December is a whirlwind — holidays, deadlines and a to-do list that never ends. But it’s also the perfect time to tackle year-end tax planning and set yourself up for savings this tax season. A little prep now can help you maximize deductions, manage cash flow and make strategic financial decisions that could save you money down the road.
Here’s how you can make the most of these last few weeks of the year.
1. Organize your financial records
Start by making sure your financials are accurate and up-to-date. Gather receipts, invoices and expense records, and get them in order. Good organization is key to making informed decisions and avoiding surprises come tax season.
2. Defer a loan payment
This might sound counterintuitive, but deferring a loan payment could give you some breathing room during the holidays. Car payments and mortgages will be big ones; just ask your lender what they can do for you.
Many lenders allow a one-month pause on principal payments, often called programs like TD Bank's “Payment Pause” or RBC's “Skip-A-Payment.” The missed interest is added to your loan principal, so weigh the pros and cons.
3. Maximize medical expense deductions
If your medical expenses for the year exceed $2,759 (or 3% of your income, whichever is less), you can claim the difference as a deduction. Now’s the time to stock up:
- Refill prescriptions
- Get new glasses
- Visit your chiropractor, dentist or physiotherapist
- Purchase eligible health products, including medical cannabis
Remember to keep all receipts and documentation handy — they’re critical at tax time. Here's a list of 17 critical documents to keep safe for tax time.)
4. Use your health spending account (HSA)
Got unused funds in your HSA? Most expire on December 31, so make those appointments and purchases now. From massages to new orthotics, use it before you lose it!
5. Review your investments
Consider selling investments before year-end to optimize your tax position. For instance:
- If you’ve had significant capital gains this year, selling underperforming investments at a loss can offset those gains.
- If your investments are in a corporation, selling shares to crystalize gains could allow you to add half the gain to your Capital Dividend Account and pay yourself a tax-free dividend.
This area can be complex, so it's a good idea to consult a tax professional for expert guidance.
6. Make charitable donations
Giving back feels good — and it’s tax-smart too!
- Donations over $200 earn a 29% tax credit federally (donations under $200 earn 15% back).
- You can save smaller donation receipts for up to five years to maximize your rebate.
Not sure where to start? Check out our blog post on Donating Responsibly for tips.
7. Optimize bonuses and dividends
If you’re a small business owner, you have flexibility in how you compensate yourself or your staff. Paying a bonus or dividend before year-end can sometimes save you money, depending on your income this year versus next year.
If you’re cutting a cheque to a family member, be mindful of the Tax on Split Income (TOSI) rules. For a more detailed discussion on this topic, please refer to our blog on Income Sprinkling.
8. Make year-end purchases
For businesses with a December 31 year-end, now’s the time to maximize your write-offs. Think about equipment, technology or other big purchases that could qualify as deductions this year.
9. Plan for the new year
The end of the year is also the perfect time to think ahead. Set financial goals, create a budget and strategize for your business’s growth in the coming year.
10. Consult a tax professional
Year-end tax planning can feel overwhelming, but you don’t have to do it alone. Our team of CPAs is here to help small business owners like you navigate changing tax laws and maximize your savings. Whether it’s bookkeeping, GST filing, or strategic tax services, we’re ready to help.
📍 Serving Okotoks, Calgary, and beyond — contact us today to get started.
Want more tips? Explore our blogs on Corporate Tax and Personal Tax topics for more helpful advice tailored to small business owners.
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