TAX TIPS FOR CHANGES IN LIFE AND HOW IT AFFECTS TAX

Buying your first home? Getting married? Launching a new career or business?
These are some of life’s most exciting milestones full of hope, transition, and growth. But while you’re focused on planning the wedding, signing mortgage papers, or onboarding into your dream job, there’s one silent player in the background: the Canada Revenue Agency (CRA).

Here’s what most people don’t realize:
Every major life change has a tax implication. And how you handle it can either put money back in your pocket or lead to unexpected tax bills, missed credits, or even CRA letters asking for more.

When you're navigating a life transition, it’s easy to overlook the paperwork, deadlines, and rules that shift with your new reality. But the CRA doesn’t give grace periods for being newlywed, a first-time homeowner, or a new entrepreneur.

That’s why we’ve created this guide to break down what you actually need to know, in plain language. So you can stay focused on what matters most while still making smart, strategic tax decisions that support your goals.

Let’s dive in and make sure your next big life move is backed by financial clarity not tax-time regret.

□ Buying Your First Home  

That “Sold” sign feels amazing and rightly so. Buying your first home is a massive achievement. But while you’re getting the keys, choosing paint colors, and settling into your new space, don’t forget: your first home purchase can come with major tax benefits if you know where to look.

The government wants to support first-time buyers, especially with rising housing costs, so there are several programs designed to reduce your upfront costs or offer long-term tax perks.

First-Time Home Buyers’ Tax Credit (HBTC)  

If you’re purchasing your very first home or haven’t owned one in the last four years you may be eligible for a non-refundable tax credit that’s worth up to $1,500 in 2025. It’s a simple way to reduce your tax bill just for being a new homeowner.

Home Buyers’ Plan (HBP)  

The HBP allows you to withdraw up to $60,000 from your RRSP to put toward your down payment completely tax-free, as long as you repay it over the next 15 years.

• Ideal for first-time buyers who have built RRSP savings
• Doesn’t count as taxable income in the year you withdraw
• You must repay a portion each year, or CRA will tax that amount

If you’re buying with a spouse who also qualifies, you can each withdraw up to $60,000 that’s $120,000 toward your down payment, interest-free.

Land Transfer Tax Rebate  

If you’re purchasing in provinces like Ontario, BC, or PEI, or in cities like Toronto, you may qualify for a Land Transfer Tax Rebate, which can refund up to $4,000 or more in taxes you would otherwise pay on closing.

• Ontario: Up to $4,000
• Toronto (municipal portion): Up to an additional $4,475
• Eligibility depends on your first-time buyer status and residency.

Pro Tip: Keep Your Finances Organized — Especially If You’re Self-Employed  

If you're running your own business or recently switched jobs, lenders and CRA both care about clean financials.

• Lenders want at least 2 years of stable income and updated financial statements
• CRA wants a clear picture of where your funds are coming from especially if you're using the HBP or claiming credits

Working with a CPA early ensures you’re not only eligible for every tax break, but also positioned to get mortgage approval without hiccups.

□  Getting Married or Common-Law  

Love is a beautiful thing but when it comes to taxes, marriage isn’t just a romantic milestone, it’s a financial one too. Whether you’ve tied the knot or entered a common-law relationship, your new status has direct impacts on how the CRA views your household, your benefits, and your deductions.

Many couples are surprised to learn that the CRA doesn’t treat you as two individuals anymore you’re a household unit now. That shift opens the door to new tax opportunities, but it also comes with new responsibilities.

How Marriage or Common-Law Status Affects Your Taxes:  

Combined Household Income for Benefit Programs  

Programs like the Canada Child Benefit (CCB), GST/HST Credit, and various provincial benefits now consider your combined family income, not just your individual earnings.

• If one partner earns significantly less, your total benefits may actually increase.
• But if both partners have strong incomes, some benefits may be reduced or phased out.

Important: You must update your marital status with CRA using your My CRA Account or Form RC65.

Transferable Tax Credits  

As a couple, you can now share and transfer unused tax credits to reduce your overall household tax bill. This includes:

• Tuition credits (great for students or recent grads)
• Age amount (for seniors 65+)
• Disability tax credit
• Pension income amount

If one of you doesn't owe much tax, transferring those unused credits to your spouse can make a big difference.

Pension Income Splitting (Later in Life)  

Once you hit retirement, couples can split eligible pension income between spouses. This can reduce the higher-income spouse’s tax bracket and potentially avoid OAS claw backs.

• Available once you're 65+ and receiving eligible pension income.
• Can save hundreds to thousands annually in taxes

Child Care Expenses  

Here’s where the rules get a bit strict: child care expenses must be claimed by the lower-income spouse even if the higher-income spouse pays for daycare or babysitting.

• Exceptions apply if the lower-income spouse is in school, disabled, or temporarily unable to care for the child.
• Documentation is key: keep all receipts with names, SINs, and payment proof

□ Starting a New Job or Business  

Whether you’ve landed that long-awaited promotion, started freelancing on the side, or taken the leap into full-time entrepreneurship, any change in how you earn income comes with new tax responsibilities. And if you don’t prepare for them early, your excitement could be followed by a surprisingly large tax bill.

The CRA doesn’t differentiate between your full-time job, your weekend gig, or your startup dream income is income, and it must be reported accurately. But with the right planning, these transitions can also open new ways to save on taxes and build financial momentum. 

➤ New Job? Watch Your Tax Bracket and RRSP Strategy  

• If your new role comes with a higher salary, you could move into a higher tax bracket meaning more of your income is taxed at a higher rate.
• That also means RRSP contributions become even more valuable, as they help reduce your taxable income and defer tax to future (lower-income) years.
• Bonuses, stock options, and commissions can also bump you into higher brackets temporarily so planning ahead can soften the blow.

