How to Catch Up on Your RRSP Contributions

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How to Catch Up on Your RRSP Contributions

If you have ever felt behind on your RRSP, you are not alone. Life gets in the way, rent, a mortgage, kids, a period of lower income, and RRSP contributions get pushed to the back of the list.

Here is the good news: unused RRSP contribution room does not disappear. It accumulates year over year, and many Canadians are sitting on far more room than they realize. Catching up on those contributions is one of the most straightforward ways to reduce your tax bill.

Here is how it works.

What Is RRSP Contribution Room?

Each year, the Canada Revenue Agency (CRA) calculates how much you are allowed to contribute to your RRSP. The formula is 18% of your prior year’s earned income, up to an annual maximum set by the government, which is updated periodically and published by the CRA each year.

If you do not contribute the full amount in a given year, the unused room carries forward to the following year. And the year after that. And so on.

This carry-forward provision is what makes catch-up contributions possible. Someone who has been contributing inconsistently over the past decade may have accumulated tens of thousands of dollars in available room.

How to Find Your Contribution Room

The most reliable way to see your available RRSP room is through your CRA My Account, the federal government’s online portal. Once logged in, look for your Notice of Assessment (NOA) from last year’s tax return. Your RRSP deduction limit for the current year is listed there explicitly.

If you have not set up a CRA My Account, the same information appears on the paper NOA mailed to you after your return is processed. You can also call the CRA directly to confirm your available room.

Your available room is the combined total of any room you did not use in prior years, plus the new room added based on last year’s income.

The Tax Benefit of Catching Up

RRSP contributions reduce your taxable income dollar for dollar. If you are in a 40% combined federal and provincial marginal tax bracket and contribute $10,000 to your RRSP, you reduce your taxable income by $10,000, which means approximately $4,000 less in taxes owed.

That is the core value of catching up. Every dollar of unused room you do not use is a tax deduction sitting on the table.

The benefit compounds over time as well. Money contributed to your RRSP grows tax-sheltered until withdrawn. The earlier it is contributed, the longer it has to grow without being taxed each year.

The RRSP Catch-Up Loan Strategy

One approach many Canadians use is an RRSP catch-up loan, a short-term personal loan taken specifically to make a large RRSP contribution all at once.

Here is the idea: you borrow a lump sum, deposit it into your RRSP before the deadline, and use the tax refund you receive to pay down a significant portion of the loan. If your refund covers half the loan, for example, you are left with only half the balance to pay off over the following months.

This strategy works best when:

  • You have a meaningful amount of carry-forward room built up

  • You are in a higher tax bracket, which produces a larger refund

  • You can realistically pay off the loan within 12 months

The interest on an RRSP loan is not tax-deductible, so the goal is to repay it quickly. Holding the loan for an extended period reduces the overall benefit of the strategy.

Many Canadian banks and credit unions offer RRSP loans specifically for this purpose, often at competitive rates and with repayment terms designed around the expected tax refund timeline.

Timing: The RRSP Deadline

RRSP contributions for a given tax year must be made by 60 days after December 31, which works out to March 1 in most years, or March 2 when the following year is a leap year. Contributions made in January or February of the new year can be applied to either the previous tax year or the current one, giving you some flexibility.

Many Canadians wait until close to the deadline to contribute. While this is common, making contributions earlier in the year, or throughout the year, means the money spends more time growing inside the plan.

Over-Contributing: What to Watch

There is one important guard rail: RRSP over-contributions above a $2,000 lifetime buffer are penalized at 1% per month on the excess amount. This rarely happens accidentally, but it is worth confirming your available room before making a large lump-sum deposit.

Your confirmed room from your most recent NOA, minus any contributions already made in the current year, gives you your remaining available room.

When an RRSP Makes the Most Sense

The RRSP is most valuable when you are in a higher tax bracket now than you expect to be in retirement. Contributing while earning at a high rate and withdrawing at a lower rate in retirement produces the greatest tax advantage.

If you are in a lower bracket now, it can sometimes make more sense to contribute to a TFSA first and save your RRSP room for higher-earning years. Both accounts have their place, and many Canadians use both, the RRSP for the tax deduction today, the TFSA for tax-free access later.

Putting It Together

If you have years of unused RRSP room, that room represents real tax savings that are still within reach. Catching up does not require a windfall. It can be done gradually, contributing more each year than required, or all at once using a short-term loan.


Check your CRA My Account for your current room, run the numbers on what a contribution would mean for your tax return this year, and decide whether catching up makes sense for your situation. The deadline comes every early March, and with every year that passes, the carry-forward room keeps growing.

This content is provided for general informational purposes only. It is not intended to provide investment, tax, or legal advice, and should not be relied upon as such.

