Of the many things I get to do each week, I particularly enjoy starting it with my Monday morning appearance on Collingwood’s Peak FM with my good high school friend John Eaton. Some of you may already know John through his Shipyard Kitchen productions that have made their way through southern Ontario, including Peterborough. I have been providing updates on economic and market developments on the morning show each Monday for the past 15 years. While there has been no shortage of topics to cover for listeners, especially since Trump took office, there are weeks when we get to tune out the noise and focus of financial planning issues. This week we focused on items to cross off of our year-end lists.

As the end of 2025 approaches, I’m reminded that tax planning, much like investing or running a business, is best done with intention and foresight—not at the last minute. Yet, for many of us, year-end brings a flurry of activity and, inevitably, a few opportunities that are easy to miss in the rush. So, let’s take a moment to walk through some practical steps you might consider before December 31 to help set yourself up for a smoother tax season and, ideally, a bit more peace of mind.

First, if you’re an investor with non-registered accounts, now is the time to review your portfolio for any opportunities to realize capital losses. These losses can offset gains elsewhere, potentially reducing your tax bill. But a word of caution: if you’re dealing in foreign currencies, don’t assume a loss in U.S. dollars is a loss in Canadian dollars. Exchange rates can flip the script, as many have learned the hard way. And if you’re thinking of buying back a security you just sold at a loss, remember the superficial loss rules—wait at least 30 days, or that loss won’t count.

The tax loss season also presents us with some potential investment opportunities, where underperforming stocks are sold, thus exacerbating the decline in the stock price. Last week I talked about value investing and how blending this approach with growth can produce a more diversified portfolio solution with lower risk. The other week we added CargoJet to the portfolio for that very reason after watching it slide in recent weeks from tax-loss selling.

For those making regular RRSP or TFSA contributions, contributing sooner rather than later allows your money more time to grow tax-free. The RRSP deadline for 2025 is March 2, 2026, but why wait? The TFSA limit for 2025 is $7,000, and if you’ve never contributed, your total room might be much higher. Planning a withdrawal? Doing it before year-end could restore your contribution room for next year, but don’t get tripped up by overcontribution penalties—those can be an unpleasant surprise.

If you’re nearing retirement age, there are a couple of nuances worth noting. Turning 65 opens the door to the pension income credit if you convert part of your RRSP to a RRIF. This has become a popular tool for those who do not receive a pension from a previous or current employer. And if you turn 71 in 2025, make sure you get any final RRSP contributions in before converting to a RRIF or annuity.

On that note, if you are converting to a RRIF, your minimum payment will be calculated by multiplying the closing balance of the RRIF at year-end times 5.40% (the payment percentage that applies to age 72). You will therefore know your minimum payment at the start of January. If you require monthly cash flow, you can simply take that payment and divide by 12. If you don’t need some or all of it, a good strategy is to leave that payment in the RRIF until the end of next year so that income and growth on that amount is tax deferred. Another thing to keep in mind is whether withholding tax should be taken at source. Since you or the financial institution are not obligated to hold tax back as long as you are only taking the minimum, you will likely owe the CRA when you file your taxes the subsequent year. Some tax professionals may advise you to have withholding tax taken to ensure that the amount owed is reduced.

Homeowners and first-time buyers have some newer tools at their disposal. The First Home Savings Account (FHSA) lets you contribute up to $8,000 a year (with unused room carried forward for one year), and you can combine it with the Home Buyer’s Plan for a more robust down payment strategy. Renovations for accessibility or to accommodate family can also yield credits, but the details matter—especially if you’re coordinating with other claims like the medical expense tax credit.

For families with students, don’t overlook RESP contributions. Not only do they grow tax-deferred, but timely contributions can maximize government grants. If your child or grandchild is finishing high school soon, now’s the time to catch up on those contributions to secure future grant eligibility. If a student beneficiary attended post-secondary this year, consider making withdrawals before year-end to take advantage of their likely low tax rate. In many of financial planning cases we deal with, parents or grandparents looking to gift during their lifetimes will find it advantageous to help their children or grandchildren via an RESP, either on an annual basis or in a lump-sum fashion.  

And while I’m on the topic, I can’t give up a chance to repeat my rant on how the federal government has not indexed RESP contribution limits to inflation, like it has with RRSPs and TFSAs. The lifetime contribution limit has been $50,000 since 2007, when it was increased from $42,000, where it was set in 1996. First of all, the cost of education has risen at a faster rate than the headline CPI since 1996, as seen in the chart above. Ignoring that, even if we just adjusted the $42,000 contribution limit back in 1996 by headline inflation, the limit in 2025 would have been north of $77,000. Sigh.

Sticking with family members in need, those supporting a loved one with a disability may want to check in on their Registered Disability Savings Plan (RDSP) contributions and government grant eligibility before the clock runs out. And for all of us, reviewing medical expenses for the past year (or even the past 12 months) could uncover credits that are easy to overlook. I had a discussion with a client this week and they spoke of a relative that had a child with a disability, where a Henson Trust had been used. The RDSP can represent an excellent replacement or add-on for such a strategy, and the popularity of this vehicle has increased significantly in recent years.

Charitable giving is another area where timing matters. Donations made by December 31 can generate a tax receipt for this year, and gifts of securities can be especially tax efficient. If you’re not sure which causes to support just yet, donor-advised funds let you make the gift now and decide on the beneficiaries later.

If you expect your tax rate to change next year—maybe you’re retiring, selling a business, or expecting a one-time windfall—it can make sense to shift income or deductions between years. Sometimes accelerating income or deferring deductions makes sense, and sometimes it’s the opposite. The key is to look ahead, not just at the year behind.

For business owners, the compensation question—salary or dividends—remains as relevant as ever. Salary creates RRSP room, but dividends can mean lower taxes in some cases. If your corporation is earning passive investment income, pay attention to the $50,000 threshold; crossing it could reduce your access to the small business deduction. And if you’re thinking of selling your business, new incentives like the Canadian Entrepreneurs’ Incentive or employee ownership trusts might offer meaningful tax advantages.

Circling back to our RRSP discussion, it is also possible that business owners that are incorporated may find it beneficial to look at setting up an Individual Pension Plan (IPP), especially if they are over the age of 40. Over time, the amount of tax-deferred wealth accumulation in an IPP can often exceed that of utilizing just an RRSP by a wide margin. If you are in that camp and don’t have an IPP, don’t fret. Setting one up will involve an analysis that takes into account when you incorporated and what your T4 income has been over that time. In other words, you won’t miss out and if you are interested in possibly setting up an IPP next year, we can definitely help you with that.

In short, year-end tax planning isn’t about scrambling to find last-minute deductions—it’s about making thoughtful decisions that fit your broader financial picture. If any of these strategies strike a chord or raise a question, let’s connect and talk them through. As always, the best plan is one tailored to your unique circumstances and you should always seek the advice of a tax professional.

On behalf of the Pyle Wealth Advisory team, have a wonderful and calmly organized weekend.   

Andrew Pyle