Tax Reminders & Updates for 2025
A few dates and details for you to consider.
Whether you are ringing in the new year at a fancy party, or with a quiet night at home, we hope you look at 2025 with great optimism.
Godfrey Yu, CPA, CGA, CFP, CIM, TEP, CIWM
Relationship Manager and Wealth Planner
While 2024 is winding down and we are preparing for the holiday season, I recommend setting aside a little time to review your finances and consider any tax planning opportunities before the year end.
To make your job easier, here is a checklist that outlines some of the tax planning opportunities, tax changes, and deadlines.
Register Retirement Savings Plans (RRSP)
The maximum contribution amount for the 2024 tax year is $31,560 if your 2023 income is over $175,333. While you do have the 1st 60 days of 2025 to contribute, the earlier you contribute, the sooner your investment will start to grow tax free inside the RRSP.
If you turned 71 in 2024, this is the last year you can contribute, and you cannot wait until 2025 to contribute as your RRSP has to convert to a RRIF by end of year.
Tax Free Savings Accounts (TFSA)
The 2024 contribution limit is $7,000 to a maximum of $95,000 if you have never contributed and you are 32 years old or older.
If you are planning to withdraw from your TFSA in the near future, consider withdrawing by end of year, doing so will allow you to re-contribute the withdrawn amount in 2025, rather than waiting until 2026.
Registered Education Savings Plans (RESP)
If you are saving for your children’s education, you can contribute $2,500 per year for each child and receive $500 int he form of a government grant. The maximum lifetime contribution limit is $50,000 and the maximum government grant is $7,200. You can catch up on missed government grants one year at a time. There are also special grant eligibility restrictions during the years when your children are turning 16 and 17 years old, so some planning may be required if you want to maximize the government grants.
First Home Savings Account (FHSA)
The contribution limit for the FHSA is $8,000 annually, with a lifetime maximum of $40,000. Similar to an RRSP, you can deduct the contribution from your income. Since contribution room to the FHSA does not increase until the FHSA account is opened, consider opening an account so you can start accumulating contribution room.
Vacant Home Tax (VHT)
The Vacant Home Tax applies to homes that remain unoccupied for more than six months within a calendar year unless they meet specific exemption criteria. The program requires homeowners in Toronto to let the City know if their property is occupied or vacant every year by making a declaration. The declaration deadline is April 30, 2025.
Charitable Donations
If you are considering making a charitable donation, you may consider donating securities that have incurred a capital gain directly in order to avoid realizing capital gain.
New Capital Gain Inclusion Rate
If you have realized capital gains, you may consider selling some of your investments that have unrealized capital losses to offset the gains. Also, the proposed increase to the capital gains inclusion rate of capital gains realized in excess of $250,000 on or after June 25, 2024 could affect your tax owing for 2024.
Alternative Minimum Tax (AMT)
If you are a high-income earner, you may be impacted by some of the proposed changes to the AMT.
Capital gain inclusion increase from 80% to 100%
30% of capital gains on donated shares are included
Bare Trust Tax Reporting
If you have a bare trust, CRA has provided administrative relief so you are not required to file a trust income tax return for the 2024 tax year.
As your portfolio managers, our goal is to make investing easier for you. If you have questions about any of the above, or simply want to discuss the financial markets, please feel free to reach out to us. We're always happy to talk about your investment journey.
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