Year-End Tax Planning Checklist Ontario (2026) | Mississauga CPA

By Bader A. Chowdry, CPA, CA, LPA | Insight Accounting CPA

At Insight Accounting CPA in Mississauga, we provide expert accounting, tax planning, and advisory services for Ontario businesses across the GTA and Toronto.

# Year-End Tax Planning Checklist for Ontario Business Owners

*By Bader Chowdry, CPA | Insight Accounting CPA | [Insight Accounting CPA](https://insightscpa.ca)*

As the fiscal year draws to a close, Ontario business owners face a critical window for tax optimization. Whether you operate in Mississauga, across the GTA, or anywhere in Canada, missing year-end opportunities can cost your business thousands in unnecessary tax liability. This comprehensive checklist—designed specifically for $500K+ enterprises—ensures you capture every available deduction while remaining fully compliant with Canada Revenue Agency (CRA) requirements.

## Why Year-End Tax Planning Matters for Ontario Businesses

The difference between reactive and proactive tax planning often translates to 15-30% in additional savings for Ontario businesses. Under the Income Tax Act, your ability to implement certain strategies expires when the fiscal year closes—making November and December mission-critical months. [Our tax planning services](/services/tax-planning) help businesses throughout Toronto and Mississauga optimize their tax position before year-end deadlines.

### Strategic Timing Considerations

Ontario businesses benefit from understanding jurisdictional nuances:

– **Provincial Corporate Tax Rate**: Ontario maintains a 11.5% small business rate on the first $500,000 of active business income
– **Federal Rate Integration**: The federal rate of 9% combines with provincial obligations
– **Calendar Year vs. Fiscal Year**: Many owner-managed businesses elect non-calendar fiscal years, creating specific planning windows

## Pre-Closing Checklist: Actions Before Your Year-End

### 1. Income Deferral and Acceleration Strategies

The fundamental principle of year-end tax planning is timing—when you recognize income and when you incur deductible expenses.

**For Calendar-Year Businesses (December 31 year-end):**
– Consider invoicing timing—issuing invoices before year-end accelerates income recognition
– Review outstanding receivables—bad debts may be deductible under specific conditions
– Evaluate prepaid expenses—which can often be deducted when paid

**For Non-Calendar Fiscal Years:**
– Assess whether your fiscal year-end aligns with your business cycle
– Consider the tax deferral benefits available through [strategic year-end selection](/services/tax-planning)

### 2. Expense Acceleration Opportunities

Maximize deductible expenses before year-end:

| Expense Category | Timing Strategy | CRA Considerations |
|—————–|—————|——————-|
| Equipment/Software | Purchase before year-end for CCA | Available for use rule triggers deduction |
| Professional Development | Pay registration fees before year-end | Must relate to current business |
| Insurance Premiums | Prepay multi-year policies | Limited to 12-month prepayment |
| Office Supplies | Bulk purchases for Q1 needs | Document business purpose clearly |
| Capital Projects | Complete projects before year-end | Significant CCA impact |

### 3. Capital Cost Allowance (CCA) Optimization

Understanding the [Accelerated Investment Incentive](/services/tax-planning) is crucial:

– **Class 50 (Software)**: Up to 55% CCA rate
– **Class 8 (Furniture)**: 20% rate
– **Class 1 (Buildings)**: 4% rate
– **Class 44 (Patents/Franchises)**: 25% rate with specific rules

**Immediate Expensing**: Certain property may qualify for immediate full deduction under the enhanced Immediate Expensing rules—potentially the last opportunity for some businesses depending on legislative changes.

