Making Sense of

Your Corporate
Obligations
Many incorporated business owners
feel intimidated by the demands of
tax season and the corporate filing
requirements of the Canada Revenue
Agency (CRA). This is completely natural.
While there are numerous benefits to
incorporation, it also comes with three serious
obligations: filing an annual return, filing your
T2 tax return, and keeping your minute books
up to date. The complexity and administrative
burden of these requirements leave many
businesses struggling to keep up.

That's why we've created this guide -

not just to help you get organized
ahead of tax season, but to help you:
• Understand your financial and
administrative responsibilities
as a corporation
• Take full advantage of the
benefits of incorporation
• Learn more about commonly
missed and misunderstood tax
credits and deductions
• Determine if this is the right
structure for your business
About FBC
For over 70 years, we've had the privilege of assisting countless business
owners throughout Canada, spanning diverse sectors including agriculture,
construction, and beyond.

We're committed to ensuring your financial success not just today, but for the
long haul. From expert tax advisory and optimization, to affordable
bookkeeping, payroll management, incorporation services, minute book filing,
annual returns; we offer comprehensive support tailored to your unique
needs. Trust us to navigate the complexities of taxation and financial
management, while you focus on growing your business.

Disclaimer: This material is provided for educational and informational purposes only. Always consult a
tax specialist, like FBC, regarding your specific tax situation.

© FBC 2024
 ULTIMATE GUIDE TO
INCORPORATED SMALL
BUSINESS IN CANADA

CONTENTS

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UNDERSTANDING CORPORATE
BUSINESS STRUCTURE

What’s a corporation?
A corporation is a formal business arrangement that brings into existence
a legal entity separate from you and your personal assets. For this reason,
being incorporated can provide small business owners in Canada with the
most tax and liability advantages.

When should you incorporate?

Regardless of the business structure you start with, as your business grows, the
time will come when you’ll want to consider incorporating. This usually happens
when the business is generating surplus profits and you, as the business owner,
have more revenue than you need to cover personal expenses. By incorporating,
you can leave surplus profit in the business, allowing you to defer personal taxes
on the withdrawals.
Other reasons include:
• When the tax benefits of a corporate structure outweigh the costs and
extra administrative requirements of using the structure. Paying less tax
is often a primary motivator for incorporation, but only take this action
when other costs don’t offset those gains.
• When the debt servicing of a business demands a large portion of
profits. This strategy allows you to shield a portion of profits used to
repay principal from rates of tax.
• When you want greater planning flexibility upon the closure or sale of
your business. In the event of asset liquidation, when wrapping up the
business, corporate tax rates can be preferable to graduated marginal
personal rates.

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Choosing the right
structure for your business
Most small businesses start out as a sole
proprietorship, but there are actually three main
business structures in Canada. Each one has its
own advantages and drawbacks:

• Sole proprietorship
• Partnership
• Incorporation

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Sole proprietorship
This is the most basic business structure. One person owns the business
and makes all the decisions, keeps all the profits and assumes the risks of
the business.
As a sole proprietor, the Canada Revenue Agency views the business and owner/operator
as being one and the same, which means you are personally liable for the business. This
means if a creditor files a claim against the business, they can go after your assets—
whether they’re business or personal.
As a sole proprietor, income is taxed at your personal rate. If the business is having a bad
year, you can deduct the losses from your personal income, which lowers your tax bracket.
At the same time, if you’re having a good year, you could be put into a higher tax bracket
which can cut into your profits.

it's important to consider that a sole proprietorship has a finite lifespan tied closely to the
owner's life. Unlike other business structures that can potentially outlive their founders, a
sole proprietorship ceases to exist upon the death of the owner. This means that the
business assets, relationships, and ongoing operations are typically dissolved or transferred
to heirs according to personal or legal arrangements. The inherent link between the business
and the owner's life can make succession planning complex and may result in disruption or
closure of the business upon the owner's passing. Therefore, sole proprietors need to
carefully consider and plan for the continuity and succession of their business to ensure its
long-term viability and legacy.

Advantages Drawbacks

Lower start-up costs Unlimited liability

Easy to form and dissolve Limited life
Fewer regulations Increased difficulty raising capital
Ownership of all profits Income taxed at higher personal rate
One individual income tax return Business/personal expenses

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Partnership
A partnership is a non-incorporated business that is formed between
two or more people. You and your business partner(s) choose how to
divide the profits and are equally liable for debts or legal action taken
against the business.
Like a sole proprietorship, a partnership has no legal structure. However, it’s recommended
partners have an agreement that stipulates how the business is structured, with regards to
revenue, profits, expenses and liabilities. This is beneficial come tax time, as each partner
understands what percentage of income and expenses applies to them.

There are two types of partnerships: a general partnership and limited partnership. With
a general partnership each partner is responsible for the debts. In a limited partnership,
one of the parties can be a partner but not directly involved in its day-to-day operations.
The most common limited partnerships are formed by a group of professionals, such as
doctors, lawyers and accountants.

As a result, each partner is generally responsible for filing their own income tax return and
claiming the agreed upon share of the partnership’s profits or losses. However, there are
cases where a partnership may have to file a tax return—for example, if the partnership
makes over a certain amount of money or if the partnership is formed by a group of
professional (ie. lawyers, accountants, etc.).

Most people considering a business partnership think it’s a good idea to consult a lawyer
to help draw up the agreement. However, it’s important to understand that lawyers are
generally not experts on taxes. If you’re thinking of drawing up a partnership agreement,
contact tax professionals to understand the tax implications before you commit.

Advantages Drawbacks

Simple to form and dissolve Unlimited liability

Power in numbers Income taxed at higher personal rate
Lower start-up costs Limited life
Fewer regulations Possibility of disputes/conflicts
Individual tax returns/tax rates

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Incorporation
Unlike a sole proprietorship or partnership structure, a corporation is its own
legal entity that in most cases provides the owners protection from liability.
This separation between the corporation and its owners means that the personal assets
of shareholders are generally protected from business debts and legal obligations,
providing them a layer of security.

In addition to liability protection, incorporation often brings the advantage of potentially

lower tax rates, particularly for small businesses eligible for the small business
deduction. This tax advantage can translate into substantial savings for shareholders,
allowing them to retain more of their earnings for reinvestment or personal use.

It's essential to weigh these benefits against the associated costs and complexities of
running a corporation. Setting up a corporation typically involves higher administrative
costs, including incorporation fees, ongoing compliance requirements, and the need for
assistance to navigate complex tax filing obligations. These additional expenses and
administrative burdens can require a significant investment of both financial resources
and time.