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2025 Federal Budget Highlights

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2025 Federal Budget Highlights

On November 4, 2025, the budget was delivered by the Honourable François-Philippe Champagne, Minister of Finance and National Revenue.

The 2025 Federal Budget focuses on stability, simplicity, and long-term growth. There are no broad tax increases or major new spending programs. Instead, the government is emphasizing restraint, modernization, and productivity.

For individuals and business owners, the goal is clear: help Canadians access benefits more easily, encourage investment in innovation and clean energy, and update trust and estate rules to maintain fairness across the system.

Economic Overview

Canada’s federal deficit is projected at $78.3 billion for 2025–26. The government aims to stabilize the debt-to-GDP ratio while maintaining funding for priorities such as housing, defence, and clean energy.

Spending will focus on programs that improve productivity, while efficiency reviews across departments are expected to reduce overlap and administrative costs. This marks a shift toward sustainable fiscal management and practical, targeted investments.

Personal and Family Tax Measures

Several measures are designed to make life more affordable, particularly for first-time home buyers, caregivers, and lower-income households.

Eliminating the GST for First-Time Home Buyers

First-time home buyers will not pay the 5 percent federal GST on new homes priced up to $1 million. For new homes between $1 million and $1.5 million, a partial GST reduction applies. This change provides meaningful savings and makes new construction more accessible for Canadians entering the housing market.

Home Accessibility Tax Credit

Starting in 2026, expenses can no longer be claimed under both the Home Accessibility Tax Credit and the Medical Expense Tax Credit. The rule prevents duplicate claims but continues to support renovations that make homes safer and more accessible for seniors or individuals with disabilities.

Top-Up Tax Credit

To balance the reduction in the lowest federal tax bracket—from 15 percent to 14.5 percent in 2025, and 14 percent in 2026—the government introduced a Top-Up Tax Credit to preserve the value of non-refundable credits such as tuition, medical, and charitable amounts. This temporary measure, available from 2025 through 2030, ensures Canadians receive the same credit value even as rates decrease.

Personal Support Workers (PSW) Tax Credit

A new refundable tax credit equal to 5 percent of eligible income, up to $1,100 per year, will be available for certified personal support workers beginning in 2026. The measure acknowledges the importance of care professionals and provides direct relief to those in long-term and community-care roles.

Automatic Federal Benefits

Starting in 2025, the Canada Revenue Agency will begin automatically filing simple tax returns for eligible Canadians who do not normally file. This will allow low-income earners and seniors to receive benefits such as the Canada Workers Benefit, GST/HST Credit, and Canada Carbon Rebate automatically. Those with more complex financial situations will continue to file regular returns.

Registered Plans, Trusts, and Estate Planning

The budget introduces several changes affecting trusts and registered plans—key tools in long-term financial and estate planning.

Bare Trust Reporting Rules

Implementation of new bare trust reporting requirements has been delayed. The rules will now apply to taxation years ending December 31, 2026, or later. This postponement gives individuals, trustees, and professionals more time to prepare for the new filing obligations.

The 21-Year Rule for Trusts

Trusts—particularly most personal or family trusts—are generally considered to have sold and repurchased their capital property every 21 years (a “deemed disposition”). This rule prevents indefinite deferral of capital-gains tax on assets that grow in value.

When property is moved on a tax-deferred basis from one trust to another, the receiving trust normally inherits the original 21-year anniversary date so that tax timing does not reset.

Some estate-planning arrangements have transferred trust property indirectly—for example, through a corporation or a beneficiary connected to a second trust—so that the transfer did not appear to be trust-to-trust. These arrangements effectively extended the period before capital gains would be recognized.

Budget 2025 broadens the anti-avoidance rule to include indirect transfers. Any transfer of property made on or after November 4, 2025, that effectively moves assets from one trust to another will retain the original 21-year schedule.

For families that use trusts in estate or business-succession planning, this change reinforces the importance of reviewing structure and timing. Trusts remain valuable for asset protection, legacy planning, and income distribution—this update simply ensures consistent application of the 21-year rule.

Qualified Investments for Registered Plans

Beginning January 1, 2027, all registered plans—RRSPs, TFSAs, FHSAs, RDSPs, and RESPs—will follow a single harmonized list of qualified investments. Small-business shares will no longer qualify for new contributions, though existing holdings will remain grandfathered. The update simplifies compliance and clarifies which assets can be held in registered accounts.

Business and Investment Incentives

For business owners, Budget 2025 provides opportunities to reinvest, innovate, and modernize operations, with emphasis on manufacturing, research, and clean technology.

Immediate Expensing for Manufacturing and Processing Buildings

Businesses can now claim a 100 percent deduction for eligible manufacturing and processing buildings acquired after Budget Day and available for use before 2030. This full write-off improves cash flow and encourages earlier expansion. The benefit will gradually phase out after 2033.

