Your 2025 Year-End Financial Checklist

Last year we said 2024 was a hectic year, but it proved to be nowhere near the rollercoaster ride of 2025. Notably, this year we bore witness to historic investments in AI and to a significant realignment of the established global economic order. It’s been a lot, but luckily the holiday season is upon us and a break with friends and family is awaiting.

One way to step into the season with confidence is to wrap up your financial planning now. Doing so sets the stage for a strong finish to the year and a head start on 2026.

With that in mind, here’s a quick checklist of items worth reviewing before the year closes:

Tax-Loss Selling

• Investors with unrealized losses in non-registered accounts can consider crystallizing these losses before the year ends.
  • Whether done personally or in a corporation, the capital gains inclusion rate will be 50%. We note this as it follows the announcement of Prime Minister Carney’s office that the government would cancel the previously proposed plans to increase the capital gains inclusion rate.
• This strategy creates losses that can offset current or future taxable capital gains while maintaining long-term investment goals.
• Proceeds from the sale can be reinvested in dissimilar assets to comply with the superficial loss rule, which disallows claiming a loss if a substantially similar investment is repurchased within 30 days.
• For example, selling a S&P500 ETF and purchasing an S&P/TSX ETF is acceptable since they represent different stock markets.

Charitable Donations

• December is the last month to make charitable gifts in the 2025 tax year. It’s best to plan this out as far in advance as possible, as charities and non-profits are often at their busiest for the year. A donation made too close to the institution’s deadline could run the risk of not being processed in time for the tax year.
• If possible, consider gifting appreciated shares of investments “in kind” instead of cash. Doing this provides a donation tax credit for the fair market value of the investment while not triggering any taxes that would otherwise be due to the investor if they had sold appreciated shares. Be sure to check with your desired charity or non-profit organization beforehand to see that they can accept gifts of in-kind shares, 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.
  • Our DAF offering is called the Nicola Wealth Private Giving Foundation (PGF). A PGF allows you to earmark funds for charitable donations over time but get the donation tax credit immediately.
  • The donation tax credit can be a significant financial planning opportunity to minimize taxes for many years to come. Perhaps more importantly, the philanthropic gifts you give can have potentially massive positive ripples through communities and causes.
  • Note that once funds are in your PGF, they can be disbursed gradually to charities over time or in a lump sum. You elect your ideal disbursement plan subject to some relatively lenient annual minimum requirements.

Registered Retirement Income Funds (RRIFs)

• To avoid penalties, ensure your 2025 minimum payment has been made as this must be done each calendar year.
• If desired, withdrawals may be made above the annual minimums with no limits; up to 100% of a RRIF can be withdrawn in a single year. Keep in mind all RRIF withdrawals are taxable.
• In years where the RRIF subscriber is in a low marginal tax bracket, it may be prudent to consider additional withdrawals.

Registered Retirement Savings Plans (RRSPs)

• Contributions for the 2025 tax year are still possible until the first 60 days of 2026.
• Those who turned 71 in 2025 must convert their RRSPs to RRIFs by year-end and should consult their financial institution to finalize this.
• Note that they do not need to receive any income until the following year (2025), when they will turn 72.
• Minimum RRIF payments are determined as a percentage based on age, increasing the higher the age.
• RRIF holders have the option of using their own age or their spouse’s age. If using the younger age, they will have lower required annual minimum payments, which can provide more flexibility in future planning.
• 2025’s annual maximum RRSP contribution limit will be $33,810.

Tax-Free Savings Account (TFSA)

• Like in 2025, the 2026 contribution room will be $7,000, bringing the lifetime limit (for those eligible since 2009) to $109,000.
• This means that couples can collectively shelter $14,000 next year and doing so early could provide the maximum compounded benefit under the tax-sheltering.
• If you haven’t made contributions up to your lifetime maximum (check your MyCRA account if you’re unsure), you can always catch them up at any time.

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

• The FHSA remains a valuable tool for Canadians saving for their first home, allowing $8,000 annual contributions to a lifetime maximum of $40,000.
• Contribution room is accrued by calendar year, so there is the opportunity to get 2 years’ worth of contribution room by January 2026 if an FHSA is opened in December 2025.
• A maximum of $8,000 contribution room can be carried forward each year, which means the maximum annual contribution that can be made is $16,000.
• FHSA deductions do not need to be claimed in the year that the contribution was made, so can be carried forward to future tax years if this is more advantageous.
• If a FHSA is not utilized after 15 years, when it would need to be closed, the account can be fully rolled into an RRSP without affecting RRSP contribution limits.

Registered Education Savings Plans (RESP)

• Each year, RESP contributions can benefit from a 20% matching program, the Canada Education Savings Grant (CESG), up to $500 per child, assuming a contribution of $2,500.
• CESG entitlement is accrued each calendar year, meaning December is the last month that a contribution can be made to claim 2025’s allocation.
• Unclaimed CESG entitlement is carried forward but expires in the calendar year that a child turns 17 years old, so there is a clock on claiming CESG.
• 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 (4 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).

Year-end is a chance to align every part of your wealth plan, from tax mitigation and contributions to charitable giving and long-term goals. With the right strategy, these decisions work together to help you keep more of what you have earned and move into 2025 on stronger footing.