Guides
Owner-manager tax, in plain language.
Structure
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Audit, review or compilation: which year-end statements you actually need
Three engagement levels, three prices. Most owner-managed corporations need the cheapest one — a lender, a bonding program or an outside shareholder moves you up.
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Bringing on a partner: shares, price and paper
Issuing new shares puts your partner's money in the corporation and gives you no tax event. Selling your own puts it in your pocket and gives you a gain.
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Choosing your corporate year-end (you only get one free pick)
Your year-end is whatever date lands on the first T2, and changing it later needs the CRA's permission. What the date decides, and what a bad pick costs.
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Corporate-owned life insurance: why owners hold it inside
Premiums are generally not deductible wherever the policy sits. Corporate ownership buys a cheaper dollar to pay them, and a death benefit that can leave tax-free.
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Do you need a holding company? A five-question test
A holdco earns its cost when at least two of five things are true: surplus cash, a threat to it, a near sale, split shareholder timing, a second set of books.
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How to actually read your year-end statements
Three numbers do most of the work: the shareholder-loan line, the change in retained earnings, and the gap between book profit and taxable income.
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Investing inside your corporation: the deferral and the grind
The deferral is why money stays in the corporation. Passive investment income past a threshold grinds next year's small-business limit — a year later.
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Moving your corporation to another province
A corporation's tax province follows its permanent establishment, not its address. In the move year the income splits by formula — not by the calendar.
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Personal services business risk: the incorporated contractor's tax trap
If you'd be your client's employee but for the corporation between you, the CRA can call it a personal services business — and most deductions disappear.
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Should you incorporate? What changes the day you do
Incorporating defers tax on money you leave in the company. It makes nothing newly deductible, and it starts a T2 and dividend or payroll mechanics on day one.
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The capital dividend account: tax-free money most owners forget
Half of every corporate capital gain can leave the company tax-free — but the election must be filed before the dividend is paid, and the balance moves.
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The loss year: what a bad year is actually worth
A loss carried back recovers tax already paid; carried forward it shelters future profit. Both run on windows in tax years, and neither starts until you file.
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Winding up a corporation without leaving loose ends
Closing a corporation is a sequence: a final T2 on a short tax year, payroll and GST/HST accounts closed, a clearance certificate before any distribution.
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Your first 90 days incorporated: the setup that prevents the mess
The first 90 days: a business number, a bank account before revenue, the GST/HST call, a year-end you chose rather than inherited, and records from day one.
Real estate
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Buying your building: OpCo, HoldCo or personally?
Three routes, four mechanics: what a creditor reaches, whether rent becomes a documented transaction, what the sale produces, and whose shares get measured.
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CCA on buildings, and the recapture bill at the sale
Claiming CCA on a rental building defers tax, it doesn't cancel it. Sell above its remaining tax cost and the excess is income, up to every dollar claimed.
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The PREC owner's first full tax year
Commissions land in the corporation and nothing is withheld. Year one is three obligations: GST/HST, corporate tax, and how you pay yourself.
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The PREC with a team: assistants, coordinators and payroll
Licence status decides who pays whom. Your corporation pays unlicensed staff directly, licensed splits run through the brokerage, and staff mean a payroll account.
Selling
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Buying a business: shares or assets, from the buyer’s chair
Assets give you a cost base equal to what you paid and leave the seller's history behind. Shares give you the history, usually at a lower price.
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The lifetime capital gains exemption, before you need it
It shelters up to C$1,275,000 of gain on qualifying share sales in 2026 — but your shares pass or fail the tests years before closing, not at it.
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Two years before you sell: the runway that saves the exemption
The look-back test measures a period ending on your closing date, so a cleanup done once a buyer appears fixes the snapshot and not the history behind it.
Construction
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Deposits, progress billings and when GST/HST is actually due
GST/HST is generally due on the earlier of the day you are paid and the day the amount becomes due — usually the date on the invoice, not the day you send it.
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Holdbacks, WIP and the contractor's year-end
A holdback is income when you have a right to receive it; its GST/HST runs off the lien period instead. Work in progress decides the rest of the year.
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T5018s: the contractor's other slip deadline
Construction businesses file a T5018 for subcontractor payments of C$500 or more, six months after the reporting period they elected. The penalty is per slip.
Health professionals
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Associates in the clinic: contractor or employee, and who decides
The associate agreement doesn't decide it, and neither does your college. The CRA reads the working relationship — and the assessment lands on the clinic.
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Buying into a dental practice: what the structure decides
Buy the assets and you get a depreciable cost base plus deductible interest. Buy the shares and the price sits in your cost base until you sell.
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Inside a dental PC: what to do with the money you leave in
Earnings in a dental PC can do three things: sit inside the corporation, move to a holdco, or come out as salary. Each prices the same deferral differently.
CRA
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A CRA letter arrived. Here's how to read it
Most CRA letters are not audits. Six kinds arrive; here is how to tell them apart, what each is actually asking, and which ones are already costing money.
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Reading a CRA statement of account (and finding the mistake)
A statement of account is a ledger, not a bill. Most surprise balances are a payment posted to the wrong program account — check the lines before paying the total.
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What to keep, and what the CRA can actually ask for
Keep source documents, not just the bookkeeping file — for a period counted from the end of the fiscal year they relate to. Destroying early needs permission.
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You owe the CRA and can't pay: the order of operations
File on time anyway — late filing and late payment are separate charges. Then sort the balance: the trust amounts are the ones that reach you personally.
Payroll
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Employee or contractor: the payer's side of the test
An invoice doesn't settle it. If the CRA calls your contractor an employee, you owe both shares of CPP and EI, plus penalties and interest, over closed years.