Scientific Research and Experimental Development (SR&ED)

The refundable SR&ED tax credit limit has increased from $3 million to $6 million per year, effective for taxation years beginning after December 16, 2024. This expansion strengthens support for small and medium-sized Canadian businesses investing in innovation and technology.

Tax Deferral Through Tiered Corporate Structures

To prevent deferrals of tax on investment income, new rules will suspend dividend refunds for affiliated corporations with mismatched fiscal year-ends. This ensures consistent taxation within corporate groups and aligns refund timing with income recognition.

Agricultural Co-operatives

The tax deferral for patronage dividends paid in shares has been extended to December 31, 2030, continuing to support agricultural co-operatives and their members.

Clean Technology and Clean Electricity Investment Credits

Clean-technology and clean-electricity incentives have been expanded to include additional critical minerals—such as antimony, gallium, germanium, indium, and scandium—used in advanced manufacturing and renewable energy production. The Canada Growth Fund can now invest in qualifying projects without reducing the amount of credit companies can claim, keeping the incentive structure attractive for green investment.

Canadian Entrepreneurs’ Incentive

The government has confirmed it will not proceed with the previously proposed Canadian Entrepreneurs’ Incentive. The existing Lifetime Capital Gains Exemption remains unchanged and continues to apply to the sale of qualified small-business shares.

Tax Simplification and Repealed Measures

To simplify administration and reduce complexity, two taxes are being repealed:

– Underused Housing Tax, beginning in 2025

– Luxury Tax on aircraft and vessels for purchases made after November 4, 2025

In addition, the Canada Carbon Rebate will issue its final household payment in April 2025, with no rebates available for returns filed after October 30, 2026. These changes are meant to streamline compliance and eliminate programs that were costly to administer.

Government Direction and Spending Priorities

Beyond taxation, the budget sets out the government’s broader policy priorities.

Downsizing Government: A comprehensive efficiency review is underway to eliminate duplication across departments and generate long-term savings.

Cuts to Immigration: To ease pressure on housing and infrastructure, temporary-resident levels will be reduced by about 20 percent over two years, while maintaining pathways for essential workers.

Defence Spending: Canada will invest an additional $7 billion over five years to strengthen NATO participation, Arctic defence, and cybersecurity. By 2030, defence spending is expected to reach 1.8 percent of GDP.

Oil and Gas Emission Cap: A phased-in cap starting in 2026 will allow companies to meet targets through carbon-capture and clean-tech investments rather than penalties.

Final Thoughts

For individuals, the most relevant updates include GST relief for first-time home buyers, improved benefit access, and continued tax relief for caregivers and support workers. For business owners, the focus remains on productivity—through immediate expensing, expanded SR&ED credits, and clean-tech investment incentives. For families using trusts or inter-generational structures, the clarified 21-year rule reinforces transparency in estate planning.

If you’d like to review what these changes mean for you or your business, please get in touch. We can look at your goals and make sure you’re well prepared for the year ahead.

What You Need to Know About RRIFs

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What You Need to Know About RRIFs: Turning Your RRSP Into Retirement Income

As retirement approaches, many Canadians start wondering: what happens to all the savings they’ve been building in their RRSP? The good news is, your RRSP doesn’t just stop working for you when you turn 71. Instead, it can be converted into a Registered Retirement Income Fund (RRIF)—a flexible way to draw steady income while keeping your investments working.

What is an RRIF, and how is it different from an RRSP?

An RRIF is essentially the next stage of your RRSP. While an RRSP is designed for growing your retirement savings, an RRIF is designed for drawing income from them. You’re required to convert your RRSP into an RRIF (or an annuity) by the end of the year you turn 71, though you can convert earlier if it suits your needs.

Unlike an RRSP, you can’t contribute new money to an RRIF, and you’re required to withdraw at least a minimum amount each year. The investments inside your RRIF—like GICs, stocks, bonds, mutual funds—can continue to grow tax-deferred, but your withdrawals are taxable as income.

How do you transfer funds into an RRIF and what can you hold in it?

Converting your RRSP to an RRIF is straightforward. You open an RRIF account at your financial institution and transfer all or part of your RRSP into it. There are no taxes payable on this transfer itself.

Your RRIF can hold the same types of investments you had in your RRSP. That means you can continue to hold stocks, bonds, GICs, mutual funds, ETFs, and even cash. Many people simply carry their RRSP portfolio over to the RRIF unchanged, but it’s also an opportunity to adjust your investments to align with your income needs and risk comfort level.

Do you have to convert all your RRSPs at once?

If you have more than one RRSP account, you don’t have to convert all of them into an RRIF at the same time. You can convert just one account, a portion of your savings, or all of them—whatever works best for your situation.

