December is not just the holiday season — it is the most consequential month on the Canadian tax calendar. Whether you are a salaried employee, a self-employed professional, or a business owner, the decisions you make before December 31 can significantly reduce what you owe the Canada Revenue Agency (CRA) for 2025. Unlike many financial strategies that can be deferred, most Canadian tax rules are anchored to the calendar year, making the final weeks of December a genuine deadline — not a suggestion.
This checklist walks through the key year-end tax planning moves available to both individuals and corporations in Canada, so you can close 2025 in the strongest possible tax position.
Many Canadians assume tax planning can wait until the spring filing season. It cannot — at least not for the moves that matter most. The CRA determines your tax obligations based on the calendar year from January 1 to December 31, regardless of when you file your return or what fiscal year your corporation uses.
Capital gains and losses must be realized within the calendar year to offset each other. TFSA contribution room resets and accumulates on a calendar-year basis. Charitable donations, medical expense payments, and instalment obligations all have December 31 (or December 15) cut-offs. Once the clock strikes midnight on New Year's Eve, those opportunities are gone for 2025.
The 2025 TFSA annual contribution limit is $7,000. If you have not contributed the full amount — or if you have unused room carried forward from prior years — you can deposit any remaining room before December 31. While unused room does carry forward indefinitely, there is no tax benefit to waiting. Money that grows inside a TFSA is completely tax-free, so every extra month of room left unfilled is a missed opportunity for sheltered growth.
Review your non-registered investment portfolio for positions sitting at an unrealized loss. Selling those securities before year-end allows you to use the capital loss to offset capital gains you have already realized in 2025 — or to carry the loss back three years or forward indefinitely against future gains.
Two important mechanics to keep in mind: Canadian equities now settle on a T+1 basis, meaning the trade must be executed by December 30 to settle by December 31. Also, be careful of the superficial loss rule — if you or an affiliated person repurchases the same or identical security within 30 days before or after the sale, the CRA will deny the loss.
Donations to registered Canadian charities must be made by December 31 to generate a tax credit on your 2025 return. The federal donation tax credit is 15% on the first $200 and 29% (or 33% for high earners) on amounts above $200 — a meaningful return. If you hold appreciated securities in a non-registered account, donating the securities directly to a charity rather than selling them first eliminates the capital gains tax entirely while still qualifying for the full donation receipt at fair market value.
Medical expenses are deductible over any 12-month period ending in the tax year, but the payment must occur before December 31 to be claimable on your 2025 return. If you have dental work, prescription costs, eyeglasses, or other eligible expenses that have been invoiced but not yet paid, settling them before year-end locks in the deduction. The threshold is 3% of net income or $2,759 (the 2025 figure), whichever is less.
If you relocated at least 40 kilometres closer to a new place of work or to attend full-time post-secondary education in 2025, you can claim eligible moving expenses on your 2025 return. Eligible costs include transportation, storage, temporary housing, and certain selling costs on your old home. Ensure receipts are organized and the move is documented before filing season.
The deadline to contribute to your RRSP for the 2025 tax year is March 3, 2026 — so there is no rush from a deadline standpoint. However, contributing before December 31 means the funds begin sheltering investment income sooner. If you are expecting a year-end bonus or have cash sitting in a low-interest savings account, moving it into your RRSP before year-end is a straightforward win.
If you pay personal income tax by quarterly instalments, your final 2025 instalment is due December 15. Missing this payment triggers interest charges at the CRA's prescribed rate. If your 2025 income was higher than expected, consider voluntarily increasing this instalment to reduce any balance owing at filing — and to avoid instalment interest, which is not deductible.
If you are an owner-manager, any salary or management fees you intend to pay yourself for 2025 must be declared and accrued by December 31 to be deductible in your corporation's current fiscal year and to create personal earned income (needed for RRSP contribution room). Dividends, by contrast, can be declared at any point — but they do not create RRSP room. Confirm the optimal mix with your accountant now, not in January.
Bonuses payable to arm's-length employees must be declared by your corporate year-end to be deductible in that year. Under CRA rules, the bonus must actually be paid within 180 days of the corporate year-end — but the declaration must exist by year-end. For December 31 year-end companies, that means bonuses declared now can be paid as late as June 2026 and still be deductible in the 2025 corporate year.
Any amount you borrowed from your corporation in 2025 must be repaid within one year after the end of the corporate taxation year in which the loan was made. Failing to repay on time results in the full loan amount being included in your personal income — a potentially large and unexpected tax bill. Review your shareholder loan account with your bookkeeper and plan repayment before the deadline.
