Before year-end, an owner-managed Canadian corporation should review financial statements, GST/HST, payroll liabilities, shareholder loans, salary/dividend mix, capital assets, CCA, receivables, payables, corporate tax instalments, and T2 readiness. Year-end planning is most useful before the fiscal year closes, not after.
Year-end should not be treated as only a tax filing exercise.
It is a business review.
For owner-managed corporations, the year-end review is also a chance to clean up tax-sensitive items before they become harder to fix. This is often where a fractional controller adds the most value - turning a once-a-year scramble into an ongoing monthly discipline.
CRA states that most resident corporations must file a T2 corporate income tax return every tax year, even if no tax is payable. That makes clean year-end records important for almost every incorporated business.
When this becomes a CPA conversation
Year-end planning is most valuable before the fiscal year closes. A CPA review can help clean up tax-sensitive balances, compensation decisions, GST/HST, payroll, capital assets, and cash flow before filing season narrows the options.
- The fiscal year-end is within the next few months
- Salary, dividends, shareholder loan, or equipment purchases need review
- GST/HST, payroll, corporate tax instalments, or T2 records may not be clean
Personalized Year-End Checklist
What still needs attention before year-end?
Answer five questions to build a focused review list for records, remittances, owner accounts, transactions, and tax readiness.
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Year-end review checklist
| Area | What to review | Why it matters |
|---|---|---|
| Financial statements | Profit and loss, balance sheet, cash flow | Confirms business performance and cleanup needs |
| GST/HST | Collected tax, ITCs, remittances | Avoids surprises and incorrect balances |
| Payroll | Source deductions, bonuses, T4 readiness | Supports compliance and owner compensation planning |
| Shareholder loan | Owner draws, repayments, reimbursements | Reduces risk of tax issues |
| Salary/dividend mix | Compensation paid or planned | Affects personal tax, CPP, RRSP room, and corporate cash |
| Capital assets | Equipment, vehicles, leaseholds, computers | Supports CCA review and tax treatment |
| Receivables | Old unpaid invoices | Identifies cash flow and possible bad debt issues |
| Payables | Unpaid bills and accrued expenses | Helps match expenses to the right period |
| Corporate tax | Instalments and expected balance | Helps avoid cash surprises |
| Next year planning | Hiring, pricing, financing, expansion | Turns year-end into management planning |
Start with the balance sheet
The balance sheet is where year-end problems often hide.
Review:
- Bank accounts
- Credit cards
- Accounts receivable
- Accounts payable
- GST/HST payable
- Payroll liabilities
- Corporate tax payable
- Loans and leases
- Shareholder loan
- Capital assets
If these accounts are not reviewed, the profit and loss statement may look clean while the underlying records are not reliable.
Review GST/HST before filing
GST/HST should not be treated as regular business cash.
If the business collects GST/HST, part of the bank balance may belong to CRA.
The GST/HST small supplier threshold is generally $30,000 in taxable revenue over four consecutive calendar quarters. Once the business crosses that threshold, registration and collection obligations can apply.
At year-end, review:
- GST/HST collected
- Input tax credits
- Payments made to CRA
- Adjustments
- Unusual transactions
- GST/HST balance on the balance sheet
This can prevent surprises before the next filing.
Review salary, dividends, and shareholder loan
Owner compensation is one of the most important year-end areas for a CCPC.
Salary and dividends are not the same.
| Item | Salary | Dividends |
|---|---|---|
| Paid through payroll | Yes | No |
| Creates RRSP room | Yes | No |
| CPP impact | Usually yes | No |
| Corporate deduction | Yes | No |
| T-slip | T4 | T5 |
| Common planning use | Active owner compensation | After-tax corporate profit distribution |
The right mix depends on the owner's personal tax situation, cash flow, CPP goals, RRSP planning, and corporate income.
Shareholder loan review is also important. Shareholder loans and debts can create income inclusion issues in certain circumstances.
Review capital assets and CCA
Not every large purchase should be expensed immediately.
Common capital items include:
- Equipment
- Computers
- Vehicles
- Furniture
- Leasehold improvements
- Major software implementation costs
These items may need to be capitalized and reviewed for capital cost allowance.
A year-end review should identify additions, disposals, financing, trade-ins, and business-use percentages.
Practical example
A Canadian owner-managed corporation had a profitable year and bought $95,000 of equipment in the final quarter.
The owner assumed the full amount would simply reduce taxable income.
During the year-end review, the CPA identifies that the equipment should be reviewed as a capital asset for CCA purposes. The controller also checks whether the equipment was financed, whether GST/HST was recorded correctly, and whether the purchase creates cash pressure before payroll and tax instalments.
The tax result matters, but the cash flow result matters too.
A year-end review should consider both.
Do not wait until after year-end
Some decisions are easier before the year closes.
Examples include:
- Accruing reasonable bonuses
- Reviewing owner compensation
- Collecting old receivables
- Planning equipment purchases
- Reviewing corporate tax instalments
- Cleaning shareholder loan activity
- Checking GST/HST balances
- Preparing T4/T5 information
After year-end, the options may be more limited.
Written by
Bobby Molaie, CPA, MAccFounder and lead advisor at Finexa CPA Advisory