Your year-end 2024 tax strategies

• December 31, 2023: deadline to benefit from government grants available in 2023.
• If you already have an RESP account, be sure to make the minimum contribution each year to maximize the Canada Education Savings Grant (CESG) and the Quebec Education Savings Incentive (QESI).
• Certain strategies should be considered to catch up on contributions from previous years. To learn more, talk to your wealth management advisor.
• If you have an RESP and your beneficiary is enrolled in a qualifying post-secondary program, consult your wealth management advisor to develop an appropriate disbursement strategy.

• December 31, 2024: deadline for taking advantage of government grants available in 2024.
• If you already have an RDSP, be sure to make the minimum contribution each year to maximize government grants.
• Certain strategies should be considered to catch up on previous years’ contributions. To learn more, contact your wealth management advisor.

• March 3, 2025: deadline for contributions to an RRSP or a spouse’s RRSP that are deductible for the 2024 taxation year.

• Check with the CRA for your RRSP deduction limit for the 2024 tax year to find out how much you can contribute to your RRSP.

• If you are older than 71 and your spouse is younger, you can still contribute to their RRSP until December 31 of the year in which they turn 71, as long as you have contribution room.
• If you turned 71 in 2024 and earned employment, professional or rental income, you can make a final contribution to your RRSP by December 31, 2024, based on your 2024 income. This excess contribution will be subject to a penalty of 1% per month from the date of the contribution, hence the importance of making the contribution in December. In January 2025, you will have to file a tax form (T1-0VP) in order to calculate and pay the penalty. Despite the applicable penalty, this strategy can be beneficial since it enables you to maximize your use of the RRSP as a tax shelter.
• Make the minimum repayment of your HBP (Home Buyers’ Plan) or LLP (Lifelong Learning Plan) withdrawal. If the required minimum repayment is not made by the RRSP contribution deadline, the minimum amount will be taxable on your tax returns for the 2024 tax year.

• $7,000: annual contribution limit for 2024. (A little scoop: the annual contribution limit will be the same for 2025!)
• TFSA contribution room accumulates if not used. Check with the CRA for your TFSA contribution room for the 2024 tax year to find out how much you can contribute to your TFSA.
• Contribute the maximum amount to your TFSA annually. Although contribution room is cumulative over the years, you should take advantage of the fact that investments in a TFSA grow tax-free by contributing now. Plan for pre-authorized contributions and take your investment policy into account. Your wealth management advisor can help you plan your contributions and determine whether it would be worthwhile to contribute to your spouse’s TFSA.
• If you need to make a withdrawal from your TFSA in the short or medium term, do it in December of the current year rather than January of the following year. The total amounts withdrawn will add to the contribution limit for the following year, so you can replenish your account quickly, rather than having to wait a full calendar year, as would be the case for a withdrawal in January.

• Minimum withdrawal: At the end of the year in which you turn 71, your RRSP or LIRA must be converted to an RRIF or LIF. You must begin making minimum withdrawals before the end of the year in which you turn 72. Know, however, that the withdrawal can be based on the age of your spouse, especially if that person is younger than you. The minimum withdrawal percentage will be based on your age, or your spouse’s age, at the beginning of the year of the withdrawal, depending on which is more advantageous.
• Note that for Quebec LIFs, changes will apply as of January 1, 2025. A separate communication will be sent to our clients to inform them of the various changes.

IMPORTANTS CHANGEMENTS AUX FRV DÈS 2025

Be sure to pay the interest payable for 2024 on your loan no later than January 30, 2025 to avoid the application of income attribution tax rules.

You could crystallize your latent capital losses by selling underperforming stocks to reduce the tax on a capital gain realized this year (or during the past three years, or to be realized in the future). Pay particular attention to the tax rules that may apply and ask your wealth management advisor about the suitability of this strategy in your situation.

You may be planning to invest in mutual funds late in the year. Some funds pay distributions that are taxable for the current year which can result in a substantial tax despite a short holding period. Find out about the payment of distributions before buying funds with a high tax impact.

In the most recent federal budget, the government proposed to increase the inclusion rate for capital gains and losses realized on or after June 25, 2024 from 50% to 66.67%.

• Note to individuals: for estates subject to graduated taxation and qualified disability trusts, the 50% inclusion rate would continue to apply on the first $250,000 of net capital gains realized in the year. The 67% inclusion rate would apply only to net capital gains realized in the year in excess of $250,000.
• For corporations and other trusts, the 67% inclusion rate would apply to the first dollar of net capital gains realized on or after June 25, 2024.
• On September 23, 2024, the Liberal government tabled a ways and means motion to implement this proposed increase. The bill accompanying this notice provided for an effective date of June 25 , 2024. However, as of the writing of this article, no bill formalizing this proposed increase has been assented to. Therefore, given the uncertainty surrounding the implementation of this proposed increase , we recommend that you consult your accountant or tax advisor to consider possible tax plans that may be relevant to your situation.

• The HBP RRSP withdrawal limit for first-time home buyers is now $60,000.
• Temporary repayment relief is available for HBP withdrawals made between January 1, 2022 and December 31, 2025: these benefit from a three-year extension of the repayment grace period. Individuals who have made, or will make, HBP withdrawals during this period now have up to five years before repayment begins.
• If you purchase your first home in December and want to take advantage of the HBP, defer your withdrawal until January Since you have up to thirty days after the date of purchase to make the withdrawal, deferring it until January will delay the start of your HBP repayments by one year.

• The FHSA allows you to contribute up to $8,000 per year, with a lifetime limit of $40,00 and to accumulate tax-sheltered savings for the purchase of your first property.
• You can even combine the HBP and the FHSA for your down payment.
• FHSA contributions are tax deductible, and deductions can be carried forward to a future tax year.
• If you already have an FHSA, consider making a contribution by December 31, 2024, so you can deduct it on your tax returns for the 2024 tax year.
• If you’re eligible to open an FHSA, consider opening an account before the end of the year. Even if you’re not able to maximize your contribution this year, opening an FHSA would allow you to carry forward up to $8,000 of unused FHSA contribution room to the following year. Ask your wealth management advisor now about the conditions for opening this account in order to optimize your contributions.

• Once the account is opened, the maximum FHSA participation period is 15 years. If the amounts accumulated in your FHSA are not used for a qualifying withdrawal, they can be transferred to your RRSP or RRIF with no immediate tax consequences, provided it is a direct transfer and you have no excess FHSA amount. A direct transfer generally has no impact on your RRSP contribution room.