December is the one month where smart tax decisions made today show up directly on your Notice of Assessment next spring. Whether you are a salaried employee, self-employed professional, or owner-manager of a corporation, year-end tax planning in Canada for 2025 can meaningfully reduce what you owe the CRA — but many of the most effective moves have hard deadlines that cannot be extended. This guide walks you through 13 proven strategies to act on before December 31, 2025 (and a couple with January deadlines you should plan for now).
The deadline to contribute to your RRSP and claim the deduction on your 2025 tax return is March 1, 2026. However, contributing in December rather than waiting until February gives your money an extra two months of tax-sheltered compounding. If you expect your income to be significantly higher in 2026 — a promotion, a large consulting contract, or the sale of a business asset — it may be worth deferring the contribution and claiming it against 2026's higher marginal rate instead. Your 2025 RRSP deduction limit appears on your 2024 Notice of Assessment.
The 2025 TFSA contribution room is $7,000. Unlike RRSP contributions, TFSA room does not carry forward in the same way — unused 2025 room does carry forward, but any withdrawals made in 2025 only re-open room on January 1, 2026. Top up any remaining 2025 room by December 31 to keep tax-free growth working for you. Log into CRA My Account to confirm your exact available room before contributing.
If your goal is to shift retirement income to a lower-earning spouse, contribute to a spousal RRSP before December 31, 2025. The three-year attribution rule means that if your spouse withdraws funds in 2025, 2026, or 2027, the income could be attributed back to you. Contributing now and leaving the funds untouched through 2027 sets up a clean income-split in future years.
If you have realized capital gains in 2025, review your non-registered investment accounts for positions sitting at a loss. Selling those losers before the settlement deadline — typically December 27, 2025 for Canadian equities on a standard two-business-day settlement cycle — crystallises the loss in time to offset your 2025 gains. The CRA's superficial loss rule disallows the loss if you, your spouse, or a corporation you control repurchases the identical security within 30 days before or after the sale. Swap into a similar but not identical holding if you want to maintain market exposure.
If you have an income-splitting arrangement using a prescribed rate loan, the interest for 2025 must actually be paid to the lender by January 30, 2026. Missing this deadline collapses the income-splitting benefit for the entire year. The CRA prescribed rate for Q4 2025 is 5%. Set a calendar reminder now — this is one of the most commonly missed deadlines in family tax planning.
A corporation with a December 31 year-end can accrue a bonus payable to an owner-manager and deduct it in the 2025 corporate tax year, even if the cash is not paid until early 2026. The CRA requires the bonus to be paid within 179 days of the corporation's year-end — for a December 31 year-end, that means no later than June 28, 2026. The owner-manager reports the bonus as employment income in the year it is received, deferring personal tax to 2026. The corporation gets the deduction in 2025. This can be particularly useful when the corporation has had a profitable year and the owner-manager is in a lower personal bracket than the corporate tax rate.
Incorporated professionals and owner-managers should review their optimal salary-versus-dividend split before December 31. Salary creates RRSP contribution room and CPP pensionable earnings; dividends do not. The right mix depends on corporate retained earnings, personal income needs, provincial rates, and retirement planning goals. Waiting until after year-end eliminates many of the options, since salary must be accrued and deducted in the year to which it relates.
Self-employed individuals and corporations can prepay December and early-January expenses before December 31 to pull the deduction into 2025. Eligible items include rent, software subscriptions, professional membership fees, business insurance premiums, and professional development costs. The expense must be reasonable and incurred for business purposes — prepaying 12 months of rent in December is generally acceptable; prepaying three years is not.
If you expect to be in a lower tax bracket in 2026 — retirement, a sabbatical, or a slower business year — delay issuing invoices for December work until January 2026. The income is recognised when billed for most self-employed individuals on an accrual basis, but cash-basis filers have more flexibility. Incorporated businesses can defer salary payments or bonus payments similarly, provided the accrual rules are respected.
On the flip side, if you want to maximise 2025 income — to use losses, fill lower brackets, or increase RRSP room — chase outstanding receivables before year-end. Also confirm that GST/HST collected has been properly remitted. A mismatch discovered in a CRA audit is far more expensive to resolve than a timely year-end reconciliation.
Discretionary family trusts must have income allocations documented and resolved by December 31, 2025 for the allocation to be valid for the 2025 tax year. Trustees should meet, pass a resolution allocating trust income to beneficiaries in the intended proportions, and ensure the T3 reporting will reflect those allocations. Undistributed trust income is taxed in the trust at the top marginal rate — typically 46% to 53% depending on the province. The team at Swift Accounting Calgary regularly assists clients with year-end trust resolutions to avoid this outcome.
Donations to registered Canadian charities made by December 31 qualify for the 2025 tax credit. The first $200 of donations generates a federal credit of 15%; amounts above $200 generate a federal credit of 29% (33% if your income exceeds $246,752 in 2025). Claim all household donations on the higher-income spouse's return to maximise the above-$200 credit rate. Consider donating publicly traded securities directly to the charity rather than selling and donating cash — the capital gains on the donated securities are fully exempt, and you still receive the full fair market value receipt.
Individuals who pay tax by instalment owe their fourth payment on December 15, 2025. If your 2025 income has changed significantly from 2024 — a large capital gain, a severance, or a down year — review whether you are over- or under-paying. Underpaying triggers CRA instalment interest (currently at 9% per annum); overpaying ties up cash unnecessarily. You can use the current-year method to base your December instalment on 2025 actual income if it is lower than 2024.
The strategies above work best when they are coordinated rather than implemented in isolation. For example, the bonus accrual decision interacts directly with the salary-versus-dividend mix, which in turn affects RRSP room for next year. If you want a second set of eyes on your specific situation before the calendar turns, the advisors at Swift Accounting are ready to help — book a year-end planning consultation here.
March 1, 2026 is the last day to make an RRSP contribution and claim it on your 2025 tax return. Contributing earlier — in December 2025 — gives the funds more time to grow tax-sheltered, but the deduction is the same regardless of when you contribute before that deadline. If you expect higher income in 2026, you can also contribute now and carry forward the deduction to apply against next year's higher rate.
The CRA's superficial loss rule disallows a capital loss if the same or identical security is repurchased by you, your spouse, or a corporation you control within 30 days before or after the sale — and the security is still held at the end of that 30-day period. To preserve the loss, wait at least 31 days before repurchasing, or replace the position with a similar but not identical investment immediately (for example, swap one Canadian bank ETF for another with different holdings).
Yes, provided the bonus is properly accrued (meaning a legal obligation to pay it exists as of the corporation's year-end) and it is paid within 179 days of the corporation's year-end. For a December 31, 2025 year-end, the bonus must be in the hands of the employee or owner-manager no later than June 28, 2026. The corporation deducts the bonus in 2025; the recipient reports it as employment income in the year the cash is actually received.
Yes. To claim a charitable donation tax credit on your 2025 return, the donation must be made and received by a registered Canadian charity on or before December 31, 2025. Online and credit card donations processed by that date qualify; a cheque postmarked December 31 but not received until January typically does not. If you are donating securities, initiate the transfer well in advance — brokerage transfers can take several business days to settle.
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