December 2025 - Planning for the End of the Year

Article Summary – Year-End Financial Checklist 

 ☑ Maximize tax savings

 ☑ Optimize investments

 ☑ Update corporate & personal plans

 ☑ Review salary vs. dividends

 ☑ Check TFSA & RRSP contributions

 ☑ Plan charitable donations

Planning for the End of the Year

As an incorporated professional, you know better than anyone that clarity doesn’t happen by accident; it comes from regular review, early detection, and careful attention. The same is true for your financial health. As the year draws to a close, now is the ideal time to refocus on the key decisions that protect your financial wellbeing, strengthen your long-term goals, and set you up for a clear financial picture in the year ahead. To support you, we’ve assembled a practical year-end checklist to ensure nothing important is overlooked.

Year-end Considerations for Incorporated Professionals

Some professional corporations choose December 31st as their fiscal year end. This is the time to ensure that your business licenses are renewed, corporate tax returns are filled, the minute books have been updated, tax installments have been paid – essentially ensuring that all “i’s” are dotted and “t’s” are crossed. While you’re at it, keep in mind these important financial considerations as well.   

1. Salary/Dividend Compensation Mix – the preferred mix of salary and dividends should be assessed every year.

   
   

   • Salaries provide earned income for CPP and RRSP contributions and are tax-deductible to the business.  

     • Reasonable salaries can be paid to a spouse or child who provides a service to your business.  

       
       

   • Dividends are eligible for the dividend tax credit and may provide a dividend refund to the corporation.  

     • If you are 65 or older, dividends can be an effective way to split income with your spouse. Beware of the tax on split income (TOSI) rules that could negatively affect income splitting when under 65 years of age.  

     • Be sure to utilize eligible, non-eligible and capital dividends effectively to maximize your net income.   

       
       

2. Retained Earnings – if you do not need the cash, it may be prudent to retain profits in the corporation. 

   
   

   • Significant tax deferral opportunities exist by leaving the profits in the business or making a transfer of safe income to a related corporation.  

     
     

   • Beware of passive investment income that may adversely affect corporate income taxes. Consider investments that are tax-exempt or offer tax-deferred growth. 

     
     

3. Charitable/Political Donations – qualified donations must be made before your fiscal year end to be deductible against the same year’s income.

   
   

4. Shareholder Loans – amounts owing to shareholders or amounts due to the corporation. 

   
   

   • Amounts borrowed from the corporation within the last fiscal year must be repaid before your second fiscal year end to avoid costly personal income tax inclusion. 

     
     

   • Amounts due to shareholders can be repaid without triggering personal income tax. Some corporations may benefit from deductible interest on shareholder loans, rather than additional salary or bonus payments.  

Year-end Considerations for Individuals 

There is a plethora of personal tax savings opportunities that require transactions to occur before the end of the year. Here are a few considerations to help position you and your family for financial success. 

Tax-efficient investing 

Investment portfolio mix – earning the right type of income in the right account.  

• When rebalancing your investments, be sure to consider the overall balance of all accounts and how they interact. Since interest, dividends (foreign and domestic) and capital gains are taxed differently, balancing the investments that earn these types of income between registered, non-registered, and corporate accounts can have a dramatic impact on your after-tax returns.  

  
  

• Before rebalancing, be cognisant of dividends payable and not yet received, as well as imbedded gains that may be realized by certain transactions.  

  
  

Prescribed rate loans – lending between family members to invest, with the ability of the lower income earner to be taxed on the proceeds.  

• If you are the borrower, remember to make an interest payment to your spouse within 30 days of the new year to ensure the loan continues to qualify, and maintain its current interest rate.  

  
  

• The prescribed interest rate as of November 2025 is 3%. 

  
  

Personal tax planning 

Charitable/Political Donations – qualified donations must be made before year end to allow you to claim the tax credit in the current year. Credits not immediately claimed can be carried forward for up to 5 years. 

Alternative minimum tax (AMT) – ensures that at least 20.5% tax is paid by those with income of at least the second from top federal tax bracket ($177,882 in 2025).  

• While significant tax deductions are great, the potential for AMT needs to be considered and evaluated. Efficient use of salary, RRSP and RRIF income can reduce or eliminate AMT if income occurs before the end of the year.

