Introduction: Year-End Is Not About Filing — It’s About Planning

Year-end is like a financial MRI — it shows everything.

Most Canadian business owners think year-end is about filing taxes, but the real work happens in November and December, long before slips, summaries, and T2 filings are due. This is where you can still influence:

• your tax bill
  
• your payroll and CPP
  
• your HST position
  
• your shareholder loan balance
  
• your CCA strategy
  
• your salary/dividend mix
  
• your financing and cash flow
  
• your audit risk
  

By the time March rolls around, most opportunities to save tax are gone.
This survival guide walks you step-by-step through everything you should review before December 31 to reduce tax, stay compliant, and finish the year strong.

1. Review Your Revenue & Income Timing

Year-end is the time to evaluate whether you should:

• accelerate income (if your profit is unusually low)
  
• defer income (if cash flow and contracts allow)
  

For example:
If a large project is 80% complete but not invoiced, review your contract terms — invoicing early could improve your financial ratios for lenders or help clear receivables before year-end.

SEO Keywords: income timing year-end, Canadian tax planning, corporate tax planning Ontario.

2. Evaluate Expense Timing & Deductibility

Not all expenses are fully deductible at year-end. Key considerations:

2.1 Current Expense vs. Capital Expense

Marketing, supplies, repairs → fully deductible.
Equipment, leaseholds, vehicles → depreciated via CCA.

2.2 Inventory vs. Supplies

Buying 2,000 branded pens on Dec. 20? That’s not “marketing expense.”
That’s inventory, and only COGS is deductible.

CRA denies deductions when expenses are misclassified — especially in Q4.
SEO Keywords: deductible expenses Canada, CRA rules year-end deductions.

3. Accrue Bonuses (The 180-Day Rule)

You can deduct bonuses this year even if paid next year, as long as:

• the bonus is legally payable
  
• included on the employee’s T4
  
• paid within 180 days
  
• payroll remittances are respected
  

Owner-managers use this to shift income between tax years strategically.

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

Payroll is one of CRA’s biggest audit targets.

Your year-end payroll review must include:

• CPP over/underpayments
  
• taxable benefits
  
• bonuses processed or accrued
  
• T4 accuracy
  
• T4A for subcontractors
  
• WSIB/EHT where applicable
  
• whether “contractors” should have been employees
  
• reconciliation of gross pay to CRA remittances
  

High-risk areas:

• cash labour
  
• casual labour
  
• subcontract labour with no T4A
  
• mismatched payroll remittances
  

SEO Keywords: T4 audit triggers Canada, payroll year-end checklist, CPP EI year-end.

5. HST/GST Adjustments That Most Owners Miss

Your year-end HST return should reflect:

• HST collected
  
• ITCs on expenses
  
• HST on capital assets
  
• prepaid adjustments
  
• HST on bad debts
  

HST Bad Debt Adjustment:
If you charged HST on an invoice the customer never paid, you may be eligible to recover the tax you remitted.

Many owners miss this — and it’s often thousands of dollars.

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

If you owe the corporation money at year-end (debit shareholder loan), CRA can treat the entire amount as personal income unless it’s repaid within one year after year-end.

You can clean this up by:

• repaying the loan
  
• declaring a dividend
  
• taking salary/bonus
  
• documenting adjustments correctly
  

CRA aggressively audits shareholder loans because this is where personal expenses often hide.
SEO Keywords: shareholder loan rules CRA, debit shareholder loan tax Canada.

7. Write Off Legitimate Bad Debts

A bad debt is deductible when:

• the revenue was previously recognized
  
• collection efforts were reasonable
  
• the account is genuinely uncollectible
  

You may also recover HST on written-off receivables.

Not deductible:

• disputed invoices
  
• deposits
  
• shareholder/employee loans
  
• unearned revenue
  

CRA requires documentation — not just aging.

8. Prepaid Expenses (Don’t Overstate Your Deductions)

Common prepaids needing adjustments:

• annual insurance
  
• software subscriptions
  
• annual memberships
  
• first/last month rent
  
• service contracts
  
• warranties
  
• retainers
  
  

Only the portion relating to this year is deductible.

9. CCA Optimization (Capital Cost Allowance)

CCA is optional — not automatic. And the amount you choose impacts:

• taxable income
  
• retained earnings
  
• banking & lending ratios
  
• EBITDA
  
• valuations
  
• future recapture
  
• year-end tax planning
  

This year, review:

• Class 1 buildings
  
• Class 8 equipment
  
• Class 10/10.1 vehicles
  
• Class 13 leasehold improvements
  
• Class 50 computers
  
• Class 54 ZEVs
  
• Accelerated CCA (AII incentive)
  
  

CCA is one of the most strategic decisions in the entire year-end process.
SEO Keywords: CCA Canada explained, accelerated CCA 2025, ZEV tax deduction Canada.

10. Year-End Tax Estimates

The most powerful step of all.

A year-end tax estimate reveals:

• your corporate tax
  
• your personal tax (salary/dividends)
  
• your CPP requirements
  
• your RRSP room
  
• your HST owing/refundable
  
• how much CCA you should claim
  
• how much to accrue for bonuses
  
• your cash flow for April & June
  
• whether income should be deferred
  
  

Tax estimates prevent April panic.

11. Owner & Bookkeeper Year-End Checklists

MiAccounting’s internal year-end process includes:

Owner Checklist:

• bank/credit card reconciliation
  
• receipts uploaded
  
• expenses categorized
  
• 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
  
  

This is how we ensure clean books and CRA-proof files.

12. What to Prepare for Your Accountant

To avoid delays, gather:

• bank & credit card statements
  
• loan statements
  
• payroll reports
  
• sales summaries
  
• inventory count
  
• asset purchases
  
• HST returns
  
• CRA notices
  
• shareholder loan documentation
  
• year-end financial exports
  

This reduces your fees and speeds up the process.

Conclusion: Smart Year-End Planning Changes Everything

Year-end is not about paperwork — it’s about strategy.

When done properly, it:

• reduces corporate & personal tax
  
• strengthens financial statements
  
• lowers CRA risk
  
• organizes your books
  
• improves cash flow
  
• helps your accountant serve you better
  

This guide is your roadmap for a clean, stress-free year-end and an even stronger year ahead.

Ready for a Year-End Planning Session?

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

• HST review
  
• compensation strategy
  
• shareholder loan cleanup
  
• CCA optimization
  
• prepaid allocation
  
• bad debt review
  
• corporate + personal tax mapping
  
• April/June cash flow planning
  

Contact us to reserve your spot — sessions fill quickly.

‍