taxes and make sure you have made them all!
Make renovations for home accessibility
The non-refundable Home Accessibility Tax Credit assists seniors and those eligible for the disability tax credit with certain home renovations.
The tax credit is equal to 15% of expenses towards renovations that permit these individuals to gain access to, or to be more mobile or functional within, their home, or reduce their risk of harm within their home or from entering their home. The amount of eligible expenses is $20,000, so this credit could be worth up to $3,000.
The tax credit will apply in respect of payments made by December 31st for work performed or goods acquired in 2025. A single expenditure may qualify for both the accessibility tax credit and the medical expense tax credit, and both may be claimed for 2025 taxes.
Deductions and credits
If you are self-employed and anticipate a business expense you will need to incur in the new year, you could purchase before December 31 to claim the deduction (or partial deduction, in the case of capital expenditures) on the current year’s tax return.
Merry Christmas, Joyeux Noel, Frohe Weihnachten, Glaedelig Jul
From your Ste Anne Tax Service team
Anni Markmann is a Personal Income Tax Professional; living, working, and volunteering in our community. Contact Ste Anne Tax Service at 204.422.6631 or 36 Dawson Road in Ste Anne (near Co-op) or info@sataxes.ca