  
  

• Remember that AMT is recoverable, so long as you have sufficient earned income to recover the tax over the next 7 years.   

  
  

Trust and Estate planning 

Trust distributions – allowing for Trust income to be taxed in the hands of beneficiaries, at their individual graduated tax rates.  

• Distributions must be paid or payable by the fiscal year end of the trust which is December 31st in most cases.

  • Graduated Rate Estates are the most common type of trust that can have a different year end.

    
    

• Distributions can be made throughout the year, but income declarations occur on the trust’s year end. Careful planning may be required to ensure optimal income allocations to the beneficiaries. 

  
  

• Income that is taxable to the trust may be subject to AMT from the first dollar earned. This can be particularly impactful if the income is from a significant capital gain. Careful planning is required, especially if the trust is approaching its 21st year.

Registered plans 

Tax-free savings account (TFSA) – limit remaining at $7,000 for 2025 and 2026.  

• All Canadian residents over the age of 18 have had contribution limits accumulating since 2009. If you have yet to utilize the TFSA, your limit could be up to $102,000.  

  
  

• Income earned in the TFSA is not subject to tax, and withdrawals are made tax-free.  

  
  

• You can also contribute to your spouse’s TFSA based on their contribution limit. 

  
  

Registered retirement savings plans (RRSP) – the maximum contribution is 18% of earned income, up to $32,490 in 2025. 

• Contributions for the current year can be made up until the first 60 days of the new year, March 1st in 2026. 

  
  

• If you are in a higher tax bracket that your spouse, consider contributing to a spousal RRSP. You benefit from the tax savings for the contribution, and, at time of withdrawal, your spouse is taxed on the income from the plan. Remember that at least 2 years must have passed after the last contribution year for the income to be taxable to your spouse and not attributed back to you. 

  
  

Registered Retirement Income Funds (RRIF) – annual withdrawal minimums are set by age.​

• Recent government announcements removed the reduced withdrawal limit for 2025, so minimum withdrawals requirements remain unchanged this year. 

  
  

Registered education savings plans (RESP) – federal grants that match 20% of contributions (up to $500) are available annually. 

• Family RESPs can be an effective savings solution for multiple children in one family as income earned by the plan can be shared between the students for their post-secondary education.  

  
  

• Each child, resident in Canada with a social insurance number, qualifies for the matching grant. Additional benefits are available for residence of British Columbia and Quebec.  

  
  

Registered disability savings plans (RDSP) – if you or your child qualifies for the disability tax credit (DTC), consider establishing an RDSP.  

• Grants of 100% to 300% are available on annual contributions. 

  
  

• Bonds can be received annually, even when no contributions have been made.  

  
  

• Grants and bonds are based on the DTC qualifying individual’s income once they are over the age of 18, and on their parents/caregiver’s income if they are a minor. 

  
  

First home savings account (FHSA) – if you have not owned a home in the last 5 years, or you have children over the age of 18 who do not yet own a home, it may be wise to establish an FHSA. 

• The $8,000 annual contribution room begins to accumulate the year in which the account is opened and can be carried forward for future contributions, to a maximum of $40,000.

  
  

• Contributions are tax-deductible. The deduction can be carried forward to a future year when income is higher and tax savings are needed, even if this is after the FHSA has been closed.

  
  

• The account can remain open for up to 15 years before funds are withdrawn, without tax, for the purchase of a primary residence.

  • If a home is not bought by the end of the 15th year, the funds can be transferred into an RRSP without impacting the RRSPs contribution room.

    
    

As an incorporated professional, you understand better than most that clarity and foresight are the foundation of strong outcomes. The same is true beyond your business. With strategic financial planning, you can avoid being blindsided by the unexpected and be prepared for whatever comes your way. And just as careful management supports your professional success, strong financial clarity supports your long-term financial wellbeing.

As we wrap up the year, now is the ideal moment to get financially organized and ensure your planning strategies are in place for a confident start to the year ahead. Arrange your annual financial check-up through your planning contact at Network Wealth Cooperative, email info@networkwealth.com.

The information contained in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information continues to be accurate at a future date. No one should act upon such information without appropriate professional advice after a thorough examination of their particular situation.