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Gifts, awards and parties: what stays off the T4
Cash and near-cash are always employment income. Non-cash gifts and awards can stay off the T4 under a CRA policy with limits — performance awards never do.
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T4As: the slip everyone forgets until February
Pay a non-employee for services in the course of business and it generally belongs on a T4A, filed and given to the recipient by the last day of February.
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Your first employee: the accounts, the math, the paperwork
A first hire opens a CRA payroll account and, in most provinces, a workers'-comp account. The wage is not the cost — employer CPP and EI sit on top.
Instalments
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How much to set aside for tax — a quarterly method
No flat percentage works. Estimate the corporation's tax on year-to-date profit each quarter, park it in a separate account, and true up the next quarter.
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Your first instalment year: why the CRA suddenly wants quarterly money
Nothing is withheld from a dividend, so the CRA collects quarterly instead. The reminder is a calculation with three options, and the option sets the cost.
Restaurants
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Franchise fees, royalties and the franchisee’s tax file
The initial franchise fee is capital and comes off over years. Royalties and ad-fund contributions deduct in the year incurred. The build-out splits again.
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Restaurant payroll without CRA letters
Source deductions on the schedule the CRA assigns you, controlled tips through payroll, an ROE for every departure, and T4s that tie to what you remitted.
GST/HST
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GST/HST registration: when the clock actually starts
Crossing the small-supplier threshold and having to charge tax are two different dates. The gap between them is where most registration bills come from.
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The GST/HST mistakes that actually get assessed
Most GST/HST assessments come from posting habits, not arithmetic: exempt versus zero-rated, undocumented credits, one rate everywhere, deposits, self-assessments.
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The GST/HST quick method: who it pays and who it penalizes
You charge full GST/HST, remit a lower flat rate and keep the spread. It pays a low-cost consultant and costs anyone who buys materials or inventory.
Deductions
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Health spending accounts for owner-managers: the rules that make them real
A health spending account works only when the plan does: limits written before the year, a real employment relationship, expenses already on the CRA's list.
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Per-kilometre allowances vs the logbook: paying for business driving
A reasonable per-kilometre allowance is deductible to your corporation and tax-free to you — but only where it's computed on kilometres you can prove.
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The home office when you're incorporated: reimbursement or rent
Your corporation can't deduct your house. It reimburses documented home costs at a measured workspace percentage, or it pays you rent — which lands on your T1.
Inventory
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Importing inventory: duty, brokerage and the real cost of goods
Freight, duty and brokerage belong to the goods and sit in inventory until they sell. The GST paid at the border does not — a registered importer gets it back.
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Inventory at year-end: the count that moves your tax bill
Closing inventory is subtracted from cost of goods sold — so more stock on the shelf at year-end means higher profit and higher tax. The count is the evidence.
Compensation
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Paying your spouse from the corporation without a TOSI problem
Salary for real work is a reasonableness test, not a TOSI one. Dividends escape TOSI only through an exclusion — hours in the business, or qualifying shares.
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RRSP or leave it in the corporation? The parking question
Both are deferrals, not discounts. They differ on what opens the lane, what the money earns while it sits, and what it costs to get back out.
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Salary or dividends in 2026: how to actually decide
Salary buys RRSP room and CPP; dividends buy simplicity. The mix turns on three numbers you re-run every year — not on a one-time preference.
Trucking
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Should an owner-operator incorporate?
In trucking the carrier usually decides before the arithmetic does. What then settles it is single-carrier PSB risk and where the long-haul meal claim lands.
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The incorporated owner-operator's tax year
An incorporated owner-operator runs four clocks: the T2, GST/HST, IFTA's own quarterly cycle, and payroll once there's a driver. None of them sets the others.
Updates
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SR&ED after Bill C-15: who newly qualifies
SR&ED capital spending is eligible again and the enhanced 35% credit now phases out from C$15 million to C$75 million — both back to December 16, 2024.
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What actually changed for owner-managers in 2026
Bill C-15 reinstated accelerated depreciation and widened SR&ED. The capital-gains inclusion rate stayed at 50%. What that means before your year-end.
Provinces
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Corporate tax in Alberta: what the provincial layer adds
Alberta collects its own corporate tax, so you file the AT1 with the province as well as the T2 with the CRA. No provincial sales tax, no payroll levy.
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Corporate tax in Atlantic Canada: what the provincial layer adds
New Brunswick, Nova Scotia, PEI and Newfoundland all run on the CRA's T2, and all four are HST provinces. What changes is the rate layer and employer accounts.
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Corporate tax in British Columbia: what the provincial layer adds
BC corporate tax rides on the same T2 the CRA already collects. What BC adds sits outside it: PST, WorkSafeBC and a provincial payroll tax.
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Corporate tax in Manitoba: what the provincial layer adds
Manitoba's corporate tax rides on the same T2 the CRA already assesses. What the province adds sits outside it — retail sales tax, a payroll levy and the WCB.
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Corporate tax in Ontario: what the provincial layer adds
The CRA collects Ontario's corporate tax on the same T2 — there is no separate provincial return. What Ontario adds is a rate layer, HST, EHT and WSIB.
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Corporate tax in Quebec: what the provincial layer adds
Quebec administers its own. A CO-17 beside the federal T2, QST beside GST, RL-1s beside T4s, QPP and QPIP beside CPP and EI — a parallel file, not a rate.
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Corporate tax in Saskatchewan: what the provincial layer adds
Saskatchewan's corporate tax rides on the same T2 the CRA already collects — no second return. What is genuinely separate is PST, and it has its own account.