Some people convert one RRSP early to supplement income while leaving the rest to grow. Others choose to convert all their accounts into one or more RRIFs for simplicity. Just keep in mind that by December 31 of the year you turn 71, all RRSP funds must be converted—whether into RRIFs, annuities, or withdrawn as cash.

You can also have more than one RRIF if you prefer to keep different investments or strategies separate. Each RRIF has its own minimum withdrawal based on its balance at the start of each year.

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When should you convert your RRSP?

You must convert your RRSP into an RRIF no later than December 31 of the year you turn 71, but you don’t have to wait until then. Some Canadians choose to convert earlier, especially if they retire before age 71 and want to start drawing from their savings. Others may convert a portion of their RRSP to an RRIF early to smooth out taxable income over several years or to supplement other income sources.

Can you convert before age 71?

Yes. You can convert your RRSP to an RRIF at any age, as long as you’re ready to begin taking taxable withdrawals. For example, someone retiring at age 60 may decide to convert part of their RRSP to an RRIF and leave the rest in the RRSP to continue growing.

Converting your RRSP to a RRIF at retirement

By the end of the year you turn 71, you can no longer contribute to an RRSP — and you must convert it into an income stream. The most common way to do this is by transferring it into a Registered Retirement Income Fund (RRIF).

A RRIF keeps your investments tax-sheltered, but you’re required to withdraw a minimum amount each year, which is taxable. The minimum starts small and increases as you age.

Alternatively, you can purchase an annuity to guarantee income for life, but a RRIF gives you more flexibility to manage your investments and withdrawals.

Understanding RRIF Minimum Withdrawals

One of the key rules with an RRIF is that you must withdraw at least a minimum amount each year, starting the year after you open the account. This minimum is calculated as a percentage of the total value of your RRIF on January 1 each year, and the percentage increases as you age.

For example, if you are 71, the minimum is about 5.28% of your RRIF balance. At 80, it’s about 6.82%, and it continues to rise each year. You can always withdraw more than the minimum if you need to, but you cannot withdraw less.

If you’d like to lower your required withdrawals, you can choose to have the minimum based on your younger spouse’s age when you set up the RRIF. This option is helpful if you want to keep more money invested and reduce taxable income in the early years.

It’s important to plan these withdrawals carefully, especially if you don’t need all the income right away. Any funds you withdraw that you don’t spend can be invested in a TFSA or a non-registered account, depending on your available contribution room and tax strategy.

What if you don’t need the money immediately?

Even if you don’t need the income right now, you still have to withdraw at least the minimum each year. There’s no option to skip withdrawals altogether, but you can reinvest the money in a non-registered account or a TFSA if you have contribution room, allowing it to continue growing tax-efficiently.

How are RRIF withdrawals taxed?

Withdrawals from an RRIF are considered taxable income in the year you take them. Your financial institution will issue a T4RIF slip, which shows the taxable amount (Box 16) and any tax withheld. You report the taxable amount on line 13000 of your personal tax return under “Other income.” Any tax already withheld is credited when you file.

It’s a good idea to plan your RRIF withdrawals alongside other income sources (like CPP or OAS) to help manage your overall tax bill and avoid moving into a higher tax bracket.

What happens at death? Choosing a beneficiary and successor annuitant

When you open an RRIF, you can name a beneficiary or a successor annuitant. If you name your spouse as a successor annuitant, they can take over the RRIF without tax consequences, continuing to receive income from it. If you name your spouse or a financially dependent child as a beneficiary, the RRIF can be transferred to them with reduced tax consequences. If no beneficiary is named, the full value of the RRIF is included as income on your final tax return.

Naming the right person and understanding the tax implications is an important step in ensuring your retirement savings benefit your loved ones as you intended.

Your RRIF is more than just a requirement after age 71—it’s a flexible and valuable way to turn your hard-earned savings into a sustainable income stream. Planning how and when to convert your RRSP, understanding your minimum withdrawal requirements, and choosing a beneficiary thoughtfully can help you get the most out of your retirement savings.

If you’d like help reviewing your options, reach out—we’d be happy to guide you through the process.

Disclaimer: This article is for informational purposes only and does not constitute financial, legal, or tax advice. Always consult a qualified professional regarding your specific situation. We are not responsible for any actions taken based on this content.

Sources:

Government of Canada. Registered Retirement Income Fund: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/completing-slips-summaries/t4rsp-t4rif-information-returns/payments/chart-prescribed-factors.html

Tax Tips. Registered Retirement Income Fund: https://www.taxtips.ca/rrsp/rrif-minimum-withdrawal-factors.htm

OAS Clawback 2025: What Retirees Need to Know About the Recovery Tax

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OAS Clawback 2025

If you’ve worked hard to build your retirement income, the last thing you want is to see your government benefits clawed back. Yet for many Canadians, the Old Age Security (OAS) recovery tax—commonly called the OAS clawback—can quietly reduce this valuable benefit.

