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Early 2026 Tax Tips

When the end of the year approaches, many individuals turn Family income-splitting loans
a greater focus to tax planning to minimize their income tax
liability. Beyond the end of the year, however, there are some A potential way to split income with family members involves
areas of tax planning that often get neglected. For example, there setting up a prescribed rate loan with your spouse, adult family
are tax planning strategies that may only be available early in the members or minor children through a family trust. The loan rate
new year. With that in mind, this article summarizes just a few of to a family member or spouse is 3%. Once that loan is set up that
those strategies. rate is set for the life of the loan. If you’ve previously set up a
prescribed rate loan, it’s critical that the annual interest on the
2025 RRSP contribution room loan be paid on or before January 30, of every year.
The borrower, whether they are your spouse, your
It’s generally a good idea to contribute to your RRSP as other family members or family trust should issue a
soon as possible to maximize the tax-deferred growth payment from their account to yours.
in your plan and to avoid the stress of trying to meet
a last-minute deadline. Keep in mind that January If you miss the January 30 deadline, attribution may
1 is the earliest day you can make a 2026 RRSP apply to you, the lender, for the previous taxation year
contribution using the new room that’s created from and all future years that the loan is in place. Once set
your prior year’s earned income without triggering an up it is very important to ensure interest payments are
over-contribution penalty. made on time.

If you want to make an RRSP contribution early in RESP’s
the 2026 calendar year, you may need to estimate Erica Tennenbaum, CFP, FCSI
your 2026 RRSP deduction limit as you would not Senior Portfolio Manager Take advantage of the RESP contributions at the
have received your notice of assessment confirming & Wealth Advisor beginning of the year – earning 20% on your
your amount. contribution and paying no tax will definitely help the
education fund increase growth over the longer term. If you are
Tax Free Savings Account (TFSA) grandparents’ it’s a great gift for the younger generation who are
paying off mortgages and can’t quite take advantage of the 20%
Consider making a contribution to your TFSA early in the 2026 in grants from the government.
calendar year to maximize the tax-free growth in your plan. The
TFSA contribution limit for 2026 is $7000. If you have been FHSA’s are relatively new and can provide benefits to those first-
eligible to open a TFSA since 2009 and have not yet contributed time home buyers or for those that have not owned a home for
to one, your contribution limit would be $109,000 as of January the previous two years. The contributions – max $8000 per year
1, 2026. TFSA’s are a very efficient investment vehicle to earn and program max of $40,000 are deductible against your income.
income and growth Tax Free. TFSA’s can be withdrawn without
tax or any penalties. Conclusion
If you didn’t use your contribution room in a previous year, This article covers some common tax planning strategies and
the unused room is carried forward indefinitely. In addition, if reminders that you may want to consider early in the new year.
you withdrew an amount from your TFSA in 2025, you can re- As always it is good practice to discuss with your accountant or
contribute this amount back to your TFSA as of January 1, 2026. financial advisor to ensure some of these strategies are beneficial
Any prior year withdrawal (that’s not a withdrawal of excess for you and your family.
TFSA contributions) is added back to your TFSA contribution For more information on any of these topics, please speak with
room for the following year. Be extra careful when calculating your current advisor your tax advisor or ourselves for further
your room when re-contributing to your TFSA, as the CRA can information.
charge penalties for over-contributions.

RBC Dominion Securities Inc.* and Royal Bank of Canada are separate corporate entities which are affiliated. *Member-Canadian Investor Protection Fund. RBC Dominion Securities Inc. is a member company of RBC Wealth Management, a business segment
of Royal Bank of Canada. â / ™ Trademark(s) of Royal Bank of Canada. Used under licence. © RBC Dominion Securities Inc. 2026. All rights reserved.

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