Small Moves, Big Impact: Year-End Tax Strategies for 2025

By Lil Rourke, CPA, Founder & Fractional CFO – Rourke, CPA Professional Corporation

Published November 2025 | Category: Tax & Wealth Strategy | Approx. 6-minute read

Year-end isn’t just a date on the calendar — it’s one of the most powerful opportunities of the year to reduce your tax bill, strengthen cash flow, and set the tone for a confident start to 2026.

Most people wait until tax season to “deal with taxes.” But the real savings? They happen before December 31.

Whether you’re an individual, a family, or a business owner, the small decisions you make now can create big results later. This is your practical, punchy, no-fluff guide to finishing 2025 strategically — and ahead of the curve.

For Individuals

1. Maximize Your RRSP Strategy (Not Just Your Contribution)

Yes — the RRSP deadline for the 2025 tax year is March 2, 2026, but the strategy happens before year-end.

Here’s what to evaluate now:

• Tax bracket strategy: Will a contribution push you into a lower bracket this year? If yes, contributing now may reduce your overall 2025 liability.

• Future income planning: If 2026 will be a higher-income year, it may be more beneficial to save your room and contribute later for a bigger tax deduction.

• Spousal RRSP opportunities: A spousal plan can balance retirement income and lower household tax over the long term.

• Turning 71 in 2025? December 31 is the deadline for your final RRSP contribution before the account converts to a RRIF.

• Bonus planning: If you’re expecting a year-end bonus from your corporation or employer, planning RRSP contributions ahead of time helps smooth taxable income.

  
  

RRSP planning is one of the most powerful tax tools available — and timing is everything.

2. Make Smart Use of Your TFSA (It’s More Than a Savings Account)

Your TFSA is tax-free investing at its best. To make the most of it:

• Confirm your 2025 contribution room now to avoid penalties.

• If you plan to withdraw funds, do it before December 31 so the contribution room restores on January 1.

• Review the investment mix — TFSAs are ideal for growth investments (e.g., equity ETFs, stocks) because gains are never taxed.

• Consider whether shifting money from a non-registered account to a TFSA (when room exists) makes sense for reducing future tax exposure.

  
  

Small adjustments now can lead to massive tax-free compounding later.

3. Charitable Donations: Give With Purpose and Strategy

Charitable donations must be made by December 31 to claim them on your 2025 return.

Year-end is the perfect moment to be intentional:

• Bunch donations into one year instead of spreading them out — the credit rate is higher on amounts above $200.

• Donate publicly traded securities with accrued gains to eliminate capital gains tax while still receiving a full donation receipt.

• Consider donating before year-end if you expect your income to drop in 2026 — a higher-income year gives you greater benefit for the credit.

• If you support multiple charities, review whether donor-advised funds make sense for long-term giving and tax strategy.

  
  

4. Harvest Capital Losses (and Stop Letting Gains Sit Alone)

Capital loss planning is one of the most effective — and underused — year-end strategies.

Before December 31, review your portfolio and identify:

• Investments with significant unrealized losses

• Opportunities to offset 2025 gains

• Losses you can carry back three years to recover taxes paid in 2022–2024

• Losses you can carry forward indefinitely for future planning

  
  

And remember:

• Superficial loss rules apply if you repurchase the investment (or a “substantially identical property”) within 30 days.

• Crystallizing losses is not giving up — it’s strategic reinvestment.

  
  

5. Review Income-Based Benefits Before It’s Too Late

Many government benefits depend on your 2025 net income, including:

• Canada Child Benefit

• GST/HST Credit

• Ontario Trillium Benefit

• Certain disability-related supports

Strategic contributions — especially to RRSPs — can help keep your income under thresholds that maintain or increase entitlements.

A year-end review ensures you don’t accidentally disqualify yourself.

6. Maximize Medical Expense Credits

The medical expense credit hinges on a threshold — and timing your payments matters.

Before year-end:

• Combine expenses under the spouse with the lower net income, which gives you a bigger credit.

• Pay upcoming bills before December 31 if you are close to exceeding the threshold.

• Remember that expanded fertility and IVF expenses remain eligible for significant credits.

Keep your receipts — and organize them early.

For Business Owners

1. Buy Needed Equipment Before December 31 (If It Makes Sense)

If you’ve been considering equipment or vehicle purchases for early 2026, buying before year-end may unlock additional deductions.