Here’s how the recovery tax works in 2025, what happens if you delay OAS to age 70, and the strategies we use to help our clients minimize or avoid the clawback.

What is the OAS Recovery Tax?

OAS is a monthly benefit available to most Canadians aged 65 and older. However, once your income exceeds a certain level, the government recovers part or all of your OAS through the recovery tax.

This is calculated based on Line 23400 of your tax return—net income before adjustments. In 2025, the clawback begins when your income exceeds $93,454. For every dollar above that amount, you must repay 15 cents of your OAS.

If your income reaches approximately $151,668 (age 65–74) or $157,490 (age 75+), you could lose your entire OAS benefit for the year.

How Much is the OAS Benefit in 2025?

From July through September 2025, the maximum monthly OAS payment is:

  • $734.95 for individuals aged 65–74 (about $8,820 annually)
  • $808.45 for individuals aged 75+ (reflecting a 10% enhancement introduced in 2022)

These amounts are indexed quarterly to inflation and are subject to clawback if your Line 23400 income exceeds the threshold.

What Happens if You Delay OAS Until 70?

You can choose to delay receiving OAS up to age 70, increasing your monthly benefit by 0.6% for each month deferred—a total boost of up to 36% if you wait the full five years.

While a higher payment may sound appealing, it can also lead to larger OAS repayments if your income—including CPP, investment returns, or pension income—exceeds the recovery threshold. Delaying OAS often makes sense for healthy individuals who expect to live into their late 80s or beyond and have lower taxable income during the deferral period.

How the OAS Recovery Tax Works

Example: Alan is 68 and receives the maximum OAS: $8,820 annually. In 2025, the clawback threshold begins at $93,454. Alan’s line 23400 income is $100,000—that’s $6,546 over the clawback threshold. As a result, he must repay: $6,546 × 15% = $981.90

This leaves Alan with $7,838.10 in OAS benefits for the year. If he earns more, the repayment increases proportionally. Once Alan’s income reaches around $151,668 (if aged 65–74) or $157,490 (if aged 75+), his entire OAS would be clawed back.

The recovery tax calculation is automatic and appears on your Notice of Assessment each spring, adjusting your OAS payments for the following July–June period.

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Strategies to Reduce or Avoid the OAS Clawback

The good news? There are practical ways to lower your Line 23400 income without compromising your lifestyle. Here are some of the strategies we use to help our clients keep more of their benefits:

Use a TFSA for Retirement Income

Withdrawals from a Tax-Free Savings Account (TFSA) don’t count toward Line 23400. Drawing income from a TFSA instead of taxable accounts can help preserve your OAS and reduce your tax burden.

Manage RRIF Withdrawals

RRIF withdrawals are fully taxable and included in Line 23400. If you don’t need the full minimum withdrawal, we may recommend delaying full RRSP-to-RRIF conversion or converting just part each year starting at age 65. This can help smooth your income and avoid large spikes.

Delay OAS or Split Withdrawals Over Time

If you’re planning to delay OAS, we’ll help ensure you’re not unintentionally stacking income in the deferral years. Likewise, we can help you spread RRSP-to-RRIF conversions over several years to avoid unnecessary spikes in income.

Pension Income Splitting

If you’re married or in a common-law relationship, you can split up to 50% of eligible pension income with your spouse. This reduces your taxable income and can keep you below the clawback threshold—especially effective when one spouse earns significantly less.

Choose Tax-Efficient Investments

Not all investment income is taxed equally:

  • Capital gains: 50% taxable; more clawback-friendly
  • Eligible dividends: grossed up for Line 23400 purposes, potentially triggering more clawback despite the tax credit
  • Interest income: fully taxable and the least efficient for minimizing clawback

We can help structure your investments to be as clawback-friendly as possible.

Donate Securities Instead of Cash

Donating appreciated publicly traded securities directly to a registered charity eliminates the capital gains tax, reduces net income, and supports a cause—all while lowering recovery tax exposure.

Defer Large Income Events

Selling a property, realizing a large capital gain, or cashing a pension lump sum can push you into full clawback territory. If possible, we can help you plan these events to spread them over several years or delay them to a lower-income year.

Consider Leveraged Investing

Some higher-net-worth clients use leveraged investment strategies—borrowing to invest in tax-efficient, capital-gains-producing assets. Interest may be deductible, and investment income can be structured to reduce Line 23400. This is a high-risk strategy and something we’ll discuss carefully if appropriate.

Talk to Your Financial Advisor

Everyone’s income, retirement timing, and tax situation are unique. That’s why we take the time to understand your goals, project your Line 23400 income, explore different scenarios, and build a personalized strategy designed to minimize the recovery tax while keeping your lifestyle in mind.

