6 things to prepare for your 2024 taxes

If you want to start the new year off right, the last thing you need is for year-end tax stress to be hanging over your head. So before popping the champagne bottles, make sure you’re on top of the important tax deadlines and are looking at ways to reduce the amount of tax you might owe.

Here are a few things to consider before tax season rolls around.

Optimize your RRSPs and RRIFs.

Maximizing your Registered Retirement Savings Plan (RRSP) contributions can make a big difference in the income tax you’ll pay throughout your life. RRSPs are tax-deductible, meaning any contributions you make before the deadline on March 3, 2025,¹ are subtracted from your 2024 taxable income. Best of all, since most people pay taxes throughout the year via payroll withholdings, if you do contribute, the deduction would reduce your taxable income and you could receive a refund, which you can then contribute to your RRSP. If you turned 71 in 2024, this is the last year you can contribute to your RRSP before it must be converted into a Registered Retirement Income Fund (RRIF). If you are using a RRIF, you’ll want to think carefully about how you remove money, because those funds will be taxed. An advisor can help. More information on RRIFs can be found here.

Contribute to the RESP.

The Registered Education Savings Plan (RESP) is a great way to help you save for the ever-increasing costs of post-secondary education. The money you contribute to an RESP isn’t tax-deductible, but it is tax-deferred until it is needed, at which point the money will be taxed in the hands of your child, who will likely be in a lower tax bracket than you. The big benefit of an RESP is the Canada Education Savings Grant (CESG), which is essentially free money – you’ll receive 20% on any funds you contribute, up to $2,500 per year, to a maximum of $7,200. Ideally, you want to contribute to the RESP before December 31, so you can get the CESG grant for 2024, but there are ways to receive grants from missed years. Details on the CESG can be found here.

Use an FHSA to build for the future.

If you’re planning to buy a home relatively soon, you might want to open a First Home Savings Account (FHSA) before the end of the calendar year. Similar to RRSPs, FHSAs, which launched in April 2023 to help first-time homebuyers, are tax-deductible, meaning any money you contribute before December 31 will be subtracted from your taxable income for 2024. You can contribute up to $8,000 toward an FHSA every year (up to a lifetime limit of $40,000), and any unused contribution room in a given year can be carried forward to future years (maximum $16,000). For more information on eligibility, visit Fidelity’s FHSA page.

Consider capital gains and losses.

If you invest in a non-registered account, you’ll want to think about whether you want to realize any capital gains or losses before the end of the year. A capital gain is the amount you make from an investment between the time you buy and when you sell. A capital loss is the reverse. If you realize a capital gain, one-half of the gain is taxable (note there are new tax rules gains over $250,000 have a two-thirds inclusion rate). You can potentially reduce the taxable capital gain by triggering a capital loss and selling a money-losing investment. The investment merits of an investment should be prioritized but also consider the tax impact.

Try not to slip up.

Make your life easier by getting organized well ahead of tax time. Whenever you receive an important receipt or tax slip, be sure to put it somewhere you can easily access it, if needed. This includes slips you receive from employers (T4s), those you receive from financial institutions (such as the T5, T3 and T5008) and receipts for any charitable donations you’ve made (a full checklist can be found here). You’ll also want to hang on to any receipts you receive for a range of eligible expenses, including out-of-pocket medical expenses, moving expenses or home office expenses. If you’re not sure if something can be claimed on your taxes, file it away for later, just in case.

If you need help getting a better idea of how much money you might owe this year – and how you might be able to mitigate that amount – be sure to check out Fidelity’s tax calculator. (2024 Canada Income Tax Calculator | Fidelity Investments Canada)

Key deadlines

December 31, 2024 – This is the last day to contribute to your Registered Education Savings Plan (RESP), Tax-Free Savings Account (TFSA) or First Home Savings Account (FHSA).

December 31, 2024 – This is also the deadline to make a charitable donation that you want to claim on your 2024 taxes. If you plan to give money but don’t need the credit this year, it can be carried forward (and combined with subsequent donations) for five years.

March 3, 2025² – This is the last day to contribute to your 2024 Registered Retirement Savings Plan (RRSP). Note: if you turn 71 in 2024, your final contribution must be made by December 31, 2024, at which point you’ll need to convert your RRSP into a retirement income option, such as a Registered Retirement Income Fund (RRIF). 

April 30, 2025 – This is the deadline to file your tax return and make a payment if there is a balance owing.

June 16, 2025 – This is the deadline to file your tax return if you or your spouse or common-law partner are self-employed. Note: Any money owing must be paid earlier than this date – by April 20, 2025.