Here are year-end tax planning tips for clients’ registered accounts, focusing on the impending deadline of Dec. 31.
TFSA withdrawal
A client who plans to withdraw from their TFSA in early 2026 should consider making the withdrawal now, before year-end. “Doing so will allow for recontributions as early as January 1, 2026, as opposed to having to wait until January 2027 to recontribute if the withdrawal were to occur in 2026,” said Wilmot George, managing director of tax and estate planning with Canada Life in Toronto.
With a withdrawal before year-end, “you basically accelerate the TFSA contribution room coming back to you one year earlier,” said John Natale, head of tax, retirement and estate planning services with Manulife Canada in Waterloo, Ont.
When a client who has used all their TFSA contribution room makes a withdrawal, “the key is, you cannot recontribute before year-end” or “you’ll be offside with overcontribution,” Natale said. “You do have to wait until you get the contribution room back on Jan. 1.”
The penalty for overcontributions is 1% per month on the excess amount.
No attribution with gifts for TFSAs, FHSAs
For spouses to fully benefit from TFSA contribution room, one spouse could make a gift to the other spouse (or common-law partner) for investing in the spouse’s (or common-law partner’s) TFSA, George said. Attribution rules aren’t applicable, given the TFSA’s tax-free characteristics.
Gifts can also be made to adult children or adult grandchildren who have TFSA contribution room, Natale said. “The only thing, obviously, is once you give them the money, you can’t force them to give it back to you,” he said.
Gifts can also be made to spouses or adult children or adult grandchildren (assuming they qualify) for contributing to first home savings accounts (FHSAs).
RRSP contribution strategies
If a client turned 71 in the year, they have until Dec. 31 to contribute to their RRSP (assuming they have contribution room). “Consider one last RRSP contribution … because RRSPs must be converted to RRIFs by the end of the year the RRSP annuitant turns 71,” George said.
Such a client “will not be able to contribute as of Jan. 1, 2026,” Natale said. “That contribution room will be lost,” unless they have a younger spouse or common-law partner.
Also, “what a lot of people don’t realize is you don’t have to deduct the contribution in the year you make it,” Natale said. Deductions can be timed “whenever is most … preferential or helpful for [the client] from a tax perspective.”
If the 71-year-old client had T4 income in 2025 and thus generated RRSP contribution room for 2026, they can consider an overcontribution before year-end, using the generated contribution room (this strategy assumes the client used all their 2025 contribution room). The RRSP overcontribution, less $2,000, will draw a monthly penalty of 1%, “but that’ll only be for the month of December,” Natale said, because contribution room will become available on Jan. 1. “At the cost of a one-month penalty of 1%, it allows me to put more money into my RRSP,” he said. “I would have otherwise lost that opportunity if I didn’t do that before Dec. 31.”
When a client has a younger spouse or common-law partner, the client can contribute to a spousal RRSP up to Dec. 31 of the year the spouse or common-law partner turns 71, to make use of any unused contribution room that the client has.
For tax-planning flexibility, George suggested making a spousal RRSP contribution before year-end rather than in the first 60 days of 2026.
“[Make] your spousal RRSP contributions in December, as opposed to January or February, if it’s your intention to make spousal RRSP contributions,” George said, because that will accelerate the end of the attribution period by one year.
Attribution rules generally apply to spousal RRSP contributions made in the year of withdrawal or the two years prior to withdrawal, with the withdrawals taxed to the contributor. “For example, if a spousal RRSP contribution is made in December, that contribution would be attribution-free — meaning taxation to the annuitant — in 2028,” George said. “If the contribution is made in January … the attribution-free period begins in 2029.”
Tax-loss selling as a way to contribute to registered accounts
If a non-registered investment with an accrued loss were transferred to an RRSP or TFSA, the capital loss would be denied. And there are “harsh penalties” for swapping an investment from a non-registered account to a registered account for cash or other consideration, writes Jamie Golombek, managing director of tax and estate planning with CIBC Private Wealth, in his year-end tax tips.
What a client can do is sell an investment with an accrued loss and use the cash to make a TFSA or RRSP contribution (assuming they have contribution room). But the client should be aware of the superficial loss rules.
Specifically, a capital loss is deemed superficial if a client sells an investment in a loss position, and, within 30 days before or after the settlement date, the client — or the client’s spouse, common-law partner or other “affiliated person” such as a TFSA or RRSP — buys the same investment, and the client or affiliated person still owns the investment 30 days after settlement date.
In such a case, the capital loss would be denied and added to the adjusted cost base of the repurchased investment, and the client would get the tax benefit from the loss only when they later sell the investment.
RRIFs and pension income
A strategy for clients aged 65 or older who aren’t currently receiving registered pension plan income is to create eligible pension income before year-end — by converting RRSP funds to a RRIF — to benefit from the non-refundable federal pension tax credit. (CPP and OAS benefits aren’t relevant for the purposes of this credit.)
“Once the calendar turns over to 2026, this opportunity will be lost for those who haven’t received eligible income for 2025,” George said.