### 4. Owner Compensation Review

For Mississauga and GTA business owners, optimizing the salary versus dividend mix requires careful analysis:

#### Salary Planning
– Maximizes RRSP room ($31,560 of earned income needed for maximum 2026 RRSP deduction)
– Creates CPP contribution entitlements
– Reduces corporate taxable income immediately
– Required for loss carryback claims

#### Dividend Planning
– More tax-efficient at certain income levels
– No CPP contribution requirement
– Subject to Part IV tax and potential Part I tax on association
– Must comply with integration rules

**Our [CFO services](/services/fractional-cfo) can model optimal compensation strategies based on your specific tax bracket and retirement timeline.**

## Corporate Tax Planning Considerations

### Related Party Transactions

Review all transactions with shareholders, related corporations, and family members:

– **Shareholder Loans**: Ensure any amounts owing are repaid or structured properly to avoid income inclusion under subsection 15(2)
– **Reasonable Compensation**: Salaries paid to family members must represent fair market value for services rendered
– **Inter-Corporate Charges**: Management fees and shared services must be documented with appropriate transfer pricing

### Passive Income Restrictions

The passive investment income rules limit the small business deduction when adjusted aggregate investment income exceeds $50,000. Year-end is the time to:

– Review investment portfolio structure
– Consider tax-efficient investment wrappers
– Evaluate corporate-owned insurance strategies
– Assess capital gains/loss harvesting opportunities

### Loss Utilization

Maximize loss utilization strategies:

– **Non-Capital Losses**: Can be carried back 3 years or forward 20 years
– **Net Capital Losses**: Only usable against taxable capital gains
– **Allowance on Eligible Capital Property**: Track cumulative eligible capital deductions for potential recapture

## Personal Tax Integration for Business Owners

### Income Sprinkling Rules (TOSI)

The Tax on Split Income rules significantly limited income splitting opportunities, but valid exceptions remain:

– **Excluded Shares Exception**: Family members aged 25+ with specific ownership and involvement criteria
– **Reasonable Return**: Based on contributions of capital, work, or risk assumption
– **Related Business Exception**: Applies to aged 18-24 in specific circumstances

Proper documentation of family member contributions is essential for year-end compliance. Our Mississauga office has [specific expertise](/about) in family business structures.

### RPP and IPP Planning

– **Individual Pension Plans**: Establish or contribute before year-end for additional corporate deductions
– **Retirement Compensation Arrangements**: Consider whether an RCA structure benefits long-term planning
– **Personal Will**: Review beneficiary designations on all corporate life insurance policies

### Charitable Giving Optimization

For Ontario business owners with charitable inclinations:

– **In-Kind Donations**: Donate appreciated securities from corporation for combined corporate and personal benefits
– **Private Foundation Setup**: Consider establishing before year-end for immediate giving opportunities
– **Corporate Donations**: Claim deduction in year paid or within 24 months after year-end

## Documentation and Compliance Checklist

Accurate documentation substantiates all deductions. Before year-end, ensure:

### General Records
– [ ] All invoices issued and recorded
– [ ] Expense receipts organized and captured
– [ ] Bank and credit card statements reconciled
– [ ] Inter-company balances reconciled and confirmed
– [ ] Shareholder loan account balanced and documented

### Specific Ontario Requirements
– [ ] EHT (Employer Health Tax) filings reviewed
– [ ] WSIB clearance certificates current
– [ ] Ontario New Home Warranty registrations compliant
– [ ] PST exemptions properly documented

### CRA Compliance Checkpoints
– [ ] GST/HST ITC eligibility reviewed
– [ ] Large transactions requiring T106 filings identified
– [ ] Foreign reporting obligations (T1135) assessed
– [ ] Scientific Research and Experimental Development (SR&ED) projects documented

## Industry-Specific Year-End Considerations

### Construction Businesses

– **Holdback Reconciliation**: Accrue holdbacks receivable and payable
– **Progress Billing Analysis**: Percentage of completion adjustments
– **[Construction-specific tax strategies](/industries/construction)**: Union dues, apprentice incentives, bonding costs

### Healthcare Practices

– **Professional Corporation Requirements**: Review College regulations for corporation status
– **[Healthcare accounting](/industries/healthcare)**: Equipment purchases, patient billing timing
– **HST on Professional Services**: Ensure exemption rules properly applied