The OAS recovery tax can quietly chip away at your retirement income—but it doesn’t have to. With the right guidance and a plan tailored to you, it’s possible to keep more of what you’ve worked so hard to earn.

If you’re already retired or approaching retirement, now is the perfect time to sit down and talk. Together, we’ll review where you stand, explore your options, and build a strategy that keeps more of your income working for you. We’re here to help you make the most of your retirement—let’s get started.

Disclaimer: This article is for informational purposes only and does not constitute financial, legal, or tax advice. Always consult a qualified professional regarding your specific situation. We are not responsible for any actions taken based on this content.Using borrowed money to finance the purchase of investments involves greater risk than a purchase using cash resources only. If you borrow money to purchase investments, your responsibility to repay the loan and pay interest as required by the loan’s terms remains the same even if the value of the investments purchased declines.

Sources: Old Age Security Payment Amount – Government of Canada: https://www.canada.ca/en/services/benefits/publicpensions/old-age-security.html

Old Age Security Pension Recovery Tax– Government of Canada: https://www.canada.ca/en/services/benefits/publicpensions/old-age-security/recovery-tax.html 

When Should You Start Your Canada Pension Plan?

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When Should You Start Your CPP?

Deciding when to take your Canada Pension Plan (CPP) is a key piece of your retirement puzzle. You can start collecting CPP as early as age 60 or delay it until as late as age 70. The standard age to begin is 65—but the government allows flexibility to suit your personal financial situation. Starting earlier means a reduced benefit, while delaying increases your monthly income.

Specifically, your CPP is adjusted by 0.6% for every month you take it early (before age 65) and increased by 0.7% for every month you delay (after age 65). That works out to a 7.2% reduction per year if you begin before 65, or an 8.4% increase per year if you wait past 65. Over five years, that’s a 36% reduction if you begin at age 60, or a 42% boost if you wait until 70.

Whether earlier or later is better depends on your health, lifestyle, and income needs.

Here’s what to consider when deciding the right time for you:

Financial Needs: Do you need the income to cover everyday expenses? If your savings are limited or you’re retiring without a workplace pension, starting CPP early might help you maintain your lifestyle. If you’re financially comfortable without CPP income for now, delaying may be more beneficial in the long run.

Income Sources
: Look at your full retirement income picture—this includes RRSPs, pensions, investment income, and even rental income. If you have other steady sources, you might not need CPP right away. Delaying could mean a larger, inflation-adjusted benefit down the road.

Taxes
: CPP is taxable. Adding it on top of other income might bump you into a higher tax bracket. If you’re still working or drawing RRIF income, consider whether it makes sense to wait. On the flip side, starting CPP early could reduce how much you draw from other taxable sources.

Old Age Security (OAS) Clawback
: CPP counts toward your total income for tax purposes—including for Old Age Security (OAS). If your overall income exceeds the OAS clawback threshold, you’ll begin to repay a portion of your OAS—15 cents on every dollar above the limit. Taking CPP later, once your income drops, may help preserve your full OAS.

Life Expectancy
: This is one of the biggest factors. If you expect to live well into your 80s or 90s, delaying CPP may mean more income over time. But if you have health concerns or a shorter life expectancy, taking CPP earlier ensures you receive more payments overall.

Future Earnings (including inheritance, OAS)
: Consider any expected windfalls, such as an inheritance or benefits like OAS. If your income will rise later in retirement, starting CPP early could help you smooth out your income and possibly reduce OAS clawbacks.

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What to Consider for Each Start Age

Starting CPP Early (Age 60–64)

  • You plan to retire early and have no other pension
  • You want financial freedom for travel or hobbies
  • You have health concerns or a shorter life expectancy
  • You need the income now to support retirement
  • You expect other income later (e.g., inheritance or home sale)
  • You want to delay RRSP withdrawals to allow more growth

Taking CPP at Age 65

  • You’re retiring fully and ready for consistent income
  • You’ve maxed out contributions and see no benefit in delaying
  • You want the simplicity of the standard age
  • You’re unsure about your longevity
  • Your tax situation is stable and fits well with CPP
  • You’re coordinating benefits with a spouse

Delaying CPP (Age 66–70)

  • You’re still working and don’t need the extra taxable income
  • You’re in good health and expect a long retirement
  • You want to lock in a larger monthly benefit
  • You want to reduce OAS clawback or smooth taxable income
  • You want a higher guaranteed income in later years
  • You’re protecting against outliving your savings

There’s no one-size-fits-all answer. Your decision should reflect your health, lifestyle, financial goals, and peace of mind. Whether you start CPP early, wait until 65, or delay until 70—make sure it aligns with your retirement vision.

Have questions? Let’s talk.

