The checklist
1. Decide how you will pay yourself
Salary is deductible to the company, builds RRSP room and CPP. Dividends avoid payroll but create no RRSP room. For 2026, remember the corporate rate is lower than last year and non-eligible dividends become slightly more expensive personally from 2027, so run the numbers for both years together.
2. Put any bonus in writing, and pay it on time
A bonus accrued at year-end is deductible in that year only if it is actually paid within 180 days after the year-end, with source deductions remitted. Record it in a director’s resolution before year-end.
3. Deal with shareholder loans
If you owe the company money, the balance generally has to be repaid within one year after the end of the corporation’s tax year, and not as part of a series of loans and repayments, or it is added to your personal income. Look at the balance now, not in the spring.
4. Buy and use equipment before year-end
Capital cost allowance is available only once an asset is available for use. Computers and general-purpose software bought and put into use before 2027 are eligible for a 100% first-year write-off under the current accelerated rules, and most other equipment qualifies for an accelerated first-year deduction.
5. Check passive investment income
If the corporation and its associated companies earn more than $50,000 of passive investment income in a year, the small business limit shrinks the following year. Large realized gains in December can matter.
6. Pay family members properly
Salary to a spouse or child is deductible when it is reasonable for work actually done. Keep timesheets or a written description of their role. Dividends to family members are subject to the tax on split income rules.
7. Clean up receivables and inventory
Write off accounts you genuinely can’t collect and count inventory at year-end. Both affect taxable income.
8. Make charitable donations through the right entity
Donations made by the corporation are deductible against corporate income; donations made personally earn a personal credit. Decide which suits you before December 31.
9. Get payroll and slips ready
T4 and T5 slips and summaries are due by the last day of February. Confirm employee and shareholder addresses and SINs now.
10. Book a year-end planning meeting
Thirty minutes in November or December is worth more than hours in April. Book a free consultation or see our fixed monthly packages, which include planning meetings in the Growing Business and Established Business packages.
Common questions
Is the year-end checklist different for a June 30 year-end?
The items are the same; the timing shifts. Work through the list in May or early June.
Can I still pay a bonus after year-end?
You can pay it after year-end if it was accrued in the year and paid within 180 days. If it is paid later, the deduction moves to the year it is paid.
What if my shareholder loan can’t be repaid in time?
There are options, such as declaring a bonus or dividend to clear it, each with different tax costs. Talk to us before the deadline passes.
This article is general information based on the rules as of its date, not advice for your situation. Talk to us before acting on it.
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