Last-Minute Tax Planning Strategies for Canadian Entrepreneurs

Whether you’re a freelancer or a small-business owner in Canada, November offers a valuable window to apply last-minute tax planning strategies—before you close your books for the year. Let’s walk through five actionable moves you can still make to reduce your tax liability and position your business for 2026 success.

1. Trigger Capital Losses

Tax-loss harvesting (selling investments at a loss to offset gains) is a legitimate and powerful tool. When you realize a capital loss, you can offset taxable capital gains in the same year, thereby reducing your tax bill.

Furthermore, if you end up with net capital losses (losses exceeding gains), you can carry those losses back up to three years or forward indefinitely to offset future gains.

What you should do now: Review your portfolio holdings and investment gains year-to-date. If you have positions with unrealized losses, consider whether selling them before year-end makes sense—being careful of “superficial loss” rules (for example, repurchasing the same security too soon might disallow the loss).

Doing this before the year ends may reduce your taxable gains and shift the tax burden into the future.

2. Maximize Tax Credits

Tax credits offer dollar-for-dollar reductions in taxes payable rather than deductions, which only reduce taxable income. For freelancers and small-business owners, it’s essential to check whether you qualify for credits such as the GST/HST credit (if eligible), medical expense credits, or child-related benefits.

Your business expense claims and your personal tax situation intertwine. For example, claiming eligible medical expense credits or childcare-related credits can create additional savings. Also, ensuring your business’s GST/HST and input tax credit (ITC) claims are up to date can free up cash flow.

What you should do now: Review any personal tax credits you may have overlooked. Also, ensure your business expense records are complete and appropriately separated between business and personal use, so you don’t miss out on input tax credits or expensed tax adjustments.

3. Defer Income or Accelerate Expenses

Timing is everything. Suppose you are approaching a higher tax bracket (or expecting higher business income this year than last). In that case, you might consider deferring income to the next year or accelerating deductible expenses into the current year.

For example, you might prepay software subscriptions, equipment leases, marketing contracts, or other expenditures before December 31 so the expenses are deductible in the current tax year. On the flip side, if revenue is expected to drop or tax rates are expected to change, deferring income can delay taxes.

What you should do now: With your advisor, estimate your 2025 taxable income. If you’re near a threshold (personal or corporate), model the impact of accelerating expenses or deferring revenue. Ensure cash flow remains healthy and that any prepayments are for bona fide business purposes.

4. Consider Incorporation

If you’re operating as a sole proprietor (or independent contractor) and haven’t incorporated yet, November might be the time to evaluate whether incorporation makes tax-sensible sense. Incorporating your business can provide benefits such as access to the small-business tax rate, income splitting opportunities, and potential capital-gains rollover advantages.

What you should do now: Review the pros and cons of incorporation in your situation—consider administrative costs, corporate tax rates, the ability to pay dividends, and the timing of incorporation relative to year-end. If incorporation by December 31, 2025, is beneficial, you’ll want to expedite the process.

5. Review TFSA and FHSA Limits

Tax-advantaged savings vehicles remain effective for tax-conscious entrepreneurs and freelancers. While TFSA contributions do not generate a deduction (but growth within is tax-free), the newly introduced First Home Savings Account (FHSA) offers a deduction for contributions when qualified.

What you should do now: Check your available contribution room for both TFSA and FHSA. If you meet the criteria and plan to buy your first home, making an FHSA contribution before year-end can yield a deduction and future tax-free growth.

It’s not too late to make smart tax moves within 2025—these measures can help you reduce your tax burden, smooth your cash flow and position your business for next year. At RGB Accounting – Your Mobile Accounting & Tax Solution, we help entrepreneurs and freelancers identify last-minute opportunities and act before December 31. Let us help you finish the year strong and step into 2026 with confidence.

Need support? RGB Accounting can help you file late returns, navigate CRA relief options, or develop a timely tax strategy. Contact us today to get back on track—with confidence.

Source: CRA