Are you prepared to get the most out of your 2025 tax return? See how you may use tax credits and deductions to increase your refund this tax season by reading our list of helpful hints. Even if you have a spouse, you still have to file your taxes yearly as a Canadian. There are strategies to optimize your married tax status, such as dividing your income and sharing deductions. Since they are probably in a higher tax rate, the spouse with the larger tax bill and income should often maximize deductions first. To protect—and preserve—more of your hard-earned money, we sought the opinion of our tax professionals. These ten tax-saving techniques will help you pay less in taxes.
1. Get the Most Out of Your RRSP Contributions
The maximum amount you can contribute to your RRSP is 18% of your earnings from the previous tax year, plus any unused funds from prior years. To determine your RRSP contribution limit, view your most recent notice of assessment or sign into your CRA My Account. Making the most of your RRSP contribution is a smart choice. You can even increase your RRSP contribution by transferring tax-free TFSA interest gains.
In addition to providing tax benefits and tax-sheltered growth, payments to an RRSP are tax deductible. After you take money out of your RRSP, you will have to pay taxes, but most individuals do this after they are retired and in a lower tax bracket. This sum can be used to determine your RRSP contribution room if you get a salary from your company. A Tax-Free Savings Account gives you greater flexibility by allowing you to grow your money tax-free and take it out whenever you choose without incurring penalties.
2. Remember to Deduct Losses
Even if you want your firm to be profitable, things like theft, capital losses, and non-paying clients happen. The good news is that you can utilize that loss to reduce your total taxable income, according to the CRA. You can deduct half of the entire loss from your income if you have a qualified business investment loss for your reporting tax year.
To learn how tax deductions relate to your circumstances, consult with a reputable tax accountant. If the loss exceeds your entire income, the remaining amount can be carried forward for up to 20 years or back to a prior year (opens in a new tab) for a maximum of three years.
3. Create a RESP or Registered Education Savings Plan
With a Registered Education Savings Plan (RESP), parents in Canada can set aside money for their kids’ post-secondary education. Because you can receive interest on your contributions tax-free, a RESP is highly helpful for tax purposes. Although there is no yearly limit contribution, you only need to contribute $2,500 to receive full advantages because the Canada Education Savings Grant (CESG) matches 20% of your RESP contributions up to a $500 annual maximum.
For instance, the government will offer you $100 in grant money if you donate $500 in a single year. You will receive the whole $500 if you deposit $2,500. Remember that each child’s lifetime CESB maximum is $7,200. Until funds are taken out of the RESP to cover your child’s tuition, the funds will not be subject to taxes. However, you will pay nearly nothing in taxes because your child will likely be at a lower tax rate. Each recipient may contribute a maximum of $50,000 to the RESP.
4. Interest on Student Loans
Interest paid on student loans obtained under the Apprentice Loans Act, Canada Student Financial Assistance Act, Canada Student Loans Act, or comparable legislation in your province or territory may be written off if you or your child is enrolled in post-secondary education. A personal loan or credit line is not eligible for this deduction. If you owe taxes, take advantage of this deduction. If not, it is preferable to continue. For the following five years, interest can be carried forward and used on any tax return.
5. Workers’ Benefits in Canada
When you submit your taxes, you are eligible for the Canada Workers Benefit (CWB) if you are a low-income employee. For single people, the refundable tax credit offers up to $1,428; for families, it offers up to $2,461. If you have an accepted Disability Tax Credit Certificate (Form T2201) on record with the CRA, it also includes a disability supplement. You can get half of your reward in four installments if you are eligible to request an advance payment.
6. Give More Donations
You can lower your taxes by giving a charitable contribution if you support a certain organization or cause. You can receive up to 33% of the donation amount in non-refundable tax credits as long as you’re giving to a registered charity. In addition to the federal credit, you may qualify for further credits based on your province of residency.
Donations can be held forward for up to five years, and you may claim up to 75% of your net income in donations annually. Additionally, you can give investments to a registered charity, including stocks and bonds. In addition to producing a tax credit, this may also remove the capital gains tax on securities that qualify. One excellent strategy to lower taxes and help a cause you care about is to make a charitable donation. This is a win-win scenario!
7. Utilize the Credit for First-Time Homebuyers
A non-refundable tax credit known as the First-Time Home Buyers Tax Credit (HBTC) assists individuals and families in defraying a portion of the expenses associated with purchasing their first residence. When they acquire a qualifying house, qualified homebuyers can claim a tax deduction of up to $10,000. When you file your tax return, you can collect the rebate without having to ask for it or have it authorized. To be eligible, you need to fulfill certain requirements, like:
- Purchase a qualified residence that is registered in your name, your spouse’s name, or the name of your common-law partner.
- Single-family homes, townhomes, semi-detached homes, apartments and condos, and mobile homes are all considered qualifying residences.
- Be a first-time homeowner, which means that during the preceding four years, you did not live in a home that you, your spouse, or your common-law partner owned.
- Within a year of the qualified home’s purchase or construction, it must become your primary residence.
If you qualify, it’s well worth making use of the HBTC, which can result in a $1,500 refund on your taxes.
9. Deduct Capital Losses
Any capital gains you made during the year will be subject to taxation at an inclusion rate equal to half of your gains. Generally speaking, capital gains occur when you sell or transfer property. Consequently, the presumed revenues surpass the property’s adjusted cost basis. For instance, you would make $50 if you bought a financial asset for $100 and sold it for $150. Just half of this gain, or $25, will be subject to capital gains tax.
On the other hand, if you sell assets for less than the adjusted cost base, you incur capital losses. You also account for any selling expenses at this stage. In the same way, your permissible capital loss would be equivalent to half of your loss if you had suffered a capital loss when selling your capital asset. You can utilize your capital loss in a given year to offset your capital gains in the same year.
10. Submit Your Taxes
When you file your income taxes and benefits early, you usually don’t receive any tax credits or deductions. On the other hand, you save more money and avoid incurring any costs or penalties when you file by the deadline. Additionally, your processing time may be shortened if you submit your tax return early. In this manner, whether you file your return on paper or electronically, you will get your tax refund sooner.
Do taxes the right way with ClearWealth
To make sure you’re optimizing your savings every year, it’s critical to comprehend how taxes operate and how to apply for tax credits, deductions, and other methods to lower your tax liability. Check out ClearWealth Accounting Advisory for additional financial optimization methods and advice.
