The approaching end of one calendar year and the start of another often causes individuals to reflect on their current life circumstances and on whether the new year might be the time to consider making a change – even a major change – in those circumstances.
As the holiday season approaches, and plans are made for seasonal celebrations and gift-giving, the idea that such activities could have tax consequences isn’t one that occurs to most Canadians. And, in most situations, there is no need to consider that unwelcome possibility, as our tax system has no application where gifts are given and parties held between and among friends and family members. However, where the gift giver or person or company sponsoring the holiday celebration is the employer of the recipient employee, there can be unintended (and unwanted) income tax consequences for that employee.
December 31, 2025 marks not just the end of the calendar year, but the end of the 2025 tax year for every individual Canadian taxpayer. Most Canadians are thinking about anything but income taxes during the holiday season, but the reality is that December 31 is often a critical date when it comes to determining how much tax one will pay for 2025. In some cases, steps need to be taken by December 31 in order to obtain administrative relief from interest or penalty charges which have been imposed by the Canada Revenue Agency. In other cases, not taking certain actions prior to the end of the calendar year will mean losing out on deductions and credits which might otherwise have been claimed on the return for 2025, and which would have reduced tax payable for the year. And a failure to meet that December 31 deadline cannot be remedied: in almost all cases, only actions taken prior to the end of the year can lower 2025 taxes payable.
