Canadian Business Tax Checklist (T2 / Self-Employed)

The checklist for businesses depends on the entity type (Sole Proprietor, Partnership, or Corporation) and its fiscal year-end (FYE).

1. Key Deadlines & General Review

• Confirm FYE: Especially for corporations, ensure you know your official fiscal year-end date.
• CRA Accounts: Ensure access to CRA My Business Account for GST/HST, payroll, and corporate tax installment history.
• Finalize Accounting Records:

• Reconcile all bank accounts, credit cards, and loan balances up to the FYE.
• Ensure all transactions are properly classified (revenue vs. capital, personal vs. business).
• Verify GST/HST collected and paid (Input Tax Credits).

2. Revenue & Receivables

• Sales/Revenue: Finalize all sales records for the year.
• Accounts Receivable: Review the aged accounts receivable list. Write off any bad debts that are legally uncollectible by year-end (requires documentation).
• Accrued Income: Ensure all income earned but not yet invoiced/received is recorded (Accrual basis).

3. Expenses & Liabilities

• Prepaid Expenses/Accrued Expenses: Adjust for expenses paid in advance (e.g., insurance) and expenses incurred but not yet paid (e.g., utility bills, legal fees, interest).
• Accounts Payable: Review the aged accounts payable list.
• Inventory (if applicable): Conduct a physical count as of FYE and value it (usually at the lower of cost or fair market value). Adjust for obsolete or damaged inventory.

4. Capital Assets & Depreciation (CCA)

• Fixed Assets: Review the Fixed Asset Register. List all assets purchased or disposed of during the year (e.g., equipment, vehicles, buildings).
• Capital Cost Allowance (CCA): Calculate and record the maximum allowable depreciation deduction for the year for all asset classes.
• Immediate Expensing: Assess eligibility for the immediate expensing incentive, which allows up to $ 1.5 million of eligible property to be expensed per year (consult a professional for specific rules).

5. Payroll & Owner/Shareholder Items

• T4/T4A Preparation: Prepare and file T4 slips (for employees) and T4A slips (for contractors/pension/fees) by the deadline.
• Shareholder Loans (Corporations): Review any outstanding loans to/from shareholders. Loans from the corporation must be repaid or converted to income/dividends within one year of the corporation’s FYE, or specific tax consequences apply.
• Dividends (Corporations): Record all dividends paid and issue T5 slips.
• Payroll Remittances: Ensure all source deductions (CPP, EI, income tax) were remitted to the CRA on time.

6. Documentation for Deductions

• Vehicle Expenses: Detailed logbook (for a sample period or the whole year) documenting total kilometres driven and business kilometres. Receipts for gas, repairs, insurance, etc.
• Home Office: Calculate expenses (rent, utilities, insurance, maintenance, etc.) based on the percentage of the home used exclusively for business.
• Contracts & Invoices: Maintain all supporting documents for all income and expense claims.

7. Tax Planning & Filing

• Financial Statements: Prepare the final Income Statement and Balance Sheet.
• Tax Estimate: Work with an accountant to estimate the final tax liability and plan for payment.
• Tax Credits: Review eligibility for specific credits (e.g., Scientific Research & Experimental Development (SR&ED), Provincial Tax Credits).
• Losses: Track and utilize any prior-year losses being carried forward.

Disclaimer: This checklist is for organizational purposes only and should not be considered legal or professional tax advice. Always consult with a qualified Canadian tax professional (e.g., a CPA) to ensure you meet all your specific tax obligations and maximize your benefits.