### Technology/SaaS Companies

– **SR&ED Documentation**: Track time and expenditures through year-end for maximum claim
– **Capital vs. Expense**: Software development cost treatment
– **[Technology sector incentives](/industries/technology)**: OIDMTC vs SR&ED optimization

## Post-Year-End Actions: Your 120-Day Window

Several critical actions must occur in the first 120 days after year-end:

### 1. T5 and T4 Summary Filings

– **T4 Summary Due**: Last day of February following calendar year-end
– **T5 Summary Due**: Same deadline for investment income reporting
– **Penalties**: $25/day minimum for late filing, up to $2,500

### 2. Corporate Tax Return Deadlines

– **Standard Deadline**: 6 months after year-end
– **Balance Due**: 2 months after year-end (3 months for CCPCs meeting specific criteria)
– **Instalment Requirements**: Monthly or quarterly obligations based on prior year

### 3. GST/HST Remittance

– Annual filers: 3 months after fiscal year-end
– Quarterly/monthly filers: Vary based on assigned periods

## FAQ: Year-End Tax Planning for Ontario Businesses

### What is the deadline for year-end tax planning decisions?

Most tax planning strategies must be implemented before your fiscal year-end. For December 31 year-ends, this means December 30. However, certain elections (like CCA class selection) can be made when filing your tax return—even up to 6 months post-year-end.

### How much should I set aside for tax after year-end?

Most Ontario CCPCs should reserve 12-15% of active business income for combined federal and provincial corporate taxes, plus additional amounts for shareholder personal taxes. [Schedule a consultation](/about) for a precise estimate based on your business structure.

### Can I change my fiscal year-end for tax advantages?

Yes, corporations can change fiscal year-ends with CRA approval, typically when there’s a legitimate business purpose. This can defer tax for up to 12 months or align with business cycles. However, the process requires professional tax advice.

### What records does CRA require for year-end tax positions?

CRA requires contemporaneous documentation for all deductions. This includes contracts, invoices, receipts, emails confirming business purpose, and transfer pricing documentation for related party transactions. Digital records are acceptable if properly organized.

### Are there Ontario-specific tax credits I’m missing?

Ontario offers several credits through the Ontario Innovation Tax Credit (OITC), Ontario Business Research Institute Tax Credit (OBRITC), and the Ontario Film and Television Tax Credit (OFTTC). Year-end is the time to verify qualification and complete applications.

### How does the SR&ED claim impact year-end planning?

[SR&ED tax credits](/services/sred-tax-credits) must be claimed within 18 months of the fiscal year-end, but optimal documentation requires year-end actions. Proper time tracking system implementation, project documentation completion, and expenditure categorization should occur before year-end.

### What’s the difference between accounting year-end and tax year-end?

While most businesses align their tax and accounting year-ends, some elect different periods for specific planning purposes. Understanding this distinction is critical for proper deduction timing and instalment calculations.

## Take Action Before Year-End

Year-end tax planning isn’t just about compliance—it’s about capturing opportunities that disappear when the clock strikes midnight on your fiscal year-end. At Insight Accounting CPA Professional Corporation, we help Mississauga and GTA business owners transform year-end from a stressful deadline into a strategic advantage.

**Call (905) 270-1873 today** to schedule your comprehensive year-end tax planning session with Bader Chowdry, CPA. Our [Accounting Intelligenceâ„¢](/about) approach ensures no opportunity is missed.

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*Disclaimer: This guide provides general information and does not constitute tax advice. Tax outcomes depend on specific circumstances, and professional advice should be obtained before implementing any strategy. Past performance does not guarantee future results.*

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**About Insight Accounting CPA**

Insight Accounting CPA Professional Corporation serves business owners throughout Mississauga, Toronto, and the Greater Toronto Area with sophisticated tax planning, compliance, and advisory services. Led by Bader Chowdry, CPA—a [patent-pending](/about) innovator in AI governance for financial controls—we combine traditional accounting excellence with forward-thinking technology integration.

*Accounting Intelligence™ — Where Technology Meets Financial Wisdom*