The following summary outlines year-end tax planning considerations for home buyers and owners, families with students, family members with disabilities, and individuals making gifts. As the December 31 year-end approaches, reviewing personal financial circumstances can help ensure that available tax planning opportunities are utilized effectively.
First Home Savings Account (FHSA)
The First Home Savings Account (FHSA) allows Canadian residents aged 18 or older who qualify as first-time home buyers to save toward the purchase of a home on a tax-free basis.
Starting in the year an FHSA is opened, individuals may contribute or transfer up to $8,000 per year (plus any unused carryforward from the previous year, to a maximum of $16,000 in a single year) and up to $40,000 over a lifetime. For example, if an FHSA was opened in 2024 but no contributions were made, up to $16,000 can be contributed in 2025. Contributions are tax-deductible in the year made or can be carried forward for future deduction. Unlike RRSPs, contributions made within the first 60 days of 2026 cannot be deducted for the 2025 tax year.
Withdrawals made to purchase a qualifying home—including withdrawals of any investment growth within the account—are non-taxable, similar to a TFSA. In addition, up to $60,000 may be withdrawn from an RRSP under the Home Buyers’ Plan (HBP) for the same home purchase.
If FHSA funds are not used to buy a home, they can be transferred to an RRSP or RRIF on a tax-free basis at any time before the earlier of 15 years after opening the FHSA or age 71. Such transfers do not affect RRSP contribution room or FHSA limits, and the funds are only taxed upon withdrawal from the RRSP or RRIF.
Home Accessibility Renovations
The Home Accessibility Tax Credit (HATC) provides a non-refundable credit to assist seniors and individuals eligible for the Disability Tax Credit with certain home renovations.
The credit equals 15% of qualifying renovation expenses incurred to improve accessibility, mobility, or safety within the home, up to a maximum of $20,000 in eligible expenses (a potential credit of $3,000). Payments for work performed or goods acquired by December 31, 2025 qualify.
A single expense may be eligible for both the HATC and the Medical Expense Tax Credit (METC), and both credits can be claimed where applicable.
Multigenerational Home Renovation Tax Credit (MHRTC)
The Multigenerational Home Renovation Tax Credit (MHRTC) provides financial support to homeowners aged 65 or older, or those aged 18 or older who qualify for the Disability Tax Credit, when creating a secondary unit for a qualifying relative.
The MHRTC is a refundable tax credit equal to 15% of eligible expenses, up to a maximum of $50,000, for a total potential credit of $7,500. Qualifying relatives include parents, grandparents, children, grandchildren, siblings, aunts, uncles, nieces, or nephews of the homeowner or their spouse or common-law partner.
Eligible renovations must result in a self-contained housing unit with a private entrance, kitchen, bathroom, and sleeping area. Expenses must be claimed in the year the renovations are completed and can include materials, labour, permits, and equipment rentals. However, expenses claimed under the METC or HATC cannot also be claimed for the MHRTC.
Before undertaking renovations, individuals are advised to consult a tax professional, as claiming the MHRTC may affect eligibility for the principal residence exemption on future disposition of the property.
Registered Education Savings Plan (RESP) Contributions
Registered Education Savings Plans (RESPs) enable tax-deferred savings for post-secondary education. The federal government provides the Canada Education Savings Grant (CESG) equal to 20% of the first $2,500 in annual contributions per child (maximum $500 per year). Unused CESG room can be carried forward to the year the beneficiary turns 17.
Each beneficiary with unused CESG room can receive up to $1,000 in CESGs annually, to a lifetime maximum of $7,200. To receive the full amount, annual contributions of $5,000 (double the standard annual limit) for approximately seven years are required. If fewer than seven years remain before the beneficiary turns 17, a contribution by December 31, 2025, may help maximize available CESG entitlements.
In addition, where a child turned 15 in 2025 and has never been an RESP beneficiary, no future CESG can be received unless at least $2,000 has been contributed to an RESP by the end of the year. A contribution by December 31, 2025, can secure eligibility for CESGs in 2026 and 2027.
RESP Withdrawals for Students
If an RESP beneficiary attended a post-secondary institution in 2025, Educational Assistance Payments (EAPs) may be made before year-end. The EAP amount is taxable to the student; however, in most cases, sufficient personal credits eliminate the tax liability.
During the first 13 weeks of study, EAP withdrawals are limited to $8,000 for full-time students and $4,000 for part-time students. EAPs can continue to be paid up to six months after a student ceases full-time attendance, so it may be advantageous to complete any final EAP withdrawals within that window.
Registered Disability Savings Plan (RDSP) Contributions
Registered Disability Savings Plans (RDSPs) are tax-deferred savings vehicles available to Canadian residents who qualify for the Disability Tax Credit. Contributions may be made until the end of the year in which the beneficiary turns 59, to a lifetime maximum of $200,000, with no annual limit.
While contributions are not deductible, earnings grow on a tax-deferred basis. Government assistance may also be available through the Canada Disability Savings Grant (CDSG)—up to $3,500 per year—and the Canada Disability Savings Bond (CDSB)—up to $1,000 per year—depending on family income. Grant and bond entitlements can be carried forward for up to 10 years, and contributions made by December 31, 2025, may attract current-year government assistance.
For beneficiaries with a shortened life expectancy, withdrawals of up to $10,000 annually can be made without repayment of government contributions, provided a special election is filed with the Canada Revenue Agency (CRA) by December 31, 2025.
Family Medical Expenses
A non-refundable federal medical expense tax credit is available when eligible expenses exceed the lesser of 3% of net income or $2,834 for 2025. Corresponding provincial or territorial credits may also apply.
The credit can be claimed for medical expenses paid in any 12-month period ending within the calendar year (or within 24 months in the year of death). Reviewing unclaimed medical expenses from prior periods may enhance total claims for 2025.
This article is meant to provide only high-level insights as an individual Canadian taxpayer approaches the end of the calendar year and does not constitute, nor is a substitute for, professional tax advice. Please contact our office so that we may optimize your year-end tax position while considering all elements of your individual financial plan.