Your 2024 Year-End Financial Checklist

As we approach the end of 2024, it's hard to believe how quickly the year has flown by. It's been a year marked by significant events and plenty of change, with little sign of things slowing down as we head into 2025.

With holiday shopping soon behind us, the true holiday season will begin—a time to pause, reflect, and recharge with loved ones.

If you’re looking to end the year on a strong note, completing your financial planning before the holidays can offer peace of mind. It can help you approach 2025 with greater clarity and a solid foundation for the new year.

In that spirit, here are a few key items to consider reviewing before 2024 wraps up:

Tax-Loss Selling

• Investors with unrealized losses in non-registered accounts can consider crystallizing these losses before the year ends, keeping in mind the potential impacts of the increase in the Canadian capital gains inclusion rate.
• Selling these investments can allow you to offset taxable capital gains while staying aligned with your long-term goals.
• The proceeds from the sale can be reinvested in different assets to comply with the superficial loss rule, which prevents you from claiming a loss if you buy back a nearly identical investment within 30 days.

Charitable Donations

Giving back is a meaningful way to create impact while also optimizing your tax position.

• Deadline: Donations must be made by December 31 to qualify for 2024 tax credits.
• Consider gifting appreciated shares in-kind instead of cash. This allows you to receive a tax credit for the market value of the investment without triggering taxes that would apply if the appreciated shares were sold. Be sure to confirm with your chosen charity or non-profit that they can accept in-kind share donations, as not all can.
• Are you motivated to give but having trouble identifying what charities you want to give to? Consider setting up a Donor Advised Fund (DAF) if you intend to give at least $25,000 over your lifetime.
• The Nicola Wealth Private Giving Foundation (NWPGF) is a registered charitable organization that allows you to establish a DAF, allowing you to set aside funds for charitable giving in a tax-advantageous way.
• The donation tax credit can provide notable tax savings, while supporting causes you care about. More importantly, your gifts can create lasting, positive impacts on communities.
• Once funds are in your DAF, you can choose to distribute them gradually or all at once - at your own timeline -  with only a few flexible annual minimum requirements to consider.

Registered Retirement Income Funds (RRIFs)

If you’re drawing income from a RRIF:

• Ensure you’ve met your required minimum withdrawal for 2024 to avoid penalties.
• Withdrawals above the annual minimums can be made, including up to 100% of a RRIF in a single year. Note that all RRIF withdrawals are taxable.
• If the RRIF subscriber is in a low tax bracket, additional withdrawals may be beneficial.

Registered Retirement Savings Plans (RRSPs)

• Contributions for the 2024 tax year are still possible until the first 60 days of 2025.
• If you turned 71 in 2024, your RRSP must be converted to a RRIF by year-end. We recommend consulting with your financial institution to complete this process.
• Keep in mind, you do not need to start receiving income until the following year (2025), when you turn 72.
• RRIF payments are based on age, with the required minimum percentage increasing as you get older.
• You can choose to use either your age or your spouse’s age for calculating RRIF payments. Using the younger age results in lower required withdrawals, offering more flexibility for future planning.
• The 2025 RRSP contribution limit will be $32,490.

Tax-Free Savings Account (TFSA)

• Like 2024, the 2025 contribution limit will be $7,000, bringing the lifetime limit (for those eligible since 2009) to $102,000.
• Couples can collectively shelter $14,000 next year and doing so early could provide the maximum compounded benefit under the tax-sheltering rules.
• If you haven’t yet reached your lifetime contribution limit, you can catch up at any time (check your MyCRA account to confirm your available room).

First-Time Home Buyer’s Savings Account (FHSA)

The FHSA is a valuable tool for Canadians saving for their first home.

• You can contribute up to $8,000 per year, with a lifetime limit of $40,000.
• Contribution room is based on the calendar year. By opening an FHSA in December 2024, you can access two years' worth of contribution room by January 2025.
• You can carry forward unused contribution room up to $8,000 per year, allowing you to contribute up to $16,000 in a single year if needed.
• You don't have to claim FHSA deductions in the year the contribution is made—you can carry them forward to future years if it's more beneficial for your tax situation.
• If the FHSA is not used within 15 years, or by the time you turn 71, it must be closed. The funds can be rolled into an RRSP without affecting your RRSP contribution limits.

Note: In certain provinces and territories, the legal age at which an individual can enter into a contract (which includes an FHSA) is 19 years old.

Registered Education Savings Plans (RESP)

If you’re saving for your child’s education:

• RESP contributions can benefit from the Canada Education Savings Grant (CESG), which offers a 20% match on the first $2,500 contributed, up to $500 per child each year.
• CESG entitlement is accrued each calendar year, meaning December is the last month that a contribution can be made to claim 2024’s allocation.
• Unclaimed CESG entitlement is carried forward but expires in the calendar year when a child turns 17 years old.
• Furthermore, there is a maximum of $1,000 CESG that can be claimed in any calendar year, meaning that it could take multiple years to catch up on larger CESG accruals.
• For example, $2,000 (four years) worth of CESG accrual would take another 4 years to fully receive, assuming contributions of $5,000/year (basic $2,500 + catch-up $2,500).

Financial planning doesn’t have to feel overwhelming, especially with the right guidance. Addressing these year-end opportunities now can help you close 2024 on a high note and approach 2025 with confidence.

Contact a Nicola Wealth Advisor today to discuss personalized strategies tailored to your goals. Meet With Us