For RRIF income to be eligible, “the RRIF annuitant must be 65 or older or be receiving the RRIF payments due to the death of a spouse,” he said.
The federal pension tax credit, for eligible RRIF income of up to $2,000, is worth $290 (14.5% in 2025 × $2,000), plus an additional amount for the applicable provincial or territorial tax credit (not available in Quebec).
The federal tax credit rate drops to 14% in 2026 onward. At that rate and over a period of seven years (age 65 to 71), claiming the federal pension tax credit saves $1,960 of federal income tax, compared to withdrawing the same amount from an RRSP.
“Benefiting from this credit each year essentially allows the pensioner to receive this income tax-free, or near tax-free when you consider differences between the federal and provincial amounts,” George said.
Also, any income that qualifies for the pension income credit generally qualifies for pension income splitting, Natale said. While there is no required RRIF minimum withdrawal for the year an RRSP is converted to a RRIF, “it may be in your best interest to take $2,000 [from the RRIF] for the pension income credit, or more, to benefit from pension income splitting.”
FHSA account opening
Clients over age 18 who qualify for an FHSA may want to consider opening the account sooner rather than later.
“If eligible to open an account, think about opening the account before year-end to begin to accumulate contribution room,” George said. Unlike with a TFSA, contribution room for an FHSA begins to accumulate only once the FHSA is opened.
Further, clients should contribute to the plan “to benefit from tax-free growth sooner as opposed to later,” George said. “Missing Dec. 31 to open an account misses an opportunity to begin to accumulate contribution room in the current year, and misses an opportunity to contribute and deduct the amount for 2025.”
The account’s dollar limit is $8,000 per year, with a $40,000 lifetime contribution limit.
George noted that only $8,000 of contribution room can be carried forward regardless of when the account is opened. “The opportunity to accumulate significant amounts of unused room over time is not available,” he said.
Still, “once eligible, opening an account and beginning contributions earlier, as opposed to later, would make sense for many Canadians — even if they defer the claiming of their contributions for tax purposes until a future year, which is possible,” he said.
RRSP withdrawal timing under Home Buyers’ Plan
If your client plans to soon buy a home and will withdraw RRSP funds under the Home Buyers’ Plan to do so, they may want to make the withdrawal by Dec. 31, 2025. That’s because, under temporary relief rules that end after Dec. 31, the beginning of the 15-year repayment schedule is deferred to the fifth year after the year of withdrawal, instead of the second year.
Those temporary rules aside, a client would typically want to delay a withdrawal under the plan to the new calendar year, to defer the repayment schedule by one year. Likewise, a client planning to withdraw RRSP funds under the Lifelong Learning Plan can consider making the withdrawal in early 2026 as opposed to year-end 2025, to maximize the 10-year repayment schedule.
RESP, RDSP contributions and withdrawals
To avoid missing out on government grants related to RESPs and registered disability savings plans (RDSPs), contributions must be made before year-end, Natale said.
The Canada education savings grant equals 20% of the first $2,500 in RESP contributions per year, or $500 annually per child (the lifetime maximum grant is $7,200 per child). If a client is trying to catch up on past grants, they can receive up to a $1,000 maximum in a year by contributing $5,000 by year-end. (The maximum that can be contributed to an RESP is $50,000 per child.)
When an RESP beneficiary turns 15 in a given year, a minimum RESP contribution of $2,000 must be made before year-end, so that the beneficiary is eligible for grants at ages 16 and 17. Alternatively, a minimum annual contribution of $100 must have been made to the RESP in at least four of the years before the end of the year the beneficiary turns 15.
Natale noted that RESP withdrawals consist of tax-free return-of-capital withdrawals and taxable withdrawals — educational assistance payments (grants, bonds and investment income) — taxed to the student. “If you can be strategic about how much and when to take out that taxable income, you can really minimize [the student’s] tax,” Natale said. If the student attended a post-secondary institution in 2025, consider an educational assistance payment from the RESP before year-end.
The Canada disability savings grant varies based on the beneficiary’s adjusted family net income and the amount contributed to an RDSP. An RDSP can get a maximum of $3,500 in matching grants in one year and up to $70,000 over the beneficiary’s lifetime. Grants can be received on contributions made until Dec. 31 of the year in which the beneficiary turns 49.
If the RDSP beneficiary turned 59 in the year, Dec. 31 is the deadline for a final contribution to the RDSP.
The plan has no annual contribution limit, and the lifetime maximum contribution is $200,000.
Dec. 31 is the deadline for the following actions with registered accounts:
- Contribute (or potentially overcontribute) to an RRSP if client turned 71 in the year
- Convert an RRSP to a RRIF if client turned 71 in the year
- Consider creating eligible pension income (for clients age 65 or older) to benefit from pension tax credit and pension splitting
- Contribute to an FHSA to claim a deduction for 2025
- Close an FHSA if client turned 71 in the year or made a qualifying FHSA withdrawal during 2024 to purchase a first home
- Contribute to an RESP or RDSP to receive respective government grants