December 03, 2025

Year-end is a great time to review your financial situation. Taking time to address the following questions can help you make the most of available tax benefits and set a strong foundation for the year ahead. Remember, it’s important to consult with a qualified tax professional to ensure your year-end planning is tailored to your needs.

1. Have you maximized your TFSA contribution?

If you are a resident of Canada and at least 18 years old, you can contribute up to $7,000 to your Tax-Free Savings Account (TFSA) for the 2025 tax year and benefit from tax-free investment growth within the plan. Refer to the Canada Revenue Agency (CRA) website¹ to see if you have unused contribution room from previous years, which will up your limit.

If you anticipate making a withdrawal from your TFSA, consider doing so before year-end. TFSA withdrawals are added back to your contribution room in the calendar year following your withdrawal. Therefore, if you withdraw $5,000 from your TFSA in December 2025, you can add it back shortly thereafter as your contribution limit will increase by $5,000 on January 1, 2026.

2. Have you maximized your RRSP contribution?

Registered Retirement Savings Plan (RRSP) contributions are deducted from taxable income and can therefore reduce your tax bill. The RRSP contribution limit for the 2025 tax year is the lesser of $32,490 or 18% of last year’s earned income. For the 2025 tax year, you can contribute to your RRSP before year-end or within the first 60 days of 2026. However, if you turned 71 this year, the contribution deadline is December 31, 2025. 

3. Have you considered tax-loss selling?

Realizing capital losses within your portfolio can reduce your tax bill as losses offset capital gains in the current year. Excess losses, if any, may be carried back three years or carried forward indefinitely to reduce capital gains. Be sure to discuss this strategy with a tax professional as certain rules apply and each person's financial circumstances are unique. 

4. Could you benefit from corporate tax planning?

Realizing capital gains within a corporation will generate a capital dividend account (CDA) balance. CDAs are notional accounts that track certain types of non-taxable income that may be distributed tax-free to shareholders. 50% of realized gains within a corporation are non-taxable and may be credited to a CDA. 

Business owners with philanthropic intent may choose to donate corporately to a registered charity. Corporate donations create a deduction against income for the full amount donated. Additionally, in-kind donations of publicly-traded securities have a 0% capital gains inclusion rate. This means capital gains tax, resulting from the sale of appreciated securities, does not apply when the proceeds are donated. Furthermore, 100% of the donated gain is added to the CDA (compared to 50% for regular capital gains).²

While realizing capital gains increases the CDA balance, triggering capital losses will reduce it. Therefore, if you have a positive CDA balance, talk to your accountant and consider paying out a tax-free dividend before triggering any losses. This strategy avoids foregoing tax-free dollars (in the CDA) that you could have otherwise accessed.

Conclusion

As you prepare to close off the year, consider whether you’ve maximized contributions to your TFSA and RRSP, both of which offer valuable tax advantages. This is also an opportunity to evaluate your investment portfolio for potential tax-loss selling, which can help offset capital gains and reduce your tax bill. And if you own a business, year-end planning may include corporate tax strategies such as managing your CDA and exploring the benefits of charitable donations through your corporation. Be sure to discuss such strategies with a tax professional to determine which work best considering your financial circumstances. 

¹ To view your TFSA contribution room, visit https://www.canada.ca/en/revenueagency/services/tax/individuals/topics/tax-free-savings-account/contributing.html

² Baker Tilly Canada. (2019, October 22). Charitable donations made by your corporation. Retrieved from https://www.bakertilly.ca/insights/taxalert-charitable-donations-made-by-your-corporation [bakertilly.ca]

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