As we begin a new year, why not get ahead and make the year less taxing? Here are a handful of reminders to start the year:

Contribute to the RRSP. The deadline for the 2024 tax year is Monday, March 3, 2025, limited to 18 percent of 2023 earned income to a maximum of $31,560 (2024). Deferring the deduction may provide tax-planning opportunities: you can choose to delay the RRSP deduction to a future year, perhaps one in which you have a relatively higher income to offset the higher potential tax.

Fund your TFSA. The 2025 TFSA annual dollar amount is $7,000, bringing the eligible lifetime contribution limit to $102,000. The latest statistics show that high-net-worth taxpayers have, on average, over 34 percent of unused contribution room.¹ Have you fully maximized this tax-advantaged account?

Split income, save tax. Review your family’s potential tax bill to determine if there are income-splitting opportunities. For example, you may elect to split eligible pension income with your spouse (partner) on your tax return. Spouses may also apply for CPP pension sharing. There may be an opportunity to open a spousal RRSP. Business owners may consider paying reasonable salaries to spouses/ children for services provided to a self-employed business or private company. For ideas, call the office.

Get organized for tax season. While personal income tax returns will not be top of mind for a few months, why not organize your records before crunch time approaches? This may prevent medical expenses, donations, business charges and other receipts from being overlooked or unclaimed.

Keep in mind that bare trusts are exempt from the 2024 filing. There has been much confusion surrounding the trust reporting rules that came into effect last year as they relate to bare trusts. This was complicated by a last-minute reversal by the CRA in late March 2024 that exempted bare trusts from filing for 2023. Since then, draft legislation has been introduced that “more clearly defines beneficial ownership arrangements subject to the reporting rules.” If this passes, trusts with a fair market value of $50,000 or less throughout the year will be exempt from filing. If all parties to the trust are related, the exemption rises to $250,000 if only certain assets are held, such as GICs, stocks, bonds, mutual funds or ETFs.

This will apply to bare trusts with years ending December 31, 2025, and later. For the 2024 tax year, bare trusts are exempt from filing.

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^{Always consult a tax professional regarding your particular situation. 1. 2024 TFSA statistics for the 2022 year, with HNW taxpayers (defined as taxpayers with income over $250,000) having $28,064 of available contribution room (lifetime contribution room of $81,500).}

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