Evaluating your business and personal goals against the costs, both financial and
investment of time, can help you decide if this structure fits your needs.

Advantages Drawbacks

Limited liability Expensive

Extended life Additional tax return
Income tax deferral Increased
 paperwork (additional tax
Transferring the business returns, an annual incorporation return,
articles of incorporation, notifications for
Income control
changes, and minute books)
More opportunities to raise capital
No personal tax credits
Business name protection
Less tax flexibility
Lifetime capital gains exemption
Liability
 may not be completely limited
Income splitting (in certain (exceptions include personally guaranteed
circumstances) loans, government tax obligations and
payroll deductions)
Closing is more difficult

FBC THE ULTIMATE GUIDE TO INCORPORATED SMALL BUSINESS IN CANADA 9

IS INCORPORATING WORTH IT?
As with any business decision, you must weigh the pros and cons when
it comes to incorporating your business. In this next section, we give you
the information to help you do just that.

The two biggest benefits of incorporation

1) Limited liability to protect personal assets: The most important benefit
of incorporation is the protection it provides by limiting the liability of the
owners, or what they are responsible for under the law. Since a corporation
is its own legal entity, it pays taxes, incurs debt and can be even be sued.
However, in most cases, your personal assets are protected against creditors
or if legal action is taken against the business (talk to a tax specialist about
exceptions). This means that incorporating can help shield you and, by
extension, your family from financial harm.
While the liability of the corporation does not generally extend to you
personally, it is important to understand that there are certain situations,
such as if a corporation owes GST/payroll amounts to the CRA, where the
directors can be held personally responsible for payment.
2) Low tax rates: Businesses that operate as sole-proprietorships or
partnerships generally pay a higher personal income tax rate on profits as
opposed to incorporated business.
For example, if your income hits $250,000, your personal tax rate might average
out to 33% federally. The federal tax rate for incorporated businesses earning
active income is 15% and could be as low as 9%. Applicable provincial tax rates
would also apply.
It’s easy to see that incorporating a business could help save you a significant
amount of money in tax.

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IS INCORPORATING WORTH IT? CONTINUED

A closer look at corporate versus personal taxes

Personal income tax rates

2024, federal tax rates on personal income are as follows:

• 15% on the first $55,867 of taxable income, plus
• 20.5% on the next $55,866 of taxable income (on the portion of taxable
income over $55,867 up to $111,733), plus
• 26% on the next $61,472 of taxable income (on the portion of taxable
income over $111,733 up to $173,205), plus
• 29% on the next $73,547 of taxable income (on the portion of taxable
income over $173,205 up to $246,752), plus
• 33% of taxable income over $246,752

These rates do not include provincial tax rates that apply to personal income.

Small business corporate tax rates

Incorporated business either make money from the things they actively sell, or
the investments they make.
Canadian controlled private corporations (CCPC) can take advantage of the
small business tax deduction. This allows them to pay a lower federal tax rate
on the first $500,000 of active business income.
Businesses that hold in excess of $50,000 of passive investment income will
see a reduction in the amount that their active income is eligible for the small
business tax rate.

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IS INCORPORATING WORTH IT? CONTINUED

2024 Corporate Income Tax Rates

Active Business Income Investment

or Passive
General Small Business Business Limit Income*
Federal 15% 9% $500,000 38.7%
Alberta 8% 2% $500,000 8%
British Columbia 12% 2% $500,000 12%
Manitoba 12% 0% $500,000 12%
New Brunswick 14% 2.5% $500,000 14%
Newfoundland & Labrador 15% 2.5% $500,000 15%
Nova Scotia 14% 2.5% $500,000 14%
Northwest Territories 11.5% 2% $500,000 11.5%
Nunavut 12% 3% $500,000 12%
Ontario 11.5% 3.2% $500,000 11.5%
Prince Edward Island 16% 1% $500,000 16%
Quebec 11.5% 3.2% $500,000 11.5%
Saskatchewan 12% 1% $600,000 12%
Yukon 12% 0% $500,000 12%

* Applies to CCPCs and excludes capital gains and dividends received from Canadian corporations.

Note: Canada's Federal Budget was released April 16, 2024. While tax rates remain unchanged, there were some
proposed changes to capital gains taxes for incorporated businesses. Please read our Federal Budget 2024 Highlights
blog for more information.

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IS INCORPORATING WORTH IT? CONTINUED

2024 Corporate Income Tax Rates

Active Business Income Investment or

Passive Income
General Small Business Business Limit
Federal 15% 9% $500,000 38.7%
Alberta 8% 2% $500,000 8%
British Columbia 12% 2% $500,000 12%
Manitoba 12% 0% $500,000 12%
New Brunswick 14% 2.5% $500,000 14%
Newfoundland & 15% 3% $500,000 15%
Labrador
Nova Scotia 14% 2.5% $500,000 14%
Northwest 11.5% 2% $500,000 11.5%
Territories
Nunavut 12% 3% $500,000 12%
Ontario 11.5% 3.2% $500,000 11.5%
Prince Edward 16% 1% $500,000 16%
Island
Quebec 11.5% 3.2% $500,000 11.5%
Saskatchewan* 12% 0%/1% $600,000 12%
Yukon 12% 0% $500,000 12%

*Saskatchewan 0% small business tax rate increased to 1% for July 1, 2023 to June 30, 2024.

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What’s the difference between active
and passive income?

Active income – good and services

Income you actively earn, through selling goods or providing services is generally
considered “active business income.”
Active business income does not include investment income, income from a
specified investment business, or income from a personal services business.

Passive income – investments

Passive income usually comes from investments, like ownership of capital property or
assets that generate income without excessive effort on the part of the stakeholder. It
can come from interest, capital gains, rent, royalties, and dividends. Most of the time,
passive income is considered taxable income in Canada.
It’s always important to talk to a tax specialist about passive and active income, and
how to account for them on your books and tax filings.

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IS INCORPORATING WORTH IT? CONTINUED

Additional benefits of incorporation

Income tax deferral: Surplus profit can be reinvested back into the business or
used for other investments, allowing you to defer taxes.

If you do not need to withdraw all of the income that your business earns for
your personal use, you can defer personal taxation on that income by leaving
it in the corporation until it is required. The period that the funds are left in
the corporation creates a deferral in tax (i.e. not paying tax today and instead
paying tax in the future when the money is withdrawn).

