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Your 2024 Year-End Financial To-Do List

John Stregger |

As we enter December and holiday season, there are lots of items on our social to-do lists but don't forget, there may also be some time sensitive financial strategies that you need to act on before December 31st.

Depending on your circumstance, here are Five Strategies that you should consider investigating:

  1. If you are saving for your first home, open/contribute to a First Home Savings Account (FHSA). If you want to deduct the contribution against your 2024 income, the deadline to contribute is December 31, 2024.
  2. If you have children under age 18, set up or make and deposit to a Registered Education Savings Plan (RESP) in order to receive the 20% Canadian Education Savings Grant.
  3. Business owner salary top-ups. If you are a business owner and wish to maximize CPP contributions, make sure you pay yourself at least $73,200 in 2024. 
  4. Charitable Contributions. In order to receive a tax deduction for 2024, your charitable contribution needs to be made before December 31, 2024.
  5. If you are between age 65 and 71 and have not already done so, consider setting up a small RRIF to take advantage of the Pension Income Credit.

 

1. If you are saving for a First Home, Contribute to a First Home Savings Account (FHSA)

In 2023, the government launched the First Home Savings Account program. If you are saving for your first home/cottage this is hand down, the best savings vehicle you can access. The benefits include: 

  • A Tax Deduction on your contributions. The limit is $8,000 in your first year of contributions
  • Tax Free Growth on your investments
  • Tax Free Withdrawals when you withdraw the money to buy your home

If  you want to deduct your contribution against your 2024 income, you must contribute to an FHSA by December 31, 2024.

2. Set up or make and deposit to a RESP in order to receive the 20% Canadian Education Savings Grant

Your deposits to a RESP may be eligible for the 20% Canadian Education Savings Grant. However, there is an annual limit to the grant and you should make sure that you are managing your deposits so that you can maximize your eligible grants. The annual limit of contributions eligible for grant money is $2,500. However, if eligible, you can do one catch-up year making your potential limit $5,000.00. Contributions must be made by December 31st. Also, if you have children in College/University, consider withdrawing some taxable income from their RESP if they are in a low (or 0%) tax bracket.  

3. Business owners’ salary top-up

Business owners may want to consider paying themselves at least $73,200  to maximize their Canada Pension Plan (CPP) contributions. The CPP can be a strong foundation of one’s retirement income and should be part of your retirement plan.

4. Charitable giving

For those considering a charitable gift, donate before the end of the year to receive the charitable donation tax credit for 2024. At the Federal level a $1,000 donation will create a $262 tax credit. At the provincial level the credit is about $150, depending on which province a person resides.

 

5. Set up a Mini-RRIF between the ages of 65 and 71

Take advantage of the Pension Tax Credit by establishing a Mini-RRIF if you are over age 65. If you do not have other eligible pension income, you can take advantage of the pension income tax credit by electing to set up a mini RRIF. For example, for a 65-year-old, why not transfer $12,000 to a RRIF and draw out $2,000 annually for the next 6 years. This will maximize the pension tax credit. In Ontario, that could be a tax credit more than $400 per year.

If you think any of these topics might apply to your situation, please call me at the number below or use the “Schedule a 20 minute phone call to learn more” button to schedule a call.