Tax Tips for Year-End

Do you make quarterly tax installments?

Make your final payment to the Canada Revenue Agency (CRA) on or before December 15 to avoid interest charges and late payment penalties. Missed an earlier payment deadline? Consider making a larger payment before December 15 to reduce interest charges.

Take advantage of tax-loss selling strategies.

• If you have capital gains this year (sold an investment for more than you paid for it)—and you’re holding securities with unrealized capital losses (an investment that will sell for less than you paid for it)—consider selling the securities to realize the losses and offset the capital gains. Note that trade settlement must take place on or before December 31 to apply to this year’s tax bill.
• If your capital losses this year are more than your capital gains, the unused capital loss may be carried back three years or carried forward indefinitely.
• Beware the superficial loss rules. Affiliated persons including you, your spouse, a corporation controlled by you, or your registered account (RRSP, TFSA, etc.) repurchase an identical security 30 days before or after selling it at a loss, your capital loss may be disallowed by CRA. This also applies to mutual funds. Care also needs to be taken if you are buying mutual funds on a pre-authorized contribution.

Defer capital gains.

• Consider deferring to sell investments with unrealized capital gains to next year, if you think your tax rate will be lower in 2026.

Talk to an RBC Financial Planner to get additional information on your investments and speak to your tax advisor to see if these strategies are right for you.

Take advantage of tax-smart investing.

Turning 71 in 2025 and have earned income?

• Even if you have no carry-forward room but have earned income that will generate RRSP contribution room in 2026, consider making a final RRSP contribution before the end of 2025 which can be claimed as a deduction on your 2026 tax return.
• Since the contribution is made before the end of 2025, an over-contribution penalty tax of one percent per month will apply on any amount greater than $2,000.

Make a charitable donation.

• Donate to a registered charity to claim the tax credit on your 2025 tax return.

Put your year-end bonus to work.

• Reduce your withholding taxes by transferring your bonus directly to your RRSP (if your employer allows this and you have unused contribution room).
• Expect to be in a lower tax bracket next year? Consider deferring your bonus to early 2026 (if allowed by your employer).

Moving to a different province or territory? Plan your timing.

Generally, you’re taxed based on where you live on December 31. Consider:

• Moving before year-end if you’re going to a province or territory with a lower tax rate.
• Waiting until 2026 if you are moving to an area with a higher tax rate.

Pay tax-deductible expenses.

• Pay all investment management fees, deductible legal and accounting fees, childcare expenses, alimony and medical expenses by December 31 to deduct them on your 2025 tax return.

Interest on family loans is due.

• If you set up a spousal loan or funded a family trust with a prescribed rate loan, remember that the interest owing for 2025 must be paid by January 30, 2026. The borrower may be able to claim a deduction for the interest paid on their tax return.

Take advantage of unused RRSP contribution room.

• Make any final contributions to your RRSP/spousal RRSP on or before March 2, 2026 in order to deduct the amount on your 2025 tax return.