Transferring your business: Greater flexibility for your exit strategy and
transferring operations to the next generation. For example, you can make your
children shareholders and gradually increase their stake in the business.
Income control: Multiple options for determining the most tax-efficient way to
pay yourself—dividends, salary, bonuses or a combination.
More opportunities to raise capital: The corporation can issue bonds, sell
stocks and borrow from banks and lenders.
Lifetime capital gains exemption (LCGE): This could reduce taxes due on
capital gains arising from the disposition of certain properties (small business
corporation shares and qualified farm and fishing properties.
Extended life: The corporation continues as an independent entity after you pass on.
Shareholder loans: Shareholders may use corporate funds for personal uses
throughout the year, outside of the traditional salary or formal dividend arrangements.
Income splitting: While the introduction of the TOSI rules reduced many
income splitting opportunities, if your business is incorporated, there are
still situations in which dividends can be paid to certain family members
to effectively income split. This strategy offers greater flexibility to an
incorporated business since the dividends paid can vary from year-to-year,
as can the recipients receiving them.
You must first set up your incorporated business to include your spouse and/or
children as shareholders. Note, this doesn’t have to be done at inception of the
corporation, with proper tax planning strategies and the help of a lawyer, you
can amend shareholders throughout the year.
Note: Shareholders do not have to be employees to receive dividends. But employees can be
shareholders and receive both a salary and dividends through the business.

There are additional income splitting strategies available to Canadian taxpayers

but you should consult with a tax specialist to determine if they’re right for your
situation.

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IS INCORPORATING WORTH IT? CONTINUED

Drawbacks to incorporating a small business

Cost: There are always going to be some drawbacks to any business structure.
In addition to the initial set up fees, an incorporated business needs to file a
separate tax return (called a T2) to make sure it is complying with corporate
regulations. The return can be very complex and filing it generally requires
professional help.
Losses remain with the business: If your business loses money in the first year or
two, those losses stay with the company—you cannot claim those losses personally.
That said, you can carry those losses forward into future years to deduct against
future profits within the corporation.
Additional paperwork and administrative burdens: There is a lot more paperwork
involved when your small business is incorporated. As noted above, there
is legal paperwork that needs to be filled out each year, including an annual
return, corporate tax return, minute books, financial statements to distribute to
shareholders (some exceptions apply). This will cost time and money.

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IS INCORPORATING WORTH IT? CONTINUED

Most incorporated business owners understand in principal that

they must file a tax return each year—even though they may require
professional help to do so. It’s the annual return and minutes books
that are often neglected or forgotten until it’s too late.

Annual return

What’s an annual return?

Despite having a similar name, an annual return is different from an annual tax
return. It is a corporate law requirement that lets Corporations Canada know
that your business is “active”—essentially, that you’re still in business.
Regardless of the size of your corporation, you are obligated to file an annual
return if your corporation’s legal status is “active” (that is, not dissolved,
discontinued, or amalgamated with another corporation).
If you do not file or file late, you will not receive a “Certificate of Compliance”
from Corporations Canada.

What does a Certificate of Compliance do?

A Certificate of Compliance is often needed to support a loan request or to provide
assurance to a potential investor that a corporation has not been dissolved.

What’s included in an annual return?

Your annual return can be filed online. To file you need:
• The date of your last annual meeting
• Your type of corporation: private or public
• To be a director, officer or authorized individual who has relevant knowledge
of the corporation and is authorized by the directors

An annual return is not your income tax return and is separate from any filing
obligations you may have with the CRA.

Annual return filing deadlines

Every incorporated business must submit an annual return every year to
Corporations Canada within 60 days of its anniversary date.
The anniversary date is the month and day on which the corporation was
created or the date on which the corporation first came under the jurisdiction of
the Canada Business Corporations Act.
You do not need to file for the year the business was incorporated.

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IS INCORPORATING WORTH IT? CONTINUED

Consequences of not filing an annual return

Corporations Canada has the power to dissolve a corporation that has not filed
its annual returns. Dissolution can have serious consequences, including not
having the legal capacity to conduct business. This includes raising capital or
accessing credit and loans.
While the law allows Corporations Canada to dissolve a corporation after one
year of non-filing, the policy is to only dissolve a corporation when it has not
filed an annual return for two years.

Minute Books

What are minute books?

Minute books are detailed records that document an incorporated company’s
structure and activities. They must be updated every year as part of the
incorporation’s annual return to maintain its legal structure and include:
• Articles of Incorporation
• Articles of amendment
• By-laws
• Resolutions and minutes
• Share certificates and share transfer registers
• Directors, Officers and Shareholder Registers
• Notices that have been filed
− Change of registered office address
− Changes regarding directors
• Shareholder agreements
They also track key company decisions such as granting of shares, dividends
and management fees.

Why do they matter?

Minute books are required to maintain an incorporation. If a business does
not have them or keep them up to date, they could be found in default of
mandatory government notice filings (making them non-compliant); fined
by the CRA as part of an audit; refused for loans by banks; and any potential
future sale of their business or assets could be in jeopardy or face lengthy and
expensive legal delays.

Does FBC maintain minute books and file Annual Returns?

FBC provides an affordable option to better maintain the corporate records of
those businesses who use FBC for tax filing. We take care of updating minute
books and filing the Annual Return each year when preparing and filing taxes.

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FOUR STEPS TO INCORPORATING
YOUR BUSINESS

Incorporating a business can be done federally or provincially.

If you’re going to stick to operating your business in one province, it makes
sense to incorporate on the provincial level. If you want to operate in more
than one province in the future, you’ll need to get a license for every province
you want to operate in. If you want to operate across the country, it’s wise to
consider federal incorporation.
In general, there are four basic steps:

Step 1: Name your corporation

Because you’re creating a legal entity, your corporation must have either
a word name or a number name. Here’s a quick breakdown:
• Word name, made up of letters and symbols – for example,
William Widget Manufacturing Inc.; or
• Numbered name – for example, 12345678 Ontario Ltd.
• Using the NUANS or “Federal Corporations Search” service, you
must ensure that there is no other corporation with an identical
or similar name to the one you are proposing. Identically named
corporations are not allowed
• If you choose a numbered company name, you can still use an
“operating as” name to market your business
• Corps require a legal element such as “Ltd.”, “Inc.”, or “Corp.”
• Professional corps are limited to use by regulated professional services
such as lawyers, chartered accountants and health professionals

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FOUR STEPS TO INCORPORATING YOUR BUSINESS CONTINUED

Step 2: Create your articles of incorporation

If you are incorporating provincially or federally, you must use their forms
to submit your articles of incorporation. Generally, they include:
• Name of corporation
• Contact information
• Classes of shares and information on share structure or transfers
• Number of directors your incorporated business will have (min & max)
• Restrictions on business or business activities
• Other rules or provisions (pre-emptive rights, voting provisions)

Step 3: Confirm the initial registered office

address and first board of directors
Every incorporated business must have the following:

1 A registered office address:

Your corporate registered office is where you must keep your records. It is
also where official documents are served so you should choose an address
where you are sure to receive them. Legally, official documents sent to this
address are assumed to have been received by the corporation.
If your initial registered office changes, the new address needs to be
reflected in your minute books.

