ear End Planning Seo Guide

Year-End Tax Planning Guide for Canadian Business Owners

The Real Reason Year-End Feels Heavy

He called me long after everyone else had gone home.

The office was dark. His staff had clocked out, the phones were quiet, and the only sound on his end of the line was his breath — the kind that comes from holding everything together for too long.

When he finally spoke, he didn’t ask about tax rates, deadlines, or filings.He whispered the truth every business owner feels at year-end but rarely says out loud:

“I don’t think I can keep running like this.”

On paper, his business looked great — revenue up, customers loyal, operations steady.But year-end has a way of revealing what the day-to-day hides.

Unreconciled accounts.
HST that doesn’t match.
Payroll issues nobody caught.
A shareholder loan balance creeping into dangerous territory.
Equipment purchases never capitalized.
Decisions deferred all year suddenly becoming urgent.

He wasn’t calling about forms.
He was calling because year-end had exposed everything he didn’t have the time, systems, or support to fix.

And that’s the reality for most Canadian business owners.

Year-end isn’t about filing. It’s about clarity, control, and correcting the financial blind spots that cost thousands when they’re ignored until March.

That’s why real year-end planning starts now — before December 31 — when there’s still time to reduce tax, clean up the books, strengthen ratios, and set next year up for success.

1. Review Revenue & Income Timing

Adjusting revenue timing is a core year-end tax planning strategy.

You may need to:

• Accelerate income (if profits are unusually low)
• Defer income (if cash flow allows and profit is high)

Example: If an 80% complete project hasn’t been invoiced, reviewing contract terms and invoicing before year-end may strengthen your ratios for lenders or improve receivables.

2. Evaluate Expense Timing & Deductibility

Not all expenses are treated the same at year-end. Understanding deductibility prevents CRA issues.

2.1 Current vs. Capital Expenses

• Current expenses (marketing, supplies, small repairs) → fully deductible
• Capital expenses (equipment, leasehold improvements, vehicles) → deducted through CCA over time

2.2 Inventory vs. Supplies

Buying 2,000 branded pens on December 20? CRA will treat that as inventory, not marketing.

CRA frequently audits Q4 deductions for misclassification.

3. Accrue Bonuses (The 180-Day Rule)

A bonus is deductible this year even if paid next year, if:

• The bonus is legally payable
• Included on the employee’s T4
• Paid within 180 days
• Payroll remittances are accurate

Owner-managers often use this for income shifting across tax years.

4. Payroll, CPP, EI & T4/T4A Compliance

Payroll remains one of CRA’s top audit areas.

Your year-end payroll review should include:

• CPP underpayments/overpayments
• Taxable benefits accuracy
• Bonuses paid or accrued
• T4 and T4A slip accuracy
• WSIB/EHT alignment
• Contractor vs. employee classification
• Reconciliation of remittances to payroll reports

High-risk areas: cash labour, subcontractors, mismatched remittances.

5. HST/GST Adjustments Most Owners Miss

Your last HST/GST return of the year should reflect:

• HST collected
• ITCs on expenses
• HST on capital assets
• Adjustments for prepaids
• HST on bad debts

HST Bad Debt Adjustment (Commonly Missed)

If you charged HST on an invoice and never got paid, you may be eligible to recover the tax you remitted.

This omission often costs businesses thousands.

6. Clean Up Shareholder Loans (One-Year Rule)

A debit shareholder loan at year-end can be deemed personal income if not repaid within one year of the end of the fiscal year.

You can clean it up by:

• Repaying the loan
• Declaring a dividend
• Taking salary/bonuses
• Proper documentation and resolutions

CRA audits shareholder loans aggressively because personal expenses often hide here.

7. Write Off Legitimate Bad Debts

A bad debt is deductible when:

• The revenue was previously recorded
• Collection attempts were reasonable
• The account is truly uncollectible

You can also recover HST on written-off receivables.

Not deductible: deposits, disputed invoices, shareholder/employee loans.

8. Review Prepaid Expenses

Common prepaids requiring adjustment:

• Annual insurance policies
• Software subscriptions
• Memberships
• First and last month’s rent
• Service contracts and warranties
• Retainers

Only the portion relating to the current year is deductible.

9. Optimize Your CCA (Capital Cost Allowance)

CCA is a strategic year-end decision that impacts:

• Taxable income
• EBITDA
• Corporate value
• Banking and lending ratios
• Future recapture tax

Review key asset classes:

• Class 1 – buildings
• Class 8 – equipment
• Class 10/10.1 – vehicles
• Class 13 – leasehold improvements
• Class 50 – computers
• Class 54 – zero-emission vehicles

Accelerated CCA (AII incentive) may significantly increase first-year deductions.

10. Year-End Tax Estimates

This is the most powerful part of year-end planning.

A tax estimate reveals:

• Corporate tax payable
• Personal tax (salary/dividend mix)
• CPP impact
• RRSP room
• HST obligations
• Ideal CCA claim amount
• Bonus accrual decisions
• Cash flow impact for April & June

Tax estimates eliminate surprises and allow intentional planning.

11. Owner & Bookkeeper Year-End Checklists

Owner Checklist

• Bank & credit card reconciliations
• Upload receipts
• Categorize expenses
• HST documentation
• Payroll review
• Inventory count
• Shareholder loan cleanup
• Capital asset review

Bookkeeper Checklist

• A/R & A/P aging
• Accrual entries
• Prepaid adjustments
• CCA schedule
• Taxable benefits
• Payroll journals
• Trial balance finalization
• Backup export

Strong checklists ensure clean books and CRA-ready files.

12. What to Prepare for Your Accountant

Gathering the right documents reduces fees and speeds up your year-end:

• Bank & credit card statements
• Loan statements
• Payroll reports
• Sales summaries
• Inventory count
• Capital asset purchases
• HST returns
• CRA notices
• Shareholder loan documentation
• Year-end financial exports

Conclusion: Smart Year-End Planning Changes Everything

Year-end isn’t about paperwork — it’s about strategy.

Done right, it:

• Reduces corporate and personal tax
• Strengthens financial statements
• Lowers CRA audit risk
• Improves cash flow
• Simplifies next year’s bookkeeping
• Helps your accountant deliver more value

This guide gives you the roadmap for a clean, compliant, and financially strong year-end.

Ready for a Year-End Planning Session?

MiAccounting is offering structured year-end planning sessions throughout December:

• HST review
• Compensation strategy
• Shareholder loan cleanup
• CCA optimization
• Prepaid adjustments
• Bad debt review
• Corporate + personal tax planning
• April/June cash flow mapping

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Contact us to reserve your spot — sessions fill quickly.

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