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Here's How To Take Advantage Of The Final Days To Save Tax In 2025

The 2025 tax season doesn’t begin until late February 2026, but by the time that date rolls around, it’s too late to do any significant tax planning. That’s why December is key for taxpayers looking for a few final ways to save tax in 2025. Here are some things to think about over the remaining days of the year.

Tax-loss selling with a look back to 2022

With the S&P/TSX composite index up about 25 per cent year to date, and the Nasdaq up more than 20 per cent, chances are your portfolio may not have a lot of losses in 2025. That being said, you may have the occasional loser in your portfolio, making it an ideal candidate for tax-loss selling.

Tax-loss selling involves selling an investment in a non-registered account with an accrued loss at year end to offset capital gains realized elsewhere in your portfolio. Any net capital losses that cannot be used currently may either be carried back three years and used to get back any capital gains tax paid in 2022, 2023 or 2024, or carried forward indefinitely to offset taxable capital gains in other years. It may be worth a quick peek at your 2022 return to see if you realized gains that year, as this month is your final kick at the can to realize a loss and carry it back to 2022 to recover any capital gains tax paid that year.

In order for your loss to be immediately available for 2025 (or one of the prior three years), the trade must take place by Dec. 30, 2025, to complete settlement by the Dec. 31 year end.

If you plan to repurchase a security you sold at a loss, perhaps hoping it will quickly rebound, beware of the “superficial loss” rules that apply when you sell property for a loss and buy it back within 30 days before or after the sale date. Under the rules, your capital loss will be denied and added to the adjusted cost base (tax cost) of the repurchased security. That means any benefit of the capital loss could only be obtained when the repurchased security is ultimately sold.

Also, while it may be tempting to transfer an investment with an accrued loss to your registered retirement savings plan (RRSP) or tax-free savings account (TFSA) to realize the loss without actually disposing of the investment, such a loss is specifically denied under our tax rules. To avoid this from occurring, consider selling the investment with the accrued loss and, if you have the contribution room, contributing the cash from the sale into your RRSP or TFSA. If you want, your RRSP or TFSA can then buy back the investment after the 30-day superficial loss period.

Tax gain donating

If you’re charitably inclined, and make most of your annual donations in December, why not take advantage of the gains in your portfolio by making a donation “in-kind” to your favourite charities. Gifting publicly-traded securities, including mutual funds and segregated funds, with accrued capital gains “in-kind” to a registered charity not only entitles you to a tax receipt for the fair market value of the security being donated, it eliminates capital gains tax too. You should plan gifts in-kind well before year end to allow for sufficient time to make arrangements.

If you’re not immediately sure of the charities you wish to support, you might consider making the gift by Dec. 31 to a donor advised fund (DAF), which is an account at a public foundation that holds your donation. You will get a tax receipt for your donation in the year that you contribute to the DAF. Each year you can recommend distributions to be made from your DAF to other registered charities.

Take TFSA withdrawals

Thinking about tapping into your TFSA in early 2026? If so, consider withdrawing the funds by Dec. 31. Doing so will allow you to recontribute any funds withdrawn beginning the following calendar, i.e. Jan. 1, 2026. After Dec. 31 you can’t recontribute the amount withdrawn until 2027.

Convert a portion of your RRSP to a RRIF once you turn 65

If you’re at least 65 but don’t have any pension income, consider transferring (on a tax-deferred basis) $14,000 (which is $2,000 per year × 7 years from age 65 to age 71) of your RRSP to a registered retirement income fund ( RRIF) in the year you turn 65. You can then withdraw $2,000 annually from age 65 through age 71 to take advantage of the annual pension income credit.

Open up a first home savings account

If you’re a first-time home buyer who is a resident of Canada and at least 18 years of age, the first home savings account (FHSA) allows you to save on a tax-free basis toward the purchase of a home in Canada. Starting in the year that you open an FHSA, you can contribute (or transfer from RRSPs) a total of $8,000 plus any carryforward available from the previous year (for a maximum of $16,000 in any year), and up to $40,000 during your lifetime.

If you don’t open up the FHSA you don’t accumulate the contribution room. This way you can build $8,000 of contribution room, even if you don’t make a contribution this year, which can then be carried forward to 2026, allowing you to make a $16,000 FHSA contribution next year.

Make renovations for home accessibility

The non-refundable home accessibility tax credit (HATC) assists seniors and those eligible for the disability tax credit with certain home renovations. The tax credit is equal to 14.5 per cent of expenses toward renovations that permit these individuals to gain access to, or to be more functional and safe within, their home. The amount of eligible expenses is $20,000, so this credit could be worth up to $2,900 in 2025.

The HATC applies for payments made by Dec. 31 for work performed or goods acquired in 2025. Until Dec. 31 a single expenditure may qualify for both the HATC and the medical expense tax credit and both may be claimed. But as a result of changes announced in the recent federal budget, this is the last year your expense may qualify for both credits.

Optimize tax-free RESP withdrawals for students

If the beneficiary under a registered education savings plan ( RESP ) attended a post-secondary educational institution in 2025, consider having educational assistance payments (EAPs) made from the RESP before the end of the year. Although the amount of the EAP will be included in the student’s income, if the student has sufficient personal tax credits, such as the basic personal amount ($16,129), the EAP income will be effectively tax-free.

Note that the maximum EAP that can be taken in the first 13 weeks of post-secondary education is $8,000 for full-time students and $4,000 for part-time students.

Jamie Golombek, FCPA, FCA, CFP, CLU, TEP, is the managing director, Tax & Estate Planning with CIBC Private Wealth in Toronto. Jamie.Golombek@cibc.com .

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