2026 year-end tax planning checklist

If your 2025 tax return showed net tax owing (total tax liability less tax withheld at source) of over $3,000 ($1,800 for Quebec residents), you may have received a notification from the Canada Revenue Agency (CRA), or Revenu Québec (RQ) for Quebec residents, requiring you to pay quarterly tax instalments for 2026.

If you have not paid these instalments and expect your net tax owing in 2026 to exceed $3,000 ($1,800 for Quebec residents), you should make a payment as soon as possible. This will reduce or avoid instalment interest and penalties from being charged.

Consult with your tax and investment advisors to review your situation. For investments, trades must be entered on or before December 30, 2026 in order to be settled by year-end (under the T+1 settlement cycle).

Be aware of any other factors that may limit your ability to trade certain positions on short notice, such as liquidity constraints with alternative investments.

Be sure to factor in the impact of foreign exchange if investments are not denominated in Canadian dollars.

Consider the following strategies:

• Put tax-loss strategies to work. If you have realized capital gains throughout the year, it may make sense to realize capital losses that can offset these gains in the same year. Be aware that any tax-loss selling strategies you use should account for the “superficial loss” rules, which will deny capital losses if identical investments are repurchased (or have been previously purchased) within a specified time period.
• Trigger capital gains to absorb capital losses. If you have realized capital losses throughout the year, it may make sense to realize capital gains that can offset these losses in the same year. While unused capital losses can be carried forward, they may trigger future “alternative minimum tax” (AMT) consequences. This is because in computing an individual’s minimum tax each year, the AMT limits the amount of capital loss carryovers that can be claimed to 50% of what can be claimed under regular income tax rules. As a result, using capital loss carryovers may, in certain situations, result in additional taxes payable due to the AMT. Consult with your tax advisors to assess whether accumulating capital loss carryovers could result in AMT implications.
• Review whether claiming a capital gains reserve makes sense. If you sold an asset this year and will receive portions of the payment over a number of years, you may be able to claim a capital gains reserve to defer a portion of the total capital gain from being recognized as income this year. Claiming a reserve and spreading the capital gain over multiple years may reduce taxes by taking advantage of marginal tax brackets.

Tax-Free Savings Account (TFSA):

• Consider contributing to your TFSA.The TFSA dollar limit for 2026 is $7,000. Keep in mind that TFSA contribution room accumulates if not used, so you may be able to top up your TFSA if prior contributions were missed. Check with the CRA to verify your unused contribution room.
• If you plan to withdraw from your TFSA soon, consider making the withdrawal by year-end rather than waiting until early next year. This is because a withdrawal this year will be added back to your TFSA contribution room at the beginning of next year.

Registered Retirement Savings Plan (RRSP) and Registered Retirement Income Fund (RRIF):

• Consider withdrawing funds from your RRSP or RRIF by year-end if you are in a lower tax bracket this year, or to take advantage of the $2,000 pension tax credit for RRIF income received by individuals who are at least age 65.

• If you plan to withdraw from your RRSP under the Lifelong Learning Plan (LLP) soon, consider making the withdrawal early next year rather than by year-end to maximize the repayment period.
• If you plan to make a first withdrawal from your RRSP under the Home Buyers’ Plan (HBP) soon, consider making the withdrawal by year-end to maximize the repayment period.
• Temporary repayment relief is available for Home Buyers' Plan (HBP) participants who make their first withdrawal between January 1, 2022 and December 31, 2028. Under these rules, the start of the 15-year repayment period is deferred to the fifth year following the year of the first withdrawal, rather than the usual second year. For example, if a participant makes their first HBP withdrawal in 2026, their first repayment year will be 2031.
• If you are age 71 this year, you must convert your RRSP to a RRIF by December 31 and begin taking minimum withdrawals next year.
  • Using your younger spouse’s age for minimum payment calculations.
  • Making a final RRSP contribution by year-end, if you have “earned income” this year and do not have a younger spouse for whom you can make RRSP contributions in the future. A final contribution can be made to account for new RRSP room that will accrue on January 1, 2027, but will not be available to you as you can no longer own RRSPs. However, be aware that if the final contribution exceeds your 2026 RRSP contribution limit, there will be a monthly 1% penalty tax payable on the overcontribution, before new room accrues on January 1, 2027.

First Home Savings Account (FHSA):

• If you have an FHSA open, consider making a contribution by year-end so that it may be claimed as a deduction on your 2026 tax return. The FHSA annual participation room is $8,000, with a lifetime limit of $40,000.
• If you are eligible to open an FHSA, consider opening an account by year-end. Even if you cannot make a full contribution by year-end, opening an account would allow you to carry forward up to $8,000 of unused FHSA participation room to next year. However, be aware that your maximum participation period for the FHSA is 15 years, so opening an account by year-end means that you would have to close it by December 31, 2041.

• If you made a qualifying withdrawal from an FHSA during 2025 to purchase your first home, you must close all of your FHSAs on or before December 31, 2026. Any remaining balances in your FHSAs could be transferred to your RRSP or RRIF on a tax-deferred basis, provided the transfer is a direct transfer and the transfer is made before this date. Such a transfer would not require you to use your existing RRSP contribution room.

Registered Education Savings Plan (RESP) and Registered Disability Savings Plan (RDSP).

• Consider making contributions to an RESP and/or RDSP for the benefit of your family members. The federal government can provide grants and bonds to RESPs and RDSPs which are tied to contributions made.

Consider making charitable donations.

• Donating certain property directly to charities, such as publicly listed securities, can increase your tax savings.

Pay expenses eligible for tax deductions or credits.

These include but are not limited to:

• Investment management fees
• Interest on third-party borrowings used for investing
• Childcare expenses
• Medical expenses
• Home office expenses

Consider whether to intentionally recognize or delay taxable income this year.

If you anticipate your overall tax rate will be materially different between this year and next year, you may wish to intentionally recognize or delay items of income, deductions, and credits to take advantage of the anticipated tax rate differences. One example outlined earlier is the claiming of a capital gains reserve.

Interest on such loans must be paid on or before this date to avoid the application of income attribution rules.

A RRSP or a spousal RRSP contribution made on or before this date will be deductible on your 2026 tax return, subject to your RRSP contribution limit. The RRSP dollar limit for 2026 is $33,810. Check with the CRA to verify your RRSP contribution limit.

Pay the minimum repayment amount on the outstanding balance of your HBP or LLP.

If the minimum repayment amount is not made on or before this date, it will be taxable on your 2026 tax return.