Tax Tip Thursday

So a few reminders for people of things they can and should do before year end.

1. If you want to make a charitable donation  – make them before the end of the year.
2. If you are a corporation and you want to pay yourself payroll or a bonus, make the payments now or ensure you include the amount on your t4 and pay the tax by January 15.
3. If you want to do any tax loss selling – now is the time to do it!  Selling stocks that have lost value, can create capital losses which can be utilized for the current year to apply against current year capital gains or the previous 3 years of capital gains.
4. I mentioned it last week – but if you want to have an FHSA, make sure you open the account before year end and it will create $8k worth of room for 2025 that you can utilize next year.
5. If you are getting a large refund – get a reduction of tax at source.  You can utilize a TD1 or if you have other deductions than are on the TD1, you can use the T2013 and submit to the CRA who will approve it and then you can provide to your employer.
6. And last but not least and probably the most important, if you turned 71 this year, and have an RRSP, you HAVE to choose one of the following options for your RRSPs:

1. withdraw them
2. transfer them to a RRIF
3. use them to purchase an annuity

When you withdraw funds from your RRSPs, your RRSP issuer will withhold tax.

Your RRSP issuer will not withhold tax on amounts that are transferred directly to a RRIF or that are used to purchase an annuity. You will likely be taxes on the mandatory withdrawals from your RRIF.

Spousal RRSPs or common-law partner RRSPs

While you can NOT contribute to an RRSP after the year you have turned 71 years old, you can contribute up to your RRSP deduction limit to a spousal or common-law partner RRSP if your spouse or common-law partner is 71 or younger on December 31 of the year you make the contribution.

If you participated in the Lifelong Learning Plan (LLP)

You will not be able to repay any funds you withdrew from your RRSP after the end of the year you reach the age of 71. This is because you cannot contribute to an RRSP after the end of the year in which you turn 71 years of age.

In the year you turn 71, you can choose one of the following:

• repay the remaining repayable balance to your RRSP, PRPP or SPP,
• make a partial repayment to your RRSP, PRPP or SPP. Your remaining repayable balance at the beginning of the year you turn 72 will be divided by the number of years remaining in your repayment period. That calculated amount will be included as income on line 12900 of your income tax and benefit return for each of the years after,
• make no repayment to your RRSP, PRPP or SPP. Your repayable balance at the beginning of the year you turn 71 will be divided by the numbers of years remaining in your repayment period. That amount will be included as income on line 12900 of your income tax and benefit return for each of the years after.

A couple of other things I would like to mention since I have a captive audience!

I would like to thank all my clients and my team for a great 2025.  We were voted Diamond and Platinum award winners by Readers Choice in 5 categories for the 5^th year in a row!

Best Income Tax Preparation – Diamond Winner

Best Accountant – Platinum Winner

Best Accounting – Platinum

Best Bookkeeping Services – Platinum

Best Financial Advisor- Platinum

I am very proud of my team and grateful to my clients who keep coming back year after year.

Our office will be open Monday and Tuesday only for the next 2 weeks and back to business as usual January 5.

Merry Christmas and Happy New Year to everyone!!!

We hope everyone has a safe and happy holiday season! We will be back in 2026 to answer all your questions! Make An Appointment today!

Disclaimer:

This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal or tax advice nor can it or should it be relied upon. All tax situations are specific to each individual. If you have specific tax questions you should book an appointment for a 1 on 1 consultation.