As the year draws to a close, many Canadians find themselves racing against the clock to finalize their tax preparations. With December 31 just around the corner, it’s crucial to take advantage of every opportunity to maximize your tax refund. This article outlines practical strategies that can lead to meaningful tax savings, even at this late stage.
The deadline for many tax-saving opportunities is fast approaching. December 31 is not just another day; it marks the end of the tax year and the last chance to make adjustments that could significantly impact your tax return. Don’t let the year end without taking action!
One area where you can still make a difference is in your medical expenses. The 12-month period for eligible medical expenses ends on December 31, 2025. Common eligible expenses include:
To maximize your claims, consider timing your payments for any outstanding medical bills before the year ends. This can help you reach the threshold for claiming these expenses.
If you’re considering making charitable donations, remember that December 31 is the cutoff date for claiming these on your 2025 tax return. Donations made before this date can yield a higher tax credit, especially after the first $200. Here are some strategies:
Contributing to your Registered Retirement Savings Plan (RRSP) is one of the most effective ways to reduce your taxable income. Understanding your contribution room is essential:
If you haven’t opened a First Home Savings Account (FHSA) yet, consider doing so before December 31. The contribution room starts when the account is opened, allowing you to take advantage of the $8,000 annual limit and $40,000 lifetime limit. Remember, funding is not required immediately, but opening the account is crucial.
Tax-Free Savings Accounts (TFSAs) offer tax-free growth, making them an excellent option for long-term savings. Consider moving funds from taxable accounts into your TFSA to enhance your tax efficiency.
If you have investments, consider harvesting capital losses to offset any gains. Be mindful of the carryback and carryforward rules, and remember to avoid superficial losses.
For employees and self-employed individuals, prepaying deductible expenses can be beneficial. Keep track of home office expenses, mileage, and professional fees to ensure you maximize your deductions before year-end.
Explore options for income splitting, such as pension income splitting and pooling medical expenses and donations with your spouse. These strategies can lead to significant tax savings.
December 31 is a hard deadline for many tax-saving opportunities. Taking small actions now can compound into meaningful tax savings. Planning ahead beats last-minute scrambling, so take the time to implement these strategies and maximize your tax refund.
December 25, 2025
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