Tax Tips for Your 2025 Tax Return Preparation (and Future Planning)

As you prepare your personal tax return for 2025, here are some tax tips to consider for 2025 and for 2026.

• It is possible to continue to receive tax slips from financial institutions as late as the first week of April.  If you have a taxable investment account, it is best not to prepare your tax returns until early April to ensure you have all tax slips.
• While e-filing your tax return is far more popular now, consider paper filing and mailing in your tax return to reduce the likelihood of CRA requesting tax slips later.
• If you have a large tax payable on April 30^th, make sure you finalize your tax return no later than April 20^th to allow time to find the money to send to CRA.
• Quarterly tax installments can vary widely year by year due to CRA’s method of calculating the installments.  Know that you don’t have to follow their default options if your income is materially different next year.
• A wide range of medical expenses qualify for claiming as a tax credit each year.  Keep all receipts for medical-related costs throughout the year and review eligibility with your accountant.
• Paying a few hundred dollars to have your tax return prepared each April is a fair fee.  A few hundred dollars an hour for tax planning advice that can save you thousands of dollars in taxes each year is good value too.
• If you have a prolonged and severe medical impairment, investigate qualifying for the annual disability tax credit – it’s a significant tax break.
• Consider not making charitable donations in cash – you can donate appreciated stocks or other equities for greater tax breaks.
• If you are retired, look at converting from an RRSP to a RRIF as early as age 65 for income splitting, to access the pension tax credit and to reduce your withholding taxes on withdrawals.
• If you are retired and have no income (perhaps your partner is still employed), consider withdrawals from your RRSP as early as your 50s to benefit from close to zero tax rates.
• Paying investment fees annually to your broker instead of paying by transaction can result in a larger income tax write off.
• Self-employed Canadians have until June 15 to file their tax return each year but the actual income taxes owing are still due April 30^th.
• RRSP contributions can provide limited tax advantages at lower income levels (for example, around $40,000 or less, don’t bother), and that very large RRSP balances—levels above $1.2 million—can result in higher taxable withdrawals in retirement and you may want to stop contributing in your 50s as a result.
• If you own more than one real estate property, careful planning year by year is required as to how you claim the tax-free status between the two, assuming you use both personally (e.g. house and cottage).
• If you have a joint bank or investment account with your spouse or child, the investment income claimed on the T3 or T5 slip usually can only be claimed by the person who put all the money in the account in the first place.
• On death, private corporations in Canada can face double taxation and your annual cash flow planning in retirement should include a strategy to consider winding up the corporation while you are alive.
• Spousal RRSPs are still a relevant tax planning tool for Canadian couples who want to retire before age 65 and have a goal to income split to minimize income tax in retirement.

The April tax filing deadline is just that – merely a deadline to file a tax return for the year before.  If you are going to impact, reduce, or defer your taxes, you need to implement strategies during the calendar year.  Now’s the time to do your 2026 tax planning!

For 35 years, Kurt has been a go-to, established personal finance expert across Canada, providing Canadians with sophisticated, integrated, tax-smart family financial advice.  Kurt is an 18 year course instructor on wealth management Canada-wide, has 7 published books on money and today manages his family office services for clients at 2848 Bloor Street West.  Learn more about Kurt at www.kurtismycfo.com.