Why plan instead of just filing
Filing a return reports what already happened. Planning changes what happens. Once your year-end has passed, most of the choices that affect your tax bill are gone, which is why a planning meeting a few months before year-end often pays for itself.
Corporate tax planning
- Keep active business income within the small business rate: in Ontario, 11.2% combined on the first $500,000 since July 1, 2026
- Watch the passive income limit: more than $50,000 of investment income in a year starts to reduce your small business limit
- Time equipment and vehicle purchases so the deduction lands in the right year
- Declare bonuses before year-end and pay them within 180 days to deduct them in the current year
- Plan tax instalments so you don’t overpay or pay interest
- Pay tax-free capital dividends when the company has realized capital gains or received life insurance proceeds
Paying yourself: salary, dividends or both
Salary is deductible to the company, builds RRSP room and earns CPP. Dividends are simpler, need no payroll and avoid CPP contributions. The right mix depends on how much you need to live on, whether you want RRSP room and CPP, and how much the company earns. We compare both every year and recommend a mix. Try our salary vs dividends calculator for a first estimate.
Family members and income splitting
Paying dividends to family members is restricted by the tax on split income (TOSI) rules. There are exceptions, such as dividends to a spouse once the owner is 65, or to family members who work in the business regularly, generally an average of 20 hours a week. Paying a reasonable salary to family members who actually work in the business is often the simpler option.
Personal tax planning for owners
- RRSP or TFSA, and how much of each
- Individual pension plans, which can let older, higher-income owners save more than an RRSP allows
- Vehicle and home office claims done properly
- Donations made personally or through the company
- Timing withdrawals from a holding company for lower-income years
If you’re not incorporated, we look at whether incorporating would save you tax, plan your deductions and CPP, and set your quarterly instalments. Our incorporation tax savings calculator gives you a first estimate.
Planning for a sale or succession
When you sell the shares of a qualifying small business corporation, the lifetime capital gains exemption can shelter up to $1.25 million of the gain from tax. The shares have to meet asset tests at the time of sale and over the two years before it, so planning should start at least two years before you sell. Moving surplus cash and investments to a holding company is often part of that plan.
When we meet
Two to three months before year-end
We review the year’s profit and decide on bonuses, purchases, dividends and instalments.
After year-end
We confirm your salary and dividend mix and prepare the year-end and returns.
Before the RRSP deadline
We plan RRSP contributions and your personal return.
When something changes
A big purchase, a new partner, a family change or a possible sale. Call before you act.
Common questions
Is tax planning legal?
Yes. Arranging your affairs to pay less tax by using the rules as they are intended is legal. We avoid aggressive schemes, and anything we recommend is something we’d be comfortable explaining to a CRA auditor.
How much can tax planning save?
It depends on your income and structure. The common savings come from the salary and dividend mix, timing purchases and bonuses, paying family members who work in the business, and keeping income at the small business rate. We estimate the savings before you commit.
When should I start?
At least two to three months before your company’s year-end. Many decisions have to be made before the year closes.
Do you plan both corporate and personal tax?
Yes. Looking at them together is the point: money left in the company, money you take out, and your family’s returns all affect each other.