Tax season is here again. Most taxpayers are eager to maximize deductions to minimize the taxes they pay. However, careful attention to tax planning may mean doing the opposite. In some situations, it may be beneficial to defer making deductions to achieve a greater future tax benefit. Here are some perspectives:
Registered Retirement Savings Plan (RRSP) — There may be situations in which delaying your RRSP deduction makes sense. If you expect that you will be in a higher tax bracket in future years, you can make a contribution up to your limit but not take the RRSP deduction in the year of contribution and, instead, carry that amount (or a portion of it) forward. Or, you can defer contributing until the year when you anticipate being in the higher tax bracket to maximize the taxes saved. Unused RRSP tax deductions can be carried forward indefinitely.
First Home Savings Account (FHSA) — Similar to the RRSP, if you have opened and contributed to a FHSA, you can carry forward undeducted contributions to a later year — and, generally, even beyond the FHSA’s closure. This may be beneficial for younger folks who might expect to be in a higher tax bracket in future years.
Charitable Donations — Eligible donations don’t have to be claimed in the year made and can be carried forward and claimed within the next five years. The federal tax credit has two tiers: 14.5 percent (for 2025, or 14 percent for 2026) on the first $200; 29 percent on amounts above $200 (33 percent if taxable income is in the highest tax bracket), with additional provincial credits. If you make smaller donations over different years, it may be beneficial to delay a claim and combine donations together to maximize the amount that generates the higher tax credit. As well, spouses may be able to claim each other’s unused charitable donations (including carried-forward amounts) from previous years to optimize the tax credit.
Capital Losses — If an investment is sold for less than its adjusted cost base in a non-registered account, the loss may be recorded as a capital loss. Net capital losses can be carried back three years or forward indefinitely to offset taxable capital gains. You can choose to apply them in a year when you have larger gains or a higher income to maximize the tax benefit.
Medical Expenses — Eligible medical expenses may be claimed as a federal non-refundable tax credit once they exceed a threshold. The claimable amount is the portion of expenses above the lesser of 3 percent of net income or $2,834 (for the 2025 tax year). Provincial or territorial medical expense tax credits also apply. Medical expenses do not need to be based on the calendar year and may be claimed for any 12-month period ending in the tax year (provided they were not claimed previously). Therefore, it may be beneficial to delay claiming expenses if doing so allows you to include them in a 12-month period that produces a larger claim.
Tuition Tax Credit — Many students don’t use their tuition tax credit to reduce taxes because they have limited income at school. Up to $5,000 of unused tuition amounts can be transferred to a spouse, common-law partner, parent or grandparent. Any remaining amount can be carried forward indefinitely to future years. However, once a student has federal tax payable, they must generally use available carried-forward tuition amounts to reduce that tax before claiming certain other non-refundable credits.