➤  Earning $3,000+ in Taxes Owed? Prepare for Installments  

If you end up owing more than $3,000 in personal taxes in any given year, CRA may require you to make quarterly tax installment payments the following year.

• These aren’t optional miss them, and you’ll face interest charges.
• This often applies to high earners, business owners, or commission-based workers.

If you just switched to a high-earning job or added freelance income, talk to a CPA now not next April.

➤  Starting a Business or Side Hustle? Here’s What You Need:  

If you’re self-employed — even part-time — the CRA has specific expectations:

• File a T2125 form with your personal tax return (this reports your business income and expenses)
• Track all business expenses, including software, marketing, home office use, and mileage
• Register for GST/HST if you earn $30,000 or more in gross revenue over any 12-month period

Many new entrepreneurs miss this threshold and get hit with penalties for not registering on time. Better to register early and claim your Input Tax Credits (ITCs) if you’re spending more than earning.

Tip: Stock Options, Commissions & Bonuses = Tax Curve balls

Got a new job with:

• Stock options or RSUs?
• Year-end performance bonuses?
• Deferred compensation or signing incentives?

These can push your tax bill up by thousands, depending on timing and how they’re structured. Without a proper tax plan in place, they might catch you off guard especially if you’re relying on your regular paycheck tax withholdings to cover it all.

□ Having a Child  

Expanding your family is a life-changing event filled with love, new routines, and lots of late-night cuddles. But beyond the adorable chaos, it also marks a major shift in your financial and tax landscape one that could save your household thousands of dollars a year if managed properly.

Here’s what to know when your little one arrives:

• Canada Child Benefit (CCB)  

This is one of the most valuable government supports for new parents.

• The CCB is a monthly, tax-free payment based on your household’s net income
• It can amount to over $7,000/year per child, depending on your income and family size
• Paid directly into your bank account but only once your child is registered with CRA

You must file your taxes every year to continue receiving CCB payments even if you had no income.

• Childcare Expense Deductions  

Paying for daycare, a nanny, or even part-time babysitting so you can work or go to school? You can claim up to $8,000 per child under age 7.

• Must be claimed by the lower-income spouse (with limited exceptions)
• Expenses must be for childcare while earning income or attending school
• Receipts are required, including the provider’s name and SIN

Even informal care, like home-based daycares or registered babysitters, can qualify just make sure it’s properly documented.

• RESP Contributions (Registered Education Savings Plan)  

The earlier you start saving for their future, the more you'll benefit.

• Contribute to an RESP and the government adds 20% up to $500/year per child.
• That’s a potential $7,200 in free money per child over their lifetime
• Contributions grow tax-deferred, and withdrawals are taxed in the child’s hands (often at a meager rate).
• Income Splitting & Tax Strategy Shifts  

Having children can open the door to family-based tax planning:

• Pay your spouse a reasonable salary (if you own a business)
• Claim eligible deductions or credits through the lower-income partner
• Consider long-term pension income splitting in retirement

These strategies require a plan not just guesswork so it’s smart to speak with a CPA early on.

Changing Careers or Retiring  

Big career changes whether you're chasing a new opportunity, taking a break, or stepping into retirement are often filled with both freedom and uncertainty. But while you’re figuring out what’s next, don’t overlook how these changes impact your tax bill.

Why? Because transitional years often come with lumpy income, unexpected payouts, or new types of withdrawals and if you’re not careful, you could accidentally push yourself into a higher tax bracket or miss out on valuable credits. Here’s what to keep in mind during career shifts or retirement planning:

➤  Severance Pay Is Taxable  

Leaving a job with a severance package? CRA sees that as regular income even if it’s for future compensation.

• Large severance payouts can bump you into a higher tax bracket.
• Some or all of it can be transferred directly into your RRSP to defer tax — if you have contribution room
• With the right planning, you can spread the tax hit over multiple years.

Ask your employer for a T1198 form, which allows CRA to consider the income as earned over previous years.

➤  RRSP Withdrawals Are Fully Taxable  

If you’re bridging the gap between jobs or funding early retirement, dipping into your RRSP may be tempting but it comes with consequences.

• Withdrawals are taxed as income in the year you take them.
• Withholding tax is applied at the source (10–30%), but that might not cover your full tax bill
• Too large a withdrawal could affect benefit eligibility (like GIS or OAS)

consider smaller withdrawals spread out over time or RRIF conversion strategies after age 65.

➤ CPP and OAS Timing Matters  

If you’re retiring, you can start collecting Canada Pension Plan (CPP) as early as age 60 and Old Age Security (OAS) at 65 but timing is key.

• Taking CPP early means smaller payments, but more years of income
• Delaying CPP/OAS can increase your monthly payout by up to 42%
• If you earn too much in retirement, your OAS could be clawed back.

➤ You May Qualify for Job or Education Credits  

If you’re changing careers, going back to school, or retraining:

• You may qualify for the Canada Training Credit (up to $250/year in refundable tax credit)
• Tuition, course materials, and certain fees can be claimed as education tax credits
• You can carry forward unused tuition credits from prior years.

Perfect for career switchers, mid-life learners, and those upgrading their skills.

Downsizing or Cashing In Investments? Talk to a CPA First  

Selling a home, downsizing assets, or withdrawing from non-registered investments can create capital gains that increase your tax bill. With the right strategy, we can help:

• Offset gains with capital losses
• Use reserve provisions to spread gains over time
• Time withdrawals in low-income years to reduce taxes