2 A board of directors:
You also need to decide who will be on your incorporated business’s
board of directors. There are some required eligibility criteria so make
sure they qualify before registering them as such.
Generally, a director must:
• be at least 18 years old
• not have been declared incapable under the laws of a Canadian
province or territory, or by a court in a jurisdiction outside Canada
• be an individual (a corporation cannot be a director)
• not be in bankrupt status
You must also disclose each director’s first name, last name, address,
and indicate whether they are a resident Canadian. Typically, at least
25 per cent of the directors of a corporation must be resident Canadians.
If a corporation has fewer than four directors, however, at least one of
them must be a resident Canadian.

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FOUR STEPS TO INCORPORATING YOUR BUSINESS CONTINUED

Step 4: Submit application and pay fees

When you submit your application, it must go to the regulating office
of the jurisdiction in which you’re incorporating your business (federal
or provincial). There are also required fees.
The fees vary based on where you’re incorporating and the method
you choose to submit your registration (online, mail, through a registry
service, etc.)

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UNDERSTANDING CORPORATE
TAX FILING REQUIREMENTS

Tax deadlines for incorporated businesses

T2 - Corporate Tax Return

You are required to file no later than 6 months after your fiscal year-end. If
your fiscal year-end is December 31st, your T2 return will be due June 30th the
following year. When the T2 filing deadline falls on a Saturday, Sunday, or a public
holiday, the return is due on the first business day following the filing deadline.
You have the option to change your fiscal year-end but must apply for approval
from CRA.
You may need to include various schedules with your T2 Return, depending on
your specific circumstances. Here are some common schedules that you may
need to include with your T2 return:
• Schedule 1 - Net Income (Loss) for Income Tax Purposes
• Schedule 2 - Federal Tax:
• Schedule 3 - Dividends Received, Taxable Dividends Paid, and Part IV Tax
• Schedule 4 - Tax Calculation Supplementary - Corporations
• Schedule 6 - Investment Tax Credits
• Schedule 9 - Business Limit and Taxable Income for Active Corporations

T4 – Statement of Remuneration Paid

Employers are required to file a T4 information return (T4 Summary and T4
Slips) to report remuneration paid to their employees. You must give employees
their T4 slips on or before the last day of February following the calendar year to
which the slips apply. If this date falls on a Saturday or Sunday, the due date is
the next business day.

T5 – Return of Investment Income

The T5 return (T5 Summary and T5 Slips) reports various types of investment
income (e.g. dividends and interest) paid to residents of Canada, including
corporations. You have to file your T5 information return by the last day of
February following the calendar year to which the information return applies. If
this date falls on a Saturday or Sunday, the due date is the next business day.
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UNDERSTANDING CORPORATE TAX FILING REQUIREMENTS CONTINUED

Payment Deadlines
If your business has a balance that it needs to pay, you have until 2 months
after the end of your tax year to pay it off (2 months after your fiscal year-
end). There are some exceptions to this rule. Canadian-controlled private
corporations with annual business income less than $500,000 may have up to
3 months rather than 2 if they meet the eligibility criteria.
Generally, corporations have to pay their taxes in instalments, either monthly
or quarterly.
Instalment payments are due on the last day of every complete month of your
tax year, or of every complete quarter if you are an eligible small CCPC.
There are exceptions to the instalment payment rule, speak to a tax specialist
for more information.

Late Filing Penalties

If you owe money on your corporate tax return and it’s late, the CRA charges a
late-filing penalty.
The penalty is 5% of your balance owing + 1% of your balance owing for each
full month your return is late, to a maximum of 12 months. You will also be
charged daily interest on any outstanding tax owing.
Your corporation will be charged an even larger penalty if it was issued a
“demand to file” from the CRA and was assessed a failure to file penalty in any
of the three previous tax years.
The penalty is 10% of the unpaid tax when the return was due, plus 2% of this
unpaid tax for each complete month that the return is late, up to a maximum of
20 months.
Stay on top of your tax deadlines and you won’t have to worry about interest
and penalties.

Instalment and Other Penalties

The CRA may charge your corporation penalties for other reasons including:
• late or incomplete instalment payments
• failure to provide information on an authorized or prescribed form
• when instalment interest is more than $1,000
• if a corporation makes a false statement or omission on their return
• not complying with mandatory internet filing (applicable to corporations
with annual gross revenue exceeding $1 million)
• failing to distribute T4 slips to recipients

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PAYING YOURSELF FROM
YOUR CORPORATION

There are 3 ways to take money out of a corporation:

1 By paying yourself a salary
2  hrough dividends (payments declared by the
T
directors of the company and paid to the
shareholders of the company)
3 Through a shareholder loan (must be repaid—
speak to a tax specialist for more details)
As a business owner with a corporate structure, you can pay yourself
a salary, dividends, or do a mix of both.

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PAYING YOURSELF FROM YOUR CORPORATION CONTINUED

The method you use to pay yourself personally from your corporation has an
impact on many different things—and not just your personal income tax owing.
While dividends likely create the lowest personal tax liability, they don’t allow you
to create contribution room to RRSP, build up CPP, take advantage of childcare
credits and they may create issues with potential WCB claims. The form of your
personal compensation can affect what you receive from government programs
and credits as well as your ability to qualify for loans from lending institutions.
Let’s look at the differences below, and what each option could mean for you when
deciding how to structure your compensation.

Paying Yourself a Salary

If you decide to pay yourself a salary, you’ll need to register a payroll account
with the CRA. Each time you pay yourself, you’ll need to withhold and remit
income taxes to the CRA.
You’re also required to make mandatory payments to the CPP on your income.
If you’re a small business owner and your net income is more than $3,500, you
will end up paying double the CPP than you would as an employee, as you are
paying both the half of the employer and the half of the employee; however,
keep in mind that both portions are tax deductible.
Paying yourself a salary would be a good option if you are relying on CPP as
part of your retirement savings. Your RRSP contribution room is also built
using your business salary. As well, if you incur child-care costs in the year, the
lower-income earning spouse can deduct those costs from employment income.
If both spouses were to receive only dividend income, those costs would not
result in any tax savings and therefore “lost”.

