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2026 tax year

Year-end planning checklist for corporations

What to have ready for the autumn planning conversation, and what to decide before the corporation's year-end. Written for owner-managed corporations with a December 31 year-end; the same items apply to any year-end, with the dates moved.

Download as PDFOne page, prints on Letter.

Decisions about compensation, purchases and dividends only work if they are made before the year-end date. After it, the return records what happened.

Before the meeting

Before the meeting

  • Books reconciled to the end of the most recent month, every bank and credit card account
  • Instalments paid so far this year, corporate and personal
  • Last year's T2 and the owner's T1, with notices of assessment
  • Shareholder loan account balance, and any draws not yet recorded
  • Anything that changed: a new lease, a large purchase planned, a new associate, a change at home
  • How much cash you need to take out between now and April
Compensation

Compensation

  • Salary, dividends or a mix, with this year's other income and RRSP room in view
  • RRSP room for the owner: the lesser of 18% of last year's earned income and the annual limit
  • CPP on salary: employee and employer shares, and whether the CPP entitlement matters to you
  • A bonus accrued this year must be paid within 180 days of year-end to be deducted this year
  • Eligible or other-than-eligible dividends: the designation the corporation will make
  • Salaries to family members: reasonable for the work actually done
The corporation

The corporation

  • Small business deduction: active business income against the $500,000 limit, shared with associated corporations
  • Passive investment income: whether it falls in the $50,000 to $150,000 range that reduces the limit
  • Capital purchases: whether to bring one forward into this year
  • Intercompany and related-party balances agreed on both sides
  • Bad debts identified and written off before year-end, with the evidence kept
  • Inventory count planned for the year-end date
Family shareholders

Family shareholders

  • Dividends to a spouse or adult child: whether the tax on split income (Form T1206) applies, checked before the dividend is declared
  • Hours worked and roles documented for each family