Key notes:

• The Accelerated Investment Incentive still allows enhanced CCA in the first year for many assets.

• Assets must be available for use to claim CCA for 2025.

• This is not a “buy things for the deduction” strategy — it’s a “buy things you already need at the most efficient time” strategy.

This can meaningfully reduce 2025 taxable income.

2. Revisit Your Owner Compensation Strategy

Owner compensation is one of the highest-impact year-end decisions you can make.

Before year-end, review:

• Salary vs. dividends (and the integration impact on 2025 vs. 2026)

• How much RRSP room you should create

• Whether you want to contribute to CPP (salary) or avoid it (dividends)

• Whether a year-end bonus is advantageous — deductible this year if paid within 180 days

• Your corporate income range and whether you’re approaching a higher tax bracket

Compensation planning affects tax, retirement, cash flow, and long-term wealth — get it right at year-end.

3. Review Shareholder Loan Balances to Avoid Surprises

Year-end is the perfect time to clean up shareholder loans.

Review:

• Amounts owing to the corporation — potential income inclusion under s.15(2)

• Amounts owing from the corporation — repayment strategies and tax-free withdrawals

• Bookkeeping accuracy to ensure loans aren’t misclassified

• Whether to declare dividends to clear loan balances

A little attention here prevents costly issues next spring.

4. Accrue and Pay Bonuses Strategically

Employee bonuses accrued by December 31 are deductible this year, even if paid by June 28, 2026.

This is a powerful tool if:

• You want to recognize employee performance

• You need to reduce 2025 corporate income

• You want to smooth bonus payments into early 2026 for cash-flow reasons

This deduction is often missed — but extremely valuable.

5. Review Year-End Business Expenses

Evaluate whether it makes sense to advance expenses that will occur early in 2026, such as:

• Software subscriptions

• Repairs and maintenance

• Insurance

• Training and development

• Professional fees

• Memberships and dues

• Office supplies

As long as the expense is reasonable and incurred in the year, timing it before year-end can help reduce taxable 2025 income.

6. Clean Up Your Books (Your Future Self Will Thank You)

December is the ideal bookkeeping cleanup month.

Before year-end, reconcile:

• All bank and credit card accounts

• Accounts receivable (write off bad debts)

• Accounts payable

• Inventory adjustments

• Prepaids and accruals

• Payroll reconciliations ahead of T4s

• Loan balances and interest expense

Clean books create accurate tax returns — and fewer accountant adjustments.

7. Review Your HST Compliance

HST errors often go unnoticed until CRA reviews them.

Before year-end, review:

• Whether you’ve crossed the $30,000 registration threshold

• Whether you’re claiming all eligible ITCs

• Filing frequency (annual, quarterly, monthly)

• Whether the Quick Method might be better for 2026

• Year-end adjustments for GST/HST on accruals, prepaid expenses, and shareholder accounts

Getting HST right protects cash flow and reduces audit risk.

8. Consider Larger Structural Planning for 2026

If 2026 will bring expansion, transition, or new investors, start planning now.

Consider whether you should explore:

• Estate freezes

• Holding companies

• Income-splitting (still possible in certain cases)

• Trusts

• Share reorganization

• The groundwork for an eventual sale

These are strategic moves with significant tax impact — and year-end planning gives you time to implement properly.

Budget 2025 Highlights to Keep in Mind

A few items that may affect your 2025 plan:

• Updated Alternative Minimum Tax (AMT) rules

• Expanded fertility and medical tax credits

• New personal support workers credit

• Revised trust filing requirements

• UHT clarification for certain property owners

• Increased home accessibility credit

Review these now — not in April.

Final Takeaway: Small Moves Add Up

Year-end tax planning isn’t about dramatic last-minute decisions — it’s about making small, strategic moves that add up to meaningful savings.

A little time in December creates clarity, control, and confidence as you head into 2026.

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Ready to Wrap Up 2025 on the Right Foot?

If you want personalized guidance on your year-end tax strategy — whether you’re optimizing for yourself or your business — we're here to help.

👉 Book a Discovery Call with Rourke, CPA. Let’s make sure you finish 2025 strategically, confidently, and with your best tax outcome in mind.