Weekend Reading – Year-End Tax Planning
Weekend Reading – Year-End Tax Planning
Hey Investors!
I hope you had a great week as the holidays approach – welcome to a new Weekend Reading edition on year-end tax planning and more…
Before that, some recent reads from my site!
Last weekend, this was my article and take on regulatory bodies going after Finfluencers. I welcome some guidelines on amateurs providing advice for sure but finfluencers offer value some professionals cannot. Same thinking applies with DIYers in other areas of life…personal finance is not special in that regard.
Weekend Reading – The Rise of Finfluencers
And I was pleased to interview Henry Mah, passionate 80-something DIY investor who owns a concentrated portfolio of just Canadian stocks (no U.S. stocks, no international assets, no ETFs, no bonds, etc.) Quite the lively set of comments and a reminder what can work for some may not work for others. Read on below!
Income Growth Investing and Cashflow for Life
Weekend Reading – Year-End Tax Planning
Jumping right in, here is a great article on year-end tax planning strategies for registered accounts in particular, to save more money – along with a few reminders:
- There is no attribution on the TFSA or the latest First Home Savings Account (FHSA) – so holiday-gift your money away if you have it to do so.
- If you continue to work into your early 70s, consider at least one final RRSP contribution … because RRSPs must be converted to RRIFs by the end of the year the RRSP annuitant turns 71.
- Tax loss selling can work but be mindful of superficial loss rules when contributing.
- Age 65 can be a good age to covert your RRSP assets to a RRIF — to benefit from the non-refundable pension tax credit.
- The FHSA is a great way for younger Canadians to help save and fund their first home – the account’s dollar limit is $8,000 per year, with a $40,000 lifetime contribution limit – to claim a deduction.
- Year-end is also important for these select milestones:
- Convert an RRSP to a RRIF if any investor turned 71 in the year
- Contribute to an RESP or RDSP to receive respective government grants
At Cashflows & Portfolios we collated a few top tax tips for aspiring and current retirees.
Inflation continues to run warm, so Ben Carlson reminded DIY investors that owning stocks in the best hedge for that. At the time of this post, we are about 90% equities and 10% cash/cash equivalents.
From Ben:
“I don’t know if that will repeat over the next 75 years but the stock market remains your best hedge against inflation in the long-run even if that’s not always the case in the short-run.”
Source: https://awealthofcommonsense.com/2025/12/the-best-hedge/
Some of these Globe and Mail Financial Facelift articles (subscription) are getting a bit extreme. From the profile: retirees Kurt and Eloise are self-directed investors living mainly on the returns from their substantial registered retirement savings plans (RRSPs). He is 69, and she is 64. “Their combined RRSP holdings surpass $4.8-million.” As per the article, they want to help their 40-year-old daughter, a single parent, buy a house. Amazing gifting, but they are concerned with taxes not their retirement income plan. They are wondering if they should take it all out of their RRSPs vs. using some TFSA or some small non-registered assets. If you have a subscription, quite the take but a few quick thoughts from me for those that do not subscribe:
- Amazing, phenomenal problem to have on the surface but seems to me they totally missed the boat on helping their daughter sooner (or themselves) when taxation could have been less.
- On taxes: the taxman is going to enjoy this windfall too. I read further in the article they have underutilized TFSAs which is too bad – they could have gifted that money to their daughter tax-free if they moved more RRSP/RRIF assets to their TFSAs every year. Here are great things you can do with your TFSA every year.
- Without aggressive drawdowns of RRSP/RRIF assets, now, their estate and related taxation will balloon. As of now, with so much invested, their combined income consists of Kurt’s Canada Pension Plan benefits and withdrawals from their RRSPs is about $240,000 a year or $20,000 per month (which is a bundle of course and most of that is highly taxed.) When you have this much money, life is for the living and spending and gifting when you reach those stratospheric levels – 99% of us will never get there.
Based on the fact that Henry Mah in his 80s mentioned the following in my interview, I suspect he has a few thoughts on RRSP/RRIF withdrawals and taxation too:
“We’ve managed to retire with more income than we need, having less capital, and our retirement income continues to grow. And as mentioned earlier we’ve sold over $1 million dollars of our stocks, gifting most of net proceeds to our kids, and grandkids.”
And on RRIFs as he has aged:
“We’ll be making the final withdrawal in early 2026. Then both of our RRIF accounts will be closed out. I mentioned earlier that even after selling capital, we recovered the lost income. In other words, even with less capital, because we’ve sold over $1 million of our RRIF holdings as mentioned above, our income grew to a higher level than before.”
Congrats to Henry and others with a large RRSP/RRIF balance. Amazing tax problem to have. We should all be so lucky to navigate.
Some deep personal thoughts I read from medalist Clara Hughes. Olympic speed skater Clara Hughes, after winning a gold medal:
“In my heart it is clear to me why I go to the line time and again. I can assure you it’s not a medal hanging around my neck I’m after. Medals are things I send to my mom in Winnipeg, which she in turn shares with friends and family. They are not what provide the deep sense of accomplishment, which fills my sense of self, in turn teaching me how to live.”
Have a great weekend and I’ll be back next week with some year in review kinda stuff. 🙂
Mark
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