Paying Yourself Dividends

Dividends can be paid to shareholders of your corporation. Dividends are
considered investment income instead of business income. You might pay
slightly less personal tax on dividends than on a salary, since you receive a
dividend tax credit.
When you want to prepare dividends for your shareholders, you move the cash
from your corporate account to the shareholder’s personal account. You’ll have
to prepare and file T5s to the CRA for anyone who receives dividends.
You won’t need to register for payroll and remit source deductions if there are
no payroll (salary) payments.
Paying yourself dividends could be right for you if you don’t want forced CPP
contributions. Keep in mind dividends also do not build RRSP contribution
room, so you’ll want to have your own retirement plan in place.

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PAYING YOURSELF FROM YOUR CORPORATION CONTINUED

Taking Out a Shareholder Loan

Although shareholder loans are not considered to be a method for paying
yourself, they are a way to take money out of your corporation.
Shareholders may use corporate funds for personal uses throughout the year.
These amounts are considered loans from the corporation to the shareholder.
As long as the money is repaid before the end of the corporation’s fiscal year-
end, you do not have to pay personal tax on the borrowed funds.
Shareholder loans can be enticing for business owners, but they may not be right
for your individual situation (learn more about shareholder loans on page 27).

So How Should I Pay Myself as a Business Owner?

It depends on your individual business and family situation. Dividends are
a more flexible payment option and you don’t have to pay into CPP so
you’ll reduce your costs that way. However, you’ll need to be careful about
contributing to your own retirement savings, and keep in mind that you won’t
be creating contribution room in your RRSP by issuing yourself dividends.
Also, dividends aren’t typically accepted as salary on loan applications if you’re
applying for a mortgage or other lines of non-business credit.
There are many other factors, such as other income sources, that can impact
whether you should be paying yourself a salary or dividends. Speak to a tax
specialist to find out which option is right for you.

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SHAREHOLDER LOANS
Have you heard of a shareholder loan and wondered what it is and how it works?
Keep reading and learn more about it here.

As Canadian interest rates continue to soar, the idea of taking out a loan from your
corporation at no or low interest may be increasingly appealing.
But, before you start using a shareholder loan account, it’s important that you
understand the associated tax implications. While shareholder loans may initially
look attractive to many small business owners, they may not be a good fit for your
individual situation.
If you’re considering taking out a shareholder loan, here is what you need to know
before you make that decision.

What Are Shareholder Loans?

A shareholder loan is an amount that you, as a shareholder owe, to your corporation.
Typically, a shareholder is paid from the corporation through either salary or
dividends. Dividends are paid from after-tax corporate profits and taxed at a
personal level. Salary payments require source deductions to be paid in a timely
manner (i.e. CPP and income tax must be remitted to CRA usually by the 15th
of the following month). Shareholders may use corporate funds for personal
uses throughout the year, outside of the traditional salary or formal dividend
arrangements. These amounts are considered loans from the corporation to the
shareholder. This money has not been taxed at a personal level, so must either be
repaid by the shareholder within a certain time frame (i.e. typically a year), or must
be included in the shareholder’s personal income.
A shareholder loan can be made to your own company, a company related to your
company, or a partnership of which your company is a member. The company
can give shareholder loans to any shareholder of the company and any person
connected with the shareholder of the company. Check out the Canada Revenue
Agency website on who are connected shareholders.

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SHAREHOLDER LOANS CONTINUED

How Can You Use Shareholder Loans?

There are four common uses for shareholder loans: two that are considered “due
from shareholder” loans and two that are considered “due to shareholder” loans.

Due from Shareholder

If you withdraw money from your incorporated business and it is not designated
as salary or dividends paid to you, it is considered a loan from the company to you,
the shareholder.
Another common “due from shareholder” loan takes place when company money
is used to purchase a personal item.
In both situations, corporate funds have been borrowed for personal purposes and
personal tax has not been paid on those amounts. Be aware that these types of
loans are subject to special rules such as requiring repayment to the corporation
within a year.

Due to Shareholder
If you pay for company expenses using personal funds or loan money to the
company, this is considered an owner contribution and is reflected on the balance
sheet as a debt owed (liability) by the company; the company will need to pay the
owner back at some point.

What Are the Tax Implications of Shareholder Loans?

Before taking out a shareholder loan, there are several tax implications you need
to be aware of. The most important is the shareholder loan repayment rule. The
basic rule is that the amount of the shareholder loan will not be included in your
taxable income if you repay the loan within one year from the end of the fiscal
year of the corporation.
For example, assume you own shares in Company A, and Company A has
a fiscal year-end of December 31. If you borrowed money from Company A
on December 1, 2023, you need to repay the loan by December 31, 2024.

Tax Income Impact of Shareholder Loans

If you don’t repay the money within that time, you must include the unpaid amount
in your taxable income and pay income tax on it.
Also, if you didn’t charge an interest rate on the loan, you must also add interest
rates equal to the prescribed rate to your taxable income. The prescribed rate is
currently 2% but is subject to revision every quarter. This interest is considered
a taxable benefit to you, as a shareholder, and it reflects a benefit you received
(i.e. a loan) due to your role as a shareholder. Taxable benefits are included in your
personal taxable income.

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SHAREHOLDER LOANS CONTINUED

Exceptions to the Shareholder Loan Rules

You can take out a shareholder loan for a longer period in certain circumstances.
For example, if your company’s business is to give out loans, and the shareholder
loan is made in the ordinary course of the business, then as long as the terms of
your shareholder loan are similar to that of any unrelated borrower, you don’t need
to repay the amount within one year and you won’t run into any tax issues.
You can also take out a shareholder loan if you purchase a motor vehicle for
company use or if you purchase a principal residence for the shareholder, this can
include a house, condo, cottage, or mobile home. There are certain conditions
which must be met in order for this to apply (i.e. must have a legitimate repayment
plan with a reasonable time frame, etc.).

What to Know Before Taking Out a Shareholder Loan

Remember, your corporation is a separate entity from you; therefore, corporate
funds and personal funds must be kept separately. You should also keep proper
paperwork and structure your shareholder loans correctly to avoid any issues
at tax time.
However, one of the best ways to safeguard yourself from potential problems with
CRA is to speak with a tax specialist and make sure that the right paperwork is in
place, such as clear tracking of the transactions made through the shareholder loan
account, so it’s clear to CRA that you will or have paid off the loan, and that you
keep paper records of repayment.
If the loan is to a related party, you should consider a separate and detailed loan
agreement to protect your rights and the rights of the borrower.

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CAPITAL GAINS TAX
Corporations are subject to specific rules and rates when it comes to capital
gains taxation, which can have significant implications for their tax planning
strategies.