Disclaimer: This article is for informational purposes only and does not constitute financial, legal, or tax advice. Always consult a qualified professional regarding your specific situation. We are not responsible for any actions taken based on this content.

Sources:

Government of Canada. Canada Pension Plan (CPP) – Payment Amounts. https://www.canada.ca/en/services/benefits/publicpensions/cpp/payment-amounts.html

Government of Canada. Old Age Security (OAS) pension. https://www.canada.ca/en/services/benefits/publicpensions/old-age-security/recovery-tax.html

Tax Tips for Filing Your 2024 Income Tax Return

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The deadline for filing your 2024 income tax return is April 30, 2025. Stay informed about the latest tax changes and benefits available to maximize your savings and ensure compliance. This guide outlines the key updates and important deductions and credits separated into sections for Individuals and Families, and Self-Employed Individuals.

For Individuals and Families

Alternative Minimum Tax (AMT)

  • Increased minimum tax rate and basic exemption threshold.

  • Modified calculation for adjusted taxable income affecting foreign tax credits and minimum tax carryovers.

  • Limited value on most non-refundable tax credits.

Canada Pension Plan (CPP) Enhancement

• The standard CPP contribution rate remains at 5.95% for both employees and employers on earnings up to $68,500 (the Year’s Maximum Pensionable Earnings or YMPE) in 2024.

• Additionally, employees and employers each contribute an extra 4% on earnings between the YMPE ($68,500) and the Year’s Additional Maximum Pensionable Earnings (YAMPE) of $73,200 in 2024.

Home Buyers’ Plan (HBP)

  • Withdrawal limit increased from $35,000 to $60,000 after April 16, 2024, with temporary repayment relief available.

Volunteer Firefighters and Search and Rescue Volunteers

  • Amounts increased from $3,000 to $6,000 for eligible individuals completing at least 200 hours of combined volunteer service.

Basic Personal Amount (BPA)

• For 2024, the Basic Personal Amount (BPA) has increased to $15,705 for taxpayers with net income up to $173,205.

• For taxpayers with net incomes above this amount, the BPA is gradually reduced, reaching a minimum of $14,138 at incomes of $235,675 or higher.

Short-term Rentals

  • Expenses related to non-compliant short-term rentals are no longer deductible after January 1, 2024.

Popular Tax Credits and Deductions

Canada Training Credit (CTC) Eligible taxpayers aged 26 to 65 can claim this refundable tax credit to cover a portion of eligible tuition and fees for training or courses to enhance their skills.

Canada Caregiver Credit (CCC) This non-refundable tax credit supports individuals caring for family members or dependents with a physical or mental impairment. The amount varies based on the dependent’s relationship, net income, and circumstances.

Child Care Expenses Child care expenses, such as daycare, nursery schools, day camps, and boarding schools, are deductible if incurred to enable a parent or guardian to work, pursue education, or conduct research.

Disability Tax Credit (DTC) The DTC provides a non-refundable tax credit for individuals with disabilities or their caregivers to reduce the amount of income tax payable. Applicants must have a certified disability lasting at least 12 months.

Moving Expenses Deductible moving expenses include transportation and storage costs, travel expenses, temporary living costs, and incidental expenses incurred when relocating at least 40 kilometers closer to a new work location, educational institution, or business location.

Interest Paid on Student Loans Interest paid on eligible student loans can be claimed as a non-refundable tax credit. The loans must be under federal, provincial, or territorial student loan programs.

Donations and Gifts Donations made to registered charities or other qualified organizations qualify for non-refundable federal and provincial tax credits. Typically, you can claim eligible amounts up to 75% of your net income.

GST/HST Credit The GST/HST credit is a quarterly refundable payment designed to offset the impact of sales tax on low to moderate-income individuals and families. Eligibility is automatically assessed based on your annual tax return.

For Self-Employed Individuals

CPP Contributions

  • Enhanced CPP contribution rate for self-employed individuals.

Filing and Payment Deadlines

  • Tax Return Deadline: June 16, 2025 (June 15 is Sunday).

  • Balance due must be paid by April 30, 2025.

Reporting Business Income

  • Report income on a calendar-year basis for sole proprietorships and partnerships.

Digital Platform Operators

  • New reporting rules requiring platform operators to collect and report seller information.

Mineral Exploration Tax Credit

  • Eligibility extended for flow-through share agreements signed before April 2025.

Need Assistance?

If you’re unsure about your eligibility for specific credits or deductions, reach out to your tax consultant or tax advisor for personalized guidance. They can help you optimize your tax return, maximize your savings, and ensure compliance with CRA regulations.

Sources

Bank of Canada Announces Interest Rate Cut Amid Economic Uncertainty

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On March 12, the Bank of Canada announced another reduction in its benchmark interest rate, bringing it down to 2.75%. This decision comes as the Canadian economy faces ongoing pressures, including uncertainty surrounding U.S. trade policies, slower job growth, and persistent inflation concerns.

