TAX UPFRONT
BY JAMIE GOLOMBEK
Tax Tip Time
10 ways to save clients taxes if you act before year-end 1. Consider tax-loss selling Tax-loss selling is the practice of selling investments that are in an accrued loss position to offset capital gains realized either in the current year or in the previous three years. If clients had capital gains in 2022, this year is their last chance to realize a capital loss and carry it back to that year to claim a refund of any capital gains tax paid in that year. 2. Accelerate withdrawals under the HBP If first-time homebuyers have signed a written agreement to buy or build a qualifying home they will move into within the next year, they can consider withdrawing funds from their Registered Retirement Savings Plan (RRSP) through the Home Buyers’ Plan (HBP) before December 31, 2025. A first-time homebuyer and spouse or partner can each withdraw up to $60,000 from their RRSPs for a qualifying first home purchase. Withdrawn amounts must be repaid in future annual instalments, based on the year when they were withdrawn, generally starting the second year after the year of the first withdrawal. Under a special rule, however, temporary repayment relief is available to defer the start of the 15-year repayment period by an additional three years for participants making a first withdrawal between January 1, 2022 and December 31, 2025. Accordingly, the 15-year repayment period would start the fifth year following the year in which a first withdrawal was made. So, if clients made their first withdrawal in 2025, their first year of repayment won’t be until 2030! 3. Take TFSA withdrawals If clients will need funds from a Tax-Free Savings Account (TFSA) over the next 12 months or so, they can consider making a withdrawal before December 31, 2025, 24 FORUM NOVEMBER 2025
and an equivalent amount of TFSA contribution room will be restored the following calendar year. By making the withdrawal this year, they can begin recontributing that amount starting in January 2026, rather than having to wait until 2027.
4. Pay investment expenses Investment-related expenses for nonregistered accounts, such as interest paid on money borrowed for investing and investment counselling fees, must be paid by year-end to claim a tax deduction in 2025. 5. Move some RRSP funds to a RRIF after turning 65 If clients are at least age 65 but don’t have any pension income, they can consider moving $14,000 ($2,000 per year × 7 years) of their RRSP to a Registered Retirement Income Fund (RRIF) in the year they turn 65. That way, it will be ready for them to withdraw $2,000 each year to take advantage of the fact that RRIF withdrawals count as pension income for the purpose of the $2,000 annual pension income credit. 6. Convert an RRSP to a RRIF or buy an annuity after turning 71 If clients turn 71 in 2025, they have until December 31 to make a final RRSP contribution before converting the plan into a RRIF or purchasing an annuity. If they have earned income in 2025 that will create RRSP contribution room for 2026, they can consider making a onetime overcontribution to their RRSP in December before conversion. They’ll pay a 1% penalty tax on the amount of the overcontribution (above the $2,000 permitted overcontribution) for December 2025, but they can then deduct the overcontributed amount on their 2026 (or a future year’s) tax return.
7. Contribute to an FHSA Starting in the year they open a First Home Savings Account (FHSA), clients who are qualifying first-time homebuyers can contribute a total of $8,000 plus any carryforward available from the previous year, up to limits of $16,000 in any year and $40,000 during their lifetime. They can claim a tax deduction for 2025 for contributions within these limits that are made by December 31, 2025. 8. Take RESP withdrawals for students If a client’s (grand)child is a Registered Education Savings Plan (RESP) beneficiary and attended a post-secondary educational program in 2025, consider making payments from the RESP before the end of the year. Although the income, grant, and bond portion of the payments will be taxable, the student may pay little or no tax by claiming personal tax credits. 9. Make a charitable donation To get a donation tax credit for 2025, clients must make donations to registered charities or foundations by December 31, 2025. If they gift publicly traded securities, including mutual funds, they will receive a tax receipt for the fair market value of the donated securities and also eliminate capital gains taxes on the appreciated value of those securities. 10. Plan for potential changes in tax rates Finally, if you anticipate that clients’ income tax rates will be substantially different in 2026, it may be worthwhile to shift income and expenses between 2025 and 2026, where feasible. If clients expect their income (and taxes) may be lower in 2025 than in the future, they can consider triggering income in 2025 and deferring expenses to 2026. Look for income and expenses where you may be able to control the timing, such as bonuses, capital gains, or employee stock options. JAMIE GOLOMBEK, FCPA, FCA, CFP, CLU, TEP, is managing director, tax & estate planning, with CIBC Private Wealth in Toronto. He can be reached at Jamie.Golombek@cibc.com.