When it comes to year-end tax planning, procrastination can cost you money. A friend of mine is the consummate procrastinator. Last year at this time, he developed an urgent need to alphabetize the spice rack and vacuum his baseboards. This year, he agreed to act to save taxes, so we talked about the ideas I’m sharing today. Last week, I wrote about RRSP strategies. Today, let’s examine the top year-end ideas for other registered plans.
RRIF Tips
Delay RRIF withdrawals. Before the federal election in April, the Liberals promised to reduce the required minimum withdrawals from registered retirement income funds (RRIFs) by 25 per cent for one year. We haven’t heard news yet on whether the government will make good on this promise. It’s worth waiting until after the federal budget on Nov. 4 before making your full RRIF withdrawals for 2025. Hopefully, we’ll get some clarity on this in the budget.
Other strategies. When it comes to your RRIF, consider converting some RRSP assets to a RRIF, to take dvantage of the pension credit annually, making withdrawals annually rather than monthly to allow greater compounding in the plan, basing withdrawals on the age of the younger spouse, taking advantage of pension splitting, considering RRIF withdrawals to contribute to a tax-free savings account (TFSA), and naming your spouse as a successor annuitant. See my article from July 10, 2025, for more on these ideas.
TFSA tips
Know your TFSA room and use it. If you’re 18 or older, you can contribute up to $7,000 to a TFSA for 2025, plus any accumulated contribution room from prior years. If you were 18 or older back in 2009 when TFSAs were introduced and haven’t contributed yet, your accumulated TFSA contribution room is now $102,000 in 2025. You won’t get a deduction for contributions, but the assets can grow tax-free in the TFSA, and withdrawals are tax-free later.
Other strategies. You might also consider making withdrawals before year-end to reduce the time you have to wait to recontribute those dollars to the plan, avoid carrying on a business in your TFSA, name a successor holder for your TFSA, and get rid of non-qualified investments before year-end. You can read more about these ideas in my article from Sept. 11, 2025.
FHSA tips
Contribute by year-end for a 2025 deduction. If you’re a first-time homebuyer and you’re 18 or older, be sure to open a first-home savings account (FHSA). You can contribute up to $8,000 for each year, to a $40,000 lifetime maximum. You’ll get a tax deduction for your allowable contributions similar to an RRSP, but unlike an RRSP, you can’t make your 2025 contribution in the first 60 days of 2026. So, contribute by Dec. 31.
Consider an FHSA over an RRSP. Even if you have no intention of buying a home in the future, or you’re not sure you’ll buy a home, contributing to an FHSA can make sense. This will maintain your RRSP contribution room for future use, and if you don’t buy a home, you can transfer your FHSA assets to an RRSP without affecting your RRSP contribution room. If you contribute to an RRSP first, you have the option to transfer those assets to an FHSA in the future to use up your FHSA room, but you won’t get back your RRSP contribution room at that time. So, the FHSA is the preferred savings vehicle. Do keep in mind that the FHSA can only exist for 15 years.
RESP tips
Front-end load your contributions. You can contribute up to $50,000 in a lifetime for a child to a registered education savings plan (RESP). The problem with contributing the full $50,000 up front is that you won’t be able to collect the full Canada Education Savings Grants offered (CESGs – up to $7,200 in the lifetime of a child) because the CESGs equal 20 per cent of your contributions to a maximum of $500 for each year. A $2,500 contribution in a year will give rise to the maximum $500 CESG. Contributions of $36,000 will, over time, allow you to access the maximum CESGs ($36,000 x 20 per cent is $7,200). So, consider front-loading the RESP with a contribution of $14,000 ($50,000 less $36,000) in the first year. You can add $2,500 to that figure, for a total of $16,500 in the first year, to get the maximum CESGs. The balance of the $50,000 can be contributed over the next 13 years at about $2,500 per year to maximize CESGs.
An RDSP is a long-term savings plan, similar to an RRSP, that is designed to help save for the future of someone with a disability. The good news? There are no restrictions on how the funds in the plan must be used.
A beneficiary might consider using RDSP funds to help cover daily costs of living, medical or dental costs not covered by provincial or private health insurance, unexpected emergencies, or to provide financial security in retirement.
The plan can also be put toward disability costs, such as modifying their home for accessibility, purchasing or adapting vehicles for accessibility, or hiring a personal care or support worker. The funds can even be used to support continuing education or training, or participation in hobbies such as sports or travel.
RDSP rules
An RDSP is established by someone known as the plan holder – often a parent or guardian while the beneficiary is a minor. A person can also set up an RDSP for themselves once they’re 18 if they’re contractually competent. The beneficiary of the RDSP can contribute to their own plan, or anyone else can contribute as long as the plan holder approves. There are no annual contribution limits, but the maximum that can be contributed is $200,000 in the lifetime of the beneficiary.
Seven tax tips and traps to consider in 2025
-
- Contributions are not tax-deductible and can be made until the end of the year in which the beneficiary turns 59.
- A huge benefit of RDSPs is that the government will contribute to the plan as well, in two potential ways: the Canada disability savings grant and the Canada disability savings bond.
- The CDSG is paid into the plan and will match your contributions to the tune of 100, 200 or 300 per cent – depending on the beneficiary’s adjusted family income.
For example, the government will pay grants of $3 for each $1 contributed for the first $500 of contributions (if your adjusted family income is under $114,750 in 2025), and $2 for every $1 contributed on the next $1,000 of contributions. - A maximum CDSG of $3,500 in any year, or $70,000 in the lifetime of the beneficiary, can be paid into an RDSP, and grants can be paid until the end of the year in which the beneficiary turns 49. Go to www.canada.ca and type RDSP in the search field for details on grant amounts.
- The CDSB is interesting because the money will be paid into the plan even if no contributions are made by others. The government will pay a bond of up to $1,000 each year to the RDSP of low-income Canadians with disabilities, with a lifetime limit of $20,000.
- A bond can be paid into an RDSP until the year in which the beneficiary turns 49. Again, the amount of the bond is based on the beneficiary’s adjusted family net income. For income under $37,487 (in 2025), the full $1,000 bond will be paid into the RDSP. For incomes between $37,487 and $57,375, the bond amount is reduced based on a formula. Above $57,375, and no CDSB is available.
- The beneficiary can withdraw, tax-free, the amounts contributed to the RDSP, although the CDSG, CDSB, any income earned in the plan over the years, along with any rollovers made into the plan (from an RRSP, for example), are included in the beneficiary’s income when withdrawn.
The Nuances
The beneficiary must qualify for the disability tax credit to be entitled to have an RDSP. So, file Form T2201, Disability Tax Credit Certificate, with the taxman before opening a plan. It’s also good to know that the plan holder doesn’t have to be a resident of Canada, although the beneficiary must be a resident when the plan is opened and when each contribution is made. Finally, payments out of an RDSP can only be made to the beneficiary (or to the beneficiary’s estate after their death). If you’re the contributor, sorry, you won’t be entitled to a refund of your contributions.