These rate adjustments aim to help stabilize the economy during this unpredictable time, providing support to consumers and businesses as policymakers navigate a challenging economic landscape.

Staying Focused Amid Market Fluctuations

During times like these, market uncertainty can feel overwhelming, but history has shown that markets tend to recover over time. While short-term fluctuations can be unsettling, a well-balanced and diversified approach helps manage risk and keeps you positioned for long-term success. The key is to remain patient and avoid making impulsive decisions based on temporary market movements.

We understand that recent market volatility, driven by changing trade policies and shifting interest rates, may cause concern about how your investments and finances could be affected. It’s natural to feel uncertain during periods of economic turbulence. However, it’s important to remember that markets have historically proven resilient, eventually recovering from downturns and periods of uncertainty.

Rather than reacting to day-to-day changes, it’s important to stay focused on the bigger picture. Market cycles come and go, and those who stay committed to a structured investment approach are often better positioned to navigate challenges and take advantage of future opportunities.

We’re Here to Support You

Your financial well-being remains our highest priority. If you have questions or concerns about your investments or if you’d simply like reassurance about your current strategy, please reach out. We’re always here to offer guidance, clarity, and support as you navigate these uncertain times.

Let’s connect—schedule a call with us today.

Source: Bank of Canada. “Bank of Canada Announces Interest Rate Cut Amid Economic Uncertainty.” 12 Mar. 2025. 

https://www.bankofcanada.ca/2025/03/fad-press-release-2025-03-12/

Embracing a Work Optional Lifestyle in Retirement

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Retirement is a significant milestone in your life, symbolizing the culmination of years of hard work and financial planning. However, in recent years, there has been a shift in the way people perceive retirement. Many retirees are no longer looking to retire solely for relaxation but are seeking a more dynamic and fulfilling work-optional lifestyle. As financial advisors, we believe it’s essential to educate our prospects about this exciting trend and how they can achieve it.

What is a Work Optional Lifestyle?

A work-optional lifestyle in retirement is all about having the financial freedom and flexibility to choose whether or not to work, without compromising your financial security. It’s about shifting from the traditional retirement model, where you simply stop working, to a more modern approach that allows you to continue working, but on your terms.

Key Elements of a Work-Optional Lifestyle

1. Financial Independence: The cornerstone of a work-optional lifestyle is achieving financial independence. This means having enough savings, investments, and passive income sources to cover your living expenses, healthcare costs, and other financial needs without relying on a traditional full-time job.

2. Pursuing Passions: One of the main benefits of a work-optional lifestyle is the opportunity to pursue your passions and interests. Whether it’s starting a small business, volunteering, or exploring new hobbies, this lifestyle allows you to allocate your time to activities that bring you joy and fulfillment.

3. Flexibility: A work-optional lifestyle offers the flexibility to scale your work commitments up or down as needed. You can choose part-time work, freelance opportunities, or consulting roles that align with your interests and skills without the pressure of a traditional 9-to-5 job.

4. Health and Well-being: Retirees who embrace a work-optional lifestyle often report better mental and physical health. Staying engaged in meaningful activities and maintaining social connections can contribute to a longer, happier, and healthier retirement.

How to Achieve a Work-Optional Lifestyle

1. Financial Planning: Start by working with a financial advisor to create a comprehensive retirement plan. Assess your current financial situation, set clear retirement goals, and determine how much income you’ll need to maintain your desired lifestyle.

2. Savings and Investments: Build a diversified investment portfolio that includes stocks, bonds, real estate, and other assets. Consider tax-efficient strategies to maximize your retirement savings and minimize tax liabilities.

3. Passive Income Streams: Explore passive income sources such as rental income, dividends, interest, and annuities. These can help cover your basic expenses and reduce the need for full-time employment.

4. Debt Management: Pay off high-interest debt before retiring to reduce financial stress and free up more of your retirement income for discretionary spending.

5. Insurance and Healthcare: Ensure you have adequate health insurance coverage and consider long-term care insurance to protect against unexpected medical expenses.

6. Budgeting: Create a detailed retirement budget that includes both essential and discretionary expenses. This will help you track your spending and make informed decisions about how much you can comfortably work or reduce expenses if needed.

A work-optional lifestyle in retirement represents a paradigm shift in how we view our golden years. It’s about achieving financial independence and having the freedom to work on your terms while pursuing your passions and enjoying a fulfilling retirement. As financial advisors, our goal is to help you create a retirement plan that not only secures your financial future but also allows you to embrace this exciting and enriching way of life. If you’re interested in exploring the possibilities of a work-optional retirement, we’re here to guide you on your journey toward a more rewarding retirement experience.