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Salary is deductible to the corporation, creates RRSP room and requires payroll source deductions remitted on a set schedule. Dividends come out of after-tax corporate income, create no RRSP room and no CPP, and are reported on a T5 by the end of February. Neither is universally cheaper — the answer moves with your income level, your province and whether you need the cash personally this year, and in most cases it lands on a mix. We run the comparison on your actual numbers before year-end and set the remuneration plan for the year.

Generally an expense is deductible if it was incurred to earn business income and the amount is reasonable in the circumstances. Some categories are limited by rule regardless of purpose — business meals and entertainment are generally capped at 50%, and club dues and most recreational-facility costs are denied outright. If the corporation pays a genuinely personal cost, CRA generally treats it as a shareholder benefit taxable to you, so the corporate deduction is more than offset. We test the big-ticket items as they come up rather than at year-end, and document the business purpose while it is still fresh.

It can, though corporate ownership is often the more expensive route. Either way only the business-use share is deductible, and a kilometre log that separates showings, listing appointments and client meetings from personal driving is what actually supports the claim. A passenger vehicle is also subject to prescribed ceilings on the capital cost you may depreciate, on deductible lease payments and on interest — and where the corporation owns a car you also drive personally, CRA generally assesses a standby charge and an operating benefit on your T4 that can outweigh the deduction. The buy-versus-lease mechanics are the same ones we walk the trades through on work trucks; we run the comparison on your actual kilometres before you sign.

There are usually two streams. The corporation generally pays tax in monthly instalments — many smaller CCPCs with a clean compliance record qualify to pay quarterly instead — with the balance due two months after year-end, or three months for CCPCs claiming the small business deduction. Personally, instalments are generally due March 15, June 15, September 15 and December 15 once your net tax owing exceeds C$3,000 (C$1,800 in Quebec) in the current year and in either of the two before it. We calculate both streams and give you a set-aside percentage, so the cash is there before the notice is.

Retained earnings can sit as cash, be invested inside the corporation, or be paid out as salary or dividends — each has a different tax path and there is no default answer. Left inside, the money has generally only borne corporate tax, so the deferral is real; invested inside, the investment income is generally taxed at a high corporate rate of roughly 50%, part of which is refunded to the corporation when it pays taxable dividends out. Passive income above C$50,000 a year also generally starts reducing the federal small business limit available to your practice income. We weigh all of that against your personal cash needs — RRSP and TFSA room, mortgage, an IPP — and set a drawdown plan you can actually follow.

Sometimes. A HoldCo can hold surplus cash away from operating risk, let investments accumulate outside the practice corporation, and give you more control over when dividends reach you personally — and dividends generally move between connected Canadian corporations without an immediate second layer of tax, though refundable-tax rules can apply. The costs are real too: a second T2 return, separate books, and provincial college rules that limit who may hold shares of a professional corporation. We recommend one only when the arithmetic and your college’s rules both support it, and we coordinate the setup with your lawyer.

Investment income earned inside a corporation — interest, rents, taxable capital gains, portfolio dividends — is generally taxed at roughly 50% up front, with a portion refunded to the corporation when it pays taxable dividends out, so the system is designed to be broadly neutral over the full cycle rather than a permanent surcharge. The sharper effect is the passive income rule: adjusted aggregate investment income above C$50,000 generally reduces the federal small business limit by C$5 for every extra C$1, wiping it out at C$150,000. Because the grind runs off the prior year’s passive income, it raises the rate on your practice income a year later. We track that figure through the year and adjust before it costs you the small business rate.

Equipment with a lasting benefit is generally capitalized and deducted over time through capital cost allowance rather than expensed in the year it is bought. A repair that simply keeps an asset running is usually deductible immediately; work that betters the asset or extends its useful life is usually capitalized. Which CCA class the equipment falls into sets the rate, and the first-year deduction also depends on the half-year rule and on accelerated-investment measures that have been changing from year to year — so both the purchase date and the date the equipment becomes available for use matter. We confirm the current class and first-year rate before you commit, and time the purchase around your year-end.

For goods, the place-of-supply rules generally look at where the goods are delivered or made available to the customer, not where you are — so a shipment to an Ontario customer generally carries 13% HST while the same goods shipped to Alberta carry 5% GST. Your customer being a reseller does not change what you charge; they recover it as an input tax credit on their own return. Genuinely zero-rated categories, such as basic groceries and most exports, are the exception rather than the rule. We set the tax codes up in your billing system and reconcile the returns to the sales ledger every period.

Generally it raises it. Inventory is an asset, not an expense — goods bought but not yet sold sit on the balance sheet and only reduce income when they sell, so a large purchase just before year-end usually creates no deduction. For tax, inventory is generally valued at the lower of cost and fair market value, or at fair market value throughout if applied consistently, which permits a write-down for goods that are genuinely obsolete or impaired but not a discretionary cushion. We tie the count to the year-end close and make sure any write-down is supported before it is claimed.

Usually an inter-corporate dividend. Dividends between connected Canadian corporations are generally deductible to the recipient, so the cash can move without a second layer of tax — but refundable-tax rules can apply where the payer receives a dividend refund, and an anti-avoidance rule can recharacterize a dividend as a capital gain where it exceeds the safe income behind it. Loans and management fees are alternatives, each with its own conditions: repayment deadlines on loans, and fees that must be reasonable and genuinely earned. We set the mechanics and the paperwork — directors’ resolutions, dividend declarations, safe-income support — so the transfers hold up on review.

It turns on whether the profit is a capital gain or business income, and on what is inside the price. A capital gain is generally half-taxable, but recapture of capital cost allowance you have already claimed is fully taxable, and property acquired with the intention to resell can be taxed as ordinary income in full. Inside a corporation the taxable half is investment income — taxed high, partly refundable — while the non-taxable half generally lands in the capital dividend account and can be paid to Canadian-resident shareholders tax-free by election; GST/HST turns separately on the type of property and how it was used. We run the after-tax number and the instalment impact before you sign.

Mechanically it is usually dividends up to the holding company and then out to individual shareholders — the harder question is who can receive them. The tax on split income (TOSI) rules generally apply the top marginal rate to dividends paid to a related family member who is not sufficiently involved in the business, unless an exclusion applies: broadly, being 25 or older with a 10%-or-more votes-and-value stake in a non-services corporation, working an average of 20 hours a week in the business, or being the spouse of an owner aged 65 or over. Those exclusions are narrower than most owners expect — the share-based one is generally unavailable for professional corporations and service businesses. We map who can be paid what, and in what order, before the resolutions are signed.