A year-end tax roadmap for complex financial lives

• 2026 includes a one-time tax-loss opportunity: This is the final year to realize a capital loss and carry it back to 2023. If you reported capital gains that year, reviewing that return now may help identify an opportunity to recover tax previously paid.
• For tax-loss selling, the settlement date matters: A tax-loss sale must settle before year-end to be valid for 2026. The last trading date is therefore on or before December 30.  Missing that distinction could mean missing the opportunity.
• Year-end tax decisions can affect more than this year: For business owners, the salary-or-dividend decision affects RRSP room, corporate deductions and personal tax rates. This year, provincial rate changes, AMT and the tax treatment of charitable gifts may also shape the planning conversation.

“Perhaps the most important year-end strategy is tax-loss selling,” Golombek says.

Tax-loss selling involves selling investments that have declined in value to realize a loss that can offset capital gains elsewhere in your portfolio.

Losses that are not needed this year can generally be carried back up to three years or carried forward indefinitely to offset future gains. In 2026, that timing is important because this is the final year a capital loss can be carried back to 2023.

If you reported capital gains three years ago, a loss realized now may help recover tax already paid, but only if the trade settles before December 31. In practice, that means the trade must take place on or before December 30. One of the first things worth reviewing, Golombek says, is the 2023 return: what gains were reported, and whether there is still an opportunity to act before the carry-back window closes.

If you own an incorporated business, one of the most important year-end decisions is how to take income from the corporation: as salary, dividends, or some combination of both.

Each route has different tax consequences. Salary is deductible to the corporation and included in your personal income at graduated tax rates. It also creates RRSP contribution room, which can be valuable in its own right.

Dividends, by contrast, are paid from after-tax corporate income and generally benefit from the dividend tax credit, which can mean a lower personal tax rate than salary, though without creating RRSP room.

In 2026, salary of up to $196,611 creates the maximum RRSP room of $35,390 for 2027.

Golombek notes that even where there is no immediate need to withdraw funds, it can still make sense to take enough income to maximize RRSP and TFSA contributions, depending on your asset mix and time horizon. Any remaining after-tax business income can then be left in the corporation, where tax deferral may allow more investment income to build over time than it would in a non-registered personal account.

That income can always be distributed later, when it better suits your circumstances. This is a decision that benefits from modelling: the right answer depends on your personal tax situation, what the corporation earned, and how the numbers change under different scenarios. Before year-end, professional tax advice is well worth seeking.

Related resources:

• RRSPs and TFSAs: Smart choices for business owners (PDF, 1 MB) Opens a new window.
• In good company: Earning investment income in your corporation (PDF, 605 KB) Opens a new window. 
• Bye-bye bonus! Why business owners may prefer dividends over a bonus (PDF, 720 KB) Opens a new window. 
• The compensation conundrum: Will it be salary or dividends? (PDF, 515 KB) Opens a new window.

Not every year-end decision is driven only by what happened this year. Some are also shaped by what is about to change.

In Ontario and Quebec, 2027 will bring a lower tax rate on income eligible for the small business deduction, alongside a higher tax rate on non-eligible dividends. For business owners in those provinces, that may make the timing of salary and dividend decisions more important than usual.

Golombek also flags the AMT, which was tightened in 2024. If you have realized a significant capital gain in 2026, AMT could create additional tax. With the right planning, that tax may be recoverable over the following seven years, which is why the effect is worth understanding before year-end.

Related resource: The new Alternative Minimum Tax (AMT) (PDF, 375 KB)  Opens a new window.

For clients who are already philanthropic, donating qualifying securities directly to charity rather than selling them first can be worth considering at year-end. This may be especially worth considering where tax efficiency is a priority. For more information, read Year-end planning conversations: Charitable giving.

“Not only do you get a donation receipt for the fair market value of your gift, but you pay zero capital gains tax on the accrued gain,” Golombek says.

Given the strength of equity markets in recent years, this may be especially worth considering for clients with significant unrealized gains in non-registered portfolios.

Every strategy in this article depends on one thing: your own numbers. A loss carry-back starts with a review of the 2023 return. The right salary and dividend mix needs to be modelled before anything is paid. And the effect of AMT on a 2026 gain, including whether it may be recoverable in future years, depends on your specific circumstances.

These are not decisions to make in the abstract, and they are not ones to leave until the final week of December.

Your CIBC Private Wealth advisor can coordinate with the right tax specialists, help you work through what applies to your situation, and make sure you are acting on the opportunities that matter most while the planning window is still open.

For more information, read Year-end conversations worth having before December 31.