In Canada, capital gains tax applies to the profit earned from the sale or disposition of
certain capital assets, such as real estate, stocks, and business assets.
Corporations are subject to specific rules and rates when it comes to capital gains
taxation, which can have significant implications for their tax planning strategies. Here,
we'll explore the basics of capital gains tax for Canadian corporations, including Lifetime
Capital Gains Exemption (LCGE) and capital gains inclusion rates.

Capital Gains Tax Basics

Capital gains tax is calculated based on the difference between the proceeds from the
sale of a capital asset and its adjusted cost base (ACB). The ACB typically includes the
original purchase price of the asset, as well as any related expenses such as commissions
and improvements. The taxable capital gain is determined by applying the capital gains
inclusion rate to the net capital gain, which is currently 50% for most capital assets.
For corporations, capital gains are included in taxable income and taxed at the
applicable corporate tax rate. However, corporations may be eligible for certain tax
incentives and exemptions that can reduce or eliminate the tax payable on capital gains.

Lifetime Capital Gains Exemption

The Lifetime Capital Gains Exemption (LCGE) is a valuable tax benefit available to
eligible individuals or corporations who dispose of qualified small business corporation
shares (QSBCS), qualified farm property, or qualified fishing property (QFFP). The LCGE
allows individuals to shelter a portion of their capital gains from taxation, up to a
specified lifetime limit.
Currently*, the LCGE limit for QSBCS is $971,190 and $1,000,000 for QFFP. This means
that eligible individuals can claim up to this amount of capital gains as exempt from
taxation over their lifetime. Because you only include one half of a capital gain in your
income, your cumulative capital gains deduction is one half the LCGE.
It's important to note that the LCGE is a cumulative limit and applies to the total capital
gains realized on qualified assets throughout the individual's lifetime.

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CAPITAL GAINS TAX CONTINUED

Capital Gains Inclusion Rates for Corporations

In Canada, the capital gains inclusion rate for corporations is currently* 50%,
meaning that only 50% of the capital gains realized by a corporation are included in
its taxable income. This results in a lower effective tax rate on capital gains
compared to ordinary income, which is fully taxable at the corporation's regular tax
rate.
For example, if a corporation realizes a capital gain of $100,000, only $50,000
(50% of the gain) is included in its taxable income for the year. The remaining
$50,000 is tax-free until distributed to shareholders as dividends or otherwise
disposed of by the corporation.

Tax Planning Considerations

When it comes to capital gains tax planning for Canadian corporations, several
strategies can be employed to maximize tax efficiency and minimize overall tax
liability:
1. Utilizing the LCGE: Corporations can benefit from the LCGE by structuring
transactions to qualify for the exemption or by distributing eligible assets to
shareholders to take advantage of their individual LCGE limits.
2. Timing of Dispositions: Timing the sale or disposition of capital assets
strategically can help optimize capital gains tax outcomes. Corporations may
consider factors such as market conditions, tax rates, and the availability of
tax credits or incentives.
3. Offsetting Capital Losses: Capital losses realized by a corporation can be
used to offset capital gains, reducing the overall tax payable. Corporations
may engage in tax-loss selling strategies or carry forward capital losses to
future years to maximize their tax benefits.
4. Dividend Planning: Corporations can distribute capital gains to shareholders
as eligible dividends, which may result in lower tax rates for certain
individuals compared to receiving salary or other forms of income.

Capital gains tax is an important consideration for corporations engaged in the sale
or disposition of capital assets.
Please consult with a tax specialist to help you understand the rules and
opportunities surrounding capital gains taxation, including the LCGE and capital
gains inclusion rates. An advisor specializing in corporate tax planning can help
you make informed decisions and optimize your tax outcomes.

*Canada's Federal Budget was released April 16, 2024. While tax rates remain unchanged, there were some
proposed changes to capital gains taxes for incorporated businesses. Please read our Federal Budget 2024 Highlights
blog for more information.

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DO YOU KNOW WHICH TAX
DEDUCTIONS AND CREDITS
APPLY TO YOU?
We’ve compiled a list of tax deductions and credits that may help lower your tax bill.

Federal Tax Credits

There are tax credits available at both the federal and provincial level but here
we highlight some common federal tax credits for small businesses that you
should be taking advantage of.

Investment Tax Credit – Property, Machinery, Equipment

Investment Tax Credits (ITC) allow you to claim tax credits if you invested in
your small business, bought machinery, equipment or new buildings.
What if you could have taken advantage of investment tax credits, but forgot
to? You can carry forward credits earned in tax years that end after 1997 for up
to 20 years. You can also carry back the credit you earn for up to 3 years.
You may be able to claim a refund of your unused ITCs as well.
Since there are eligibility rules and requirements that must be met before claiming
investment tax credits on property, machinery and equipment, it’s recommended
that you speak to a tax specialist to ensure you’re following the rules.

Apprenticeship Job Creation Tax Credit

If you own a small business that has hired an apprentice, you can claim 10% of
their wages, up to a maximum of $2,000 per eligible employee.
An eligible apprentice is someone who works for you in a qualifying trade in the
first two years of their field of expertise.
Any unused credit can be carried back 3 years and carried forward 20 years
(to help offset larger tax bills).

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DO YOU KNOW WHICH TAX DEDUCTIONS AND CREDITS APPLY TO YOU? CONTINUED

Scientific Research and Experimental Development (SR&ED) Tax Credit

This program encourages Canadian businesses to conduct research and development by
providing cash refunds and/or tax credits for your research and development
expenditures.
You can pool your SR&ED expenditures and deduct them against your current year income
or keep them and deduct them in a future year.
You can also earn the SR&ED investment Tax Credit and use it to reduce your income tax
payable. In some cases, the CRA will refund the remaining ITC.
If your SR&ED work is eligible, your investment tax credit will be at least 15% and can be as
much as 35% of qualified SR&ED expenditures. If you have any unused ITCs, you can carry
them back three years or forward 20 years and apply them against tax payable for other
years.
The provincial governments and territories also support SR&ED through additional tax
credits and grants.

Charitable Donations
Charitable donations made by corporations can be eligible for tax credits, which can help
reduce the corporation's tax liability. There are several key points to keep in mind:

• The tax credit is calculated based on the total amount of eligible donations made to
registered charities or qualified donees, with rates varying depending on the
donation amount.
• There are limits on the amount of donations that can be claimed in a tax year,
generally capped at 75% of the corporation's net income.
• Excess donations can be carried forward for up to five years or, in some cases,
carried back to previous tax years.
• Proper documentation of donations, including receipts or acknowledgment letters, is
essential to support claims for tax credits.
• It's important to be aware of any provincial tax credits that may apply, as rates and
rules can differ across jurisdictions.

It's essential to understand the eligibility criteria, limits, and documentation requirements
associated with claiming tax credits for charitable donations to ensure compliance with tax
laws and regulations. Consulting with a tax specialist can provide personalized guidance
based on the corporation's specific circumstances.

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DO YOU KNOW WHICH TAX DEDUCTIONS AND CREDITS APPLY TO YOU? CONTINUED

Input Tax Credit

You may be able to recover GST/HST paid or payable on purchases and
expenses related to your business, by claiming input tax credits but you must
have a registered GST/HST number to claim them.

Keep track of GST/HST paid on eligible business expenses so that you can claim
them on your GST/HST return. Be sure to keep your receipts should you be
required to back up your claims.

WHAT EXPENSES ARE ELIGIBLE FOR INPUT TAX CREDITS?

To claim an input tax credit, the expense(s) must be reasonable in quality,
nature, and cost in relation to the nature of your business. According to the
CRA’s website, the following expenses may be eligible for input tax credits:

• business start-up costs

• business-use-of-home expenses
• delivery and freight charges
• fuel costs
• legal, accounting, and other professional fees
• maintenance and repairs
• meals and entertainment (allowable part only)
• motor vehicle expenses
• office expenses
• rent
• telephone and utilities
• travel

The following expenses are NOT eligible for the input tax credit:
• certain capital property
• taxable supplies of property and services bought or imported to make
exempt supplies of property and services
• membership fees or dues to any club whose main purpose is to provide
recreation, dining, or sporting facilities (including fitness clubs, golf clubs,
and hunting and fishing clubs), unless you acquire the memberships to resell
in the course of your business
• property or services you bought or imported for your personal consumption,
use, or enjoyment

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Additional Corporate Tax Credits and
Special Accounts

Refundable Dividend Tax on Hand (RDTOH)

A dividend refund may be available to private corporations that pay taxable
dividends in a taxation year. The calculation of a private corporation’s dividend
refund is based on two accounts, the eligible refundable dividend tax on hand
(ERDTOH) and the non-eligible refundable dividend tax on hand (NERDTOH).

Capital Dividend Account (CDA)

With a positive balance in this account, you may be able to pay out tax-free income
to shareholders.

General Rate Income Pool (GRIP)

If your Canadian-controlled private corporation makes over $500,000 a year in
active income and/or generates investment income, you may be able to use Eligible
Dividends to trigger a partial tax refund to your corporation and claim a higher
dividend tax credit personally.
Speak to a tax specialist for more information on how to utilize the RDTOH, CDA or
GRIP for your corporation.

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What is the difference between a tax
deduction and a tax credit?

Tax deductions are allowable expenses that reduce your taxable income
whereas a tax credit is a percentage of an expense that directly reduces the
amount of tax you must pay to the CRA.

Small business tax deductions (or “write-offs”) include business

expenses such as rent, office supplies, advertising, and promotion. The total impact
of the tax deduction on your taxable income depends on your tax rate.

A tax deduction must also be claimed against the income

earned in the year the expense was incurred.
Once you’ve applied your tax deductions to your taxable income and calculate your
tax owing, you can then apply your eligible tax credits. Tax credits (typically 15 per
cent of the total expense) reduce this tax amount owing on a dollar-for-dollar basis.
If you spend $500 on a cost eligible for a tax credit, you may receive a tax credit of
15 per cent for a total of $75 saved on your tax owing.

Claiming tax deductions and credits can be complicated so

you should work with a specialist to ensure you’re applying
them correctly.

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DO YOU KNOW WHICH TAX DEDUCTIONS AND CREDITS APPLY TO YOU? CONTINUED

Tax Deductions

Advertising
You can deduct expenses for online advertising, advertising on Canadian radio
and television stations and Canadian newspapers and magazines, as well as
promotional materials like business cards and pamphlets.
Sponsorship of local sports teams, and other branded charitable donations, can
be claimed as advertising if the materials include your branding and logo, which
could potentially increase awareness of your business.

Bad Debts
If you are owed money from a client but are unable to collect it within a year, you
may be able to claim it. You can generally deduct an amount for a bad debt if:
• you had determined that an account receivable is a bad debt in the year
• you had already included the receivable in income
Note: Recovery of bad debts previously written off must be included in income in the year it
was recovered.

Business Taxes, Licenses and Memberships

You can deduct annual licence fees (beverage, trade, motor vehicle licenses)
and some business taxes (municipal taxes, land transfer taxes, gross receipt tax,
health and education tax, and hospital tax).
You can also deduct annual dues or fees for trade or commercial associations, as
well as magazine subscriptions if they’re expenses incurred to earn business income.
Note: You cannot deduct club membership dues (including initiation fees) if the
main purpose of the club is dining, recreation, or sporting activities such as golf club
memberships.

Delivery, Freight and Express

You can deduct the cost of delivery, freight, and express incurred in the year
that relates to your business.

Fuel Costs (Except for Motor Vehicles)

You can deduct the cost of fuel (including gasoline, diesel, and propane), motor
oil, and lubricants used in your business.
Fuel for motor vehicles will be deducted under motor vehicle expenses/
business use of your personal car.

Interest and Bank Charges

You can deduct interest on money that was borrowed for business purposes or
for buying property for your business. You can’t deduct the principal of loan or
mortgage payments, or any money borrowed for personal purposes.
You can deduct the fee you pay to reduce the interest rate on your loan, along
with any penalty a bank charges you to pay off your loan before it is due.

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DO YOU KNOW WHICH TAX DEDUCTIONS AND CREDITS APPLY TO YOU? CONTINUED

You may be able to deduct certain fees you incur when you get a loan to buy or
improve your business property. These fees include:
• application, appraisal, processing, and insurance fees
• loan guarantee fees
• loan brokerage and finder’s fees
• legal fees related to financing
Typically, costs associated with financing are deducted over a period of five years,
regardless of the term of your loan. Talk to a tax specialist for more information.

Insurance Premiums
You can deduct insurance premiums you pay for insurance on buildings,
machinery, and equipment you use for your business.

Legal and Accounting Fees

In some cases, fees for accounting, bookkeeping, tax preparation and finances
can be deducted, along with legal fees.

Meals and Entertainment

You can deduct 50 per cent of your total meal and entertainment expenses for
business purposes.

Capital Cost Allowance

If you acquire depreciable property or asset for your business, such as a building,
furniture, or equipment, its cost may be deductible over numerous years. This
is to reflect that the use of the asset or property spans more than one year. This
yearly deduction is called a capital cost allowance (CCA). There are a few rules
you need to follow to claim it.
• You cannot deduct its full cost when you calculate your net business income
for the year in which you acquired the asset or property. It must be deducted
over a period of years.
• Typically, office furniture and tools are considered Class 8 property that
allows you to deduct 20% for your annual CCA
• Computers and other data processing equipment is Class 10 which allows
for 30% CCA
• There are different rules and classes depending on the asset, its use and its
value. We recommend talking to a tax specialist to determine the optimal
application for this deduction.
The government introduced the Accelerated Investment Incentive measure to
increase the first year deduction of certain assets.

Office Expenses
This includes small items like pens, pencils, paper clips and stationery. You
can’t claim items valued at over $500 such as furniture or computer equipment,
which would qualify as capital items.

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DO YOU KNOW WHICH TAX DEDUCTIONS AND CREDITS APPLY TO YOU? CONTINUED

Rent
You can deduct rent incurred for property used in your business.

Repairs and Maintenance

You can deduct the cost of labour and materials for any minor repairs or
maintenance done to property you use to earn income.

Salaries, Wages and Benefits

You can deduct employees’ gross salaries and other benefits incurred by you as
the employer. As the employer, you must deduct your part of CPP contributions
and employment insurance premiums. You can also deduct workers’ compensation
amounts payable on employees’ remuneration.
If you pay yourself a salary out of your corporation (instead of dividends), your
wages and benefits would be included in this calculation.

Travel Expenses
You can deduct travel expenses, including transportation fares and hotel
accommodation.

Business Use of your Personal Car

If your company uses any personal assets, you have a right to be reimbursed or
compensated for this. An example is if you use a personal car for business purposes.
You would pay all vehicle expenses personally and the corporation could provide
you with a tax-free allowance for business travel. You would need to keep a mileage
log to track the kilometers the vehicle traveled for business purposes.
The company would then pay you personally based upon rates provided by the
Canada Revenue Agency (61 cents per kilometer for the first 5,000 kilometers and
55 cents per kilometer over that).

Net Operating Losses

Net operating losses generally may be carried back three tax years and forward 20.
There are special rules and exceptions that apply, speaking with a tax specialist is
recommended.

Fines and Penalties

Fines and penalties that are not government-imposed are generally deductible
if incurred for the purpose of gaining or producing income from the business
or property.

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Claiming non-capital losses

You have to be careful with what you claim, and where.

For example: If your business is incorporated, any non-capital losses can’t be
used to reduce income on your T1—your personal tax return. But non-capital losses
can be applied against income on your T2 to reduce the corporation’s tax bill.
Non- capital losses can also be carried back or carried forward to recover tax
you’ve paid in the past or help reduce a tax bill in the future.

Talk to a tax specialist to find out when it’s strategic to report

non-capital losses.

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KEEPING YOUR RECORDS IN ORDER
You are required by law to keep records of all your transactions to be able to support
your income and expense claims. You must keep daily records of your income and
expenses, along with vouchers and receipts.

If you don’t maintain records and are

audited by the CRA, you could face hefty
fines and penalties.
Because your records may be inspected by tax auditors, they should be
properly stored along with cancelled cheques and other vouchers to support
your book entries.
Good record keeping is essential to any business, since it provides you with
accurate, up-to-date information on the financial position of your business,
helps you with business planning and satisfy creditors if you want a loan.
Keep your records for at least six years after your last Notice of Assessment,
which is typically as far back as the CRA will ask to see them in the event of
an audit. You can keep the physical receipts or digital copies.
Make sure the income you report is supported with original documents,
which include sales invoices, bank deposit slips, fee statements, contracts
and receipts.
The CRA won’t accept your bank or credit card statements to justify
deductible business expenses—you need an itemized receipt that
corresponds with the transaction.
The receipts must show the date of the purchase, name and address of the
seller or supplier, your name and address, the full description of the goods or
services and the seller’s business number if they register for GST/HST. If you
don’t have receipts, the CRA could disallow your expense claims.

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WORKING WITH A TAX SPECIALIST
A tax specialist keeps your books and records in order, tracks your progress and
compares past and present financial positions, plans and forecasts future financial
positions and provides information to make sound business decisions.

They keep on top of filing deadlines, so

you avoid penalties and interest, and stay
up-to-date with tax rules and regulations so
you receive all the credits you’re entitled to.
They give you an overview of your financial situation and provide long-
term tax planning that reduces your yearly tax bill.
If you are audited by the CRA, a tax specialist can represent you so that
you don’t have to take time away from your business to deal with the
audit process.

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Tax Preparation Checklist for Incorporated Businesses
The following two pages are a summary of the documents you need to file your tax return
along with a list of business deductions you can use to lower your tax bill. Bring the documents
below to your FBC tax specialist so they can create a tax plan customized to your business and
personal situation.

BUSINESS RECORDS
Deposit slips
Bank statements
Income records
Sales invoices
Receipts
Bank deposit slips
Fee statements
Contracts
If you have employees
T4: Summary of Remuneration Paid
T4A: Summary of pension, retirement, annuity and other income
If you make payments to subcontractors
T5018: Statement of Contract Payments
Shareholder transactions and dividends
Receipts on any capital purchases or sales
Worker’s compensation payments or benefits
Instalments made for income tax, GST/HST/PST and payroll
Payroll, source deductions and taxable benefits for employees
Previous tax year slips and receipts
T1 Personal tax return, Notice of Assessment and any other CRA correspondence
T2 Return, Notice of Assessment and any other CRA correspondence
Investment information
T3 slips
T5 slips
Minute Book for updating and filing
Annual Return for updating and filing

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TAX PREPARATION CHECKLIST FOR INCORPORATED BUSINESSES CONTINUED

BUSINESS DEDUCTIONS
Advertising
Bad debts
Business taxes, licenses and memberships
Charitable Donations
Delivery, Freight and Express costs
Fines and Penalties
Fuel Costs
Interest and bank charges
Insurance premiums
Legal and accounting fees
Meals and entertainment
Capital Cost Allowance (Depreciation Expense)
Office expenses
Office stationary and supplies
Rent for property used in your business
Property taxes if not included in base rent on property used for business
Repairs and maintenance
Salaries, wages and benefits incurred by you as an employer
Travel expenses
Mileage logbook and deductions for personal use of car

To find out more about how we can support your

business, take 15 minutes to connect with us so
we can get to know each other.
Click here to book a consultation
Call us at 1-800-265-1002

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For more free tax and business resources, please visit www.fbc.ca
Click here to book a consultation
Call us at 1-800-265-1002

www.fbc.ca