2025 Tax-Filing Season Guide: Planning Your 2024 Taxes
Strategic Tax Milestones: Navigating New Inclusion Rates and Portfolio Optimization for 2025
As 2024 winds down and the holiday season approaches, we recommend setting aside time to review your finances and consider tax planning opportunities before year-end. Our goal as your portfolio managers is to make investing easier for you, and that includes helping you navigate the complexities of tax season.
This checklist outlines the milestones and changes that will impact your 2024 tax filing.
Strategic Registered Account Milestones
Registered Retirement Savings Plans (RRSP)
The RRSP remains a cornerstone of retirement planning, but the timing of your contributions matters. While you have the first 60 days of 2025 to contribute for the 2024 tax year, contributing earlier allows your investment to start growing tax-free sooner.
2024 Contribution Limit: The maximum amount is $31,560 if your 2023 income exceeded $175,333.
The Age 71 Deadline: If you turned 71 in 2024, this is your final year to contribute. You cannot wait until 2025, as your RRSP must convert to a RRIF by the end of this year.
Tax Free Savings Accounts (TFSA)
The 2024 annual contribution limit is $7,000, with a maximum cumulative limit that depends on your age. If you are planning a withdrawal in the near future, consider doing so by the end of 2024. This allows you to re-contribute that withdrawn amount as early as 2025, rather than having to wait until 2026.
First Home Savings Account (FHSA)
The FHSA offers a powerful dual benefit: contributions are deductible from your income (like an RRSP), and withdrawals for a first home are tax-free. We recommend opening an account as soon as possible, even with a small amount, because your contribution room only begins to accumulate once the account is officially open.
Annual Limit: $8,000.
Lifetime Maximum: $40,000.
Portfolio Optimization & New Legislation
Navigating New Capital Gain Inclusion Rates
The tax landscape for capital gains changed significantly in 2024. For gains realized on or after June 25, 2024, a proposed inclusion rate increase applies to gains exceeding $250,000. If you have realized gains this year, you may want to consider selling investments that currently hold unrealized capital losses to offset those gains.
Strategic Charitable Giving
If you are planning a charitable donation, there is a more tax-efficient way than simply writing a check. By donating appreciated securities directly to a charity, you can avoid realizing the capital gain altogether while still receiving the full tax credit.
Alternative Minimum Tax (AMT)
High-income earners should be aware of proposed changes to the AMT system. Notable adjustments include:
The capital gain inclusion rate for AMT purposes is increasing from 80% to 100%.
30% of capital gains on donated shares will now be included in the AMT calculation.
Property Declarations & Education Savings
Toronto Vacant Home Tax (VHT)
Owners of residential property in Toronto are required to declare the occupancy status of their property every year. This tax generally applies to homes that were unoccupied for more than six months in 2024.
The Deadline: You must make your declaration for the 2024 tax year by April 30, 2025.
Registered Education Savings Plans (RESP)
Saving for education involves more than just deposits; it's about maximizing government support. You can contribute $2,500 per year per child to receive the maximum $500 government grant.
Grant Limits: The lifetime government grant maximum is $7,200.
Catching Up: You can catch up on missed grants one year at a time, but special planning is required if your children are turning 16 or 17.
2024 Administrative Updates
Bare Trust Reporting Relief
In a welcome move, the CRA has provided administrative relief for bare trusts for the 2024 tax year. You are not required to file a trust income tax return for a bare trust for 2024 unless the CRA specifically requests it.
Partnering with JCIC
As your portfolio managers, our goal is to make investing easier for you. If you have questions about any of the above, or simply want to discuss the financial markets, please feel free to reach out to us. We're always happy to talk about your investment journey.