If your corporation has a positive Capital Dividend Account (CDA) balance — typically built up from the non-taxable portion of capital gains or life insurance proceeds — you can declare a capital dividend before year-end. Capital dividends are received by shareholders completely tax-free, making this one of the most efficient ways to extract corporate surplus.
Under Canada's half-year rule (also called the 50% rule), capital cost allowance (CCA) is generally limited to half the normal rate in the year an asset is acquired, regardless of when in the year the purchase occurs. This means buying eligible equipment, vehicles, or technology before December 31 — rather than in January — gives you a CCA deduction in 2025 rather than having to wait until 2026.
Expenses that relate to 2025 operations and are paid before December 31 are generally deductible in 2025. Consider prepaying January rent, annual software subscriptions, insurance premiums, and professional memberships that are due in early 2026. There are limits — prepaid amounts that relate to a period beyond 12 months ahead may need to be prorated — but for normal operating expenses, this is a straightforward way to accelerate deductions.
Ensure all eligible Input Tax Credits (ITCs) for 2025 have been claimed and that your GST/HST filings are current. If your business has annual taxable revenues between $30,000 and $400,000 (in most provinces), it may be worth evaluating whether the Quick Method of accounting for GST/HST would reduce your remittances going forward. An election to use the Quick Method must be filed with the CRA and takes effect from the beginning of your next reporting period.
If your corporation has been earning investment income, it may have accumulated a Refundable Dividend Tax on Hand (RDTOH) balance. The CRA refunds this tax to the corporation at a rate of $38.33 for every $100 of taxable dividends paid to shareholders. If your RDTOH balance is significant, paying eligible dividends before or shortly after year-end can trigger a corporate tax refund and improve overall integration.
Canadian-controlled private corporations (CCPCs) lose access to the small business deduction (SBD) when their associated group's passive investment income exceeds $50,000 in the prior year. Above $150,000, the SBD is eliminated entirely. If your corporation is approaching this threshold, consider strategies to reduce investment income — such as using a corporate-owned life insurance policy, deferring investment dispositions, or restructuring the portfolio — before December 31 determines next year's SBD eligibility.
The team at Swift Accounting in Calgary works with business owners throughout December specifically to help with these decisions — from salary-dividend optimization to CCA timing and RDTOH management. Getting the numbers right before year-end is far more valuable than sorting it out during tax season.
Year-end tax planning in Canada rewards preparation. Whether you are an individual looking to harvest losses and top up registered accounts, or a business owner managing salary mix, bonuses, and passive income thresholds, the window to act closes December 31 — and many of these decisions benefit from professional guidance well before that date.
Swift Accounting Calgary offers year-end planning consultations for individuals and owner-managed businesses. If you want to make sure you are not leaving money on the table this December, contact our team to book a year-end tax review.
The two most time-sensitive personal deadlines are capital loss realizations and charitable donations. Capital losses must be reflected in settled trades by December 31 (meaning Canadian stocks need to be sold by December 30 under T+1 settlement). Charitable donations must also be made — not just pledged — by December 31 to generate a 2025 tax credit. TFSA contributions, while not creating a deduction, should also be topped up before year-end to maximize tax-free growth.
Yes. The RRSP contribution deadline for the 2025 tax year is March 3, 2026 — 60 days after the end of the calendar year. You can make contributions between January 1 and March 3, 2026 and still claim the deduction on your 2025 return. However, contributing before December 31 allows sheltered growth to begin sooner, and if you are an incorporated business owner, having your salary declared before year-end maximizes your 2025 earned income and therefore your 2026 RRSP contribution room.
The superficial loss rule prevents investors from selling a security at a loss and immediately buying it back simply to capture the tax deduction. Under the rule, if you or an affiliated person (including your spouse, a corporation you control, or your RRSP) acquires the same or identical security within 30 days before or after the sale, the CRA denies the capital loss. The loss is instead added to the adjusted cost base of the reacquired security, deferring rather than eliminating it. To preserve the loss, either wait 31 days before repurchasing, or buy a similar but not identical security to maintain market exposure.
For every dollar of adjusted aggregate investment income (AAII) above $50,000 earned by an associated group of CCPCs in a taxation year, the small business deduction limit for the following year is reduced by $5. This means that if your corporation earns $150,000 or more in passive income in 2025, your SBD limit will be reduced to zero in 2026 — and active business income that would otherwise be taxed at the preferred small business rate (approximately 11% combined federally and in Alberta) will instead be taxed at the general corporate rate of around 23%. Planning investments to keep passive income below $50,000 annually can protect a significant tax advantage.
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