Here are 10 easy personal tax tips for 2025 to help you stay on top of your finances:
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Max Out RRSP Contributions
Contributing to a Registered Retirement Savings Plan (RRSP) reduces your taxable income for the year. The contribution limit is based on your income, but you can carry forward unused contribution room to future years, so try to contribute as much as possible before the deadline (usually March 1 for the 2025 tax year). -
Take Advantage of the TFSA
While contributions to a Tax-Free Savings Account (TFSA) don’t reduce your taxable income, investment growth within the TFSA is tax-free. The contribution limit for 2025 will be announced by the government, so make sure you know the limit and use it to grow your savings without worrying about taxes. -
Claim the Canada Child Benefit (CCB)
If you have children, make sure to claim the CCB. This tax-free monthly payment helps offset the cost of raising children. Keep your family’s income up-to-date with the CRA to ensure you receive the correct amount. -
Consider Income Splitting with a Spouse
If one spouse has a higher income, consider income splitting strategies to reduce the overall family tax burden. This could involve contributing to a spousal RRSP or transferring some investment income to the lower-income spouse. -
Use the Canada Caregiver Credit
If you’re supporting a family member with a physical or mental impairment, you may be eligible for the Canada Caregiver Credit. It can help reduce your tax liability, so keep track of caregiving expenses and consult a tax professional to see if you qualify. -
Take Advantage of Tax Credits
Canada offers a range of non-refundable tax credits, such as the Basic Personal Amount, the Canada Employment Amount, and credits for medical expenses, charitable donations, and public transit. Make sure you’re claiming all applicable credits to lower your tax bill. -
Track Medical Expenses
You can claim eligible medical expenses that exceed 3% of your net income or a set amount (whichever is lower). Keep all receipts for medical services, prescription drugs, and other health-related costs, as this can lead to significant tax savings. -
Capital Gains Tax Planning
If you’re selling investments (e.g., stocks or real estate), keep in mind that only 50% of capital gains are taxable. If possible, try to hold investments for longer periods to benefit from the preferential tax treatment of long-term capital gains. -
Contribute to a RESP for Education Savings
Contributions to a Registered Education Savings Plan (RESP) don’t provide immediate tax benefits, but the growth is tax-deferred, and you can receive government grants (like the Canada Education Savings Grant, or CESG) to help save for your child's education. -
Tax-Free Home Sale
If your primary residence has increased in value, you may be able to sell it tax-free due to the Principal Residence Exemption. Make sure you meet the conditions (e.g., you lived in the home the entire time you owned it) to avoid paying taxes on any capital gains from the sale.
Tax laws can change, so it’s always a good idea to consult with a tax professional to ensure you're maximizing your savings and staying compliant.
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