As we enter 2025, it's time to prepare for the upcoming tax season. Proper planning can help you maximize savings and avoid issues. Here's a quick guide to help you navigate your upcoming tax obligations and make the most of your savings’ opportunities.
Key Tax Filing Deadlines
April 30, 2025: Deadline for most individuals to file their 2024 income tax return and pay any taxes owing.
June 15, 2025: Extended deadline for filing if you or your spouse/common-law partner are self-employed. (Note: Taxes owed are still due by April 30.)
RRSP
1. 2024 Contribution Deadline
Contributions for the 2024 tax year must be made by March 3, 2025. You can check your RRSP contribution limit through the CRA website or Notice of Assessment for 2023.
2. Tips for Maximizing Your RRSP
Transfer in-kind: If you don’t have the cash to contribute, you can consider contributing investments you already own to your RRSP. Keep in mind, this triggers a deemed disposition for tax purposes, and you will have been considered to have sold your investments at their fair market value and will have to report any resulting gain on your tax return. In order to claim a capital loss however, you must first sell the investments and then contribute the cash proceeds to your RRSP. In order to retain the capital loss, superficial loss rules must not be violated. This requires investors to not buy the identical investment 30 calendar days before or after you sell it.
Borrow to contribute: Consider a short-term loan to maximize your contribution if cash is tight. The tax refund you receive may help offset the loan repayment.
Early contributions for 2025: Once your 2025 contribution room becomes available, contributing early ensures your investments grow tax-sheltered for a longer period.
TFSA
2025 Contribution Room
The total TFSA contribution room from 2009 to 2025 is $102,000. If you've never contributed, this represents a significant opportunity for tax-free growth.
Similar to the RRSP, maximize your TFSA early in the year to allow for more time for your investments to grow tax-free.
FHSA
2025 Contribution Room
A relatively new addition to the registered account suite in Canada, first-time home buyers can contribute up to $8,000. However, contributions made during the 2025 calendar year can only be deductible the following year. If you have any unused room from the previous year, the FHSA allows you to carry forward up to $8,000 for a total contribution of $16,000 for 2025.
Timing Fixed Income & Mutual Fund investments
Consider GICs with Compound Interest
If you’re purchasing Guaranteed Investment Certificates (GICs), opt for those with compound interest starting in January. This approach avoids accrued interest by the end of the year, simplifying tax reporting for 2025.
Purchase mutual funds After Year-End Distributions
If you're considering investing in mutual funds, wait until after their annual distributions (typically late December). This helps you avoid receiving taxable distributions on gains accrued before you purchased the funds.
Additional Tips
Organize Your Records: Keep receipts, T-slips, and other supporting documents in one place for easier filing.
Use CRA My Account: Track your contribution limits, review past returns, and manage your taxes online.
By taking proactive steps and making informed decisions, you can ensure a smoother tax season and maximize your financial benefits. Speak to your advisor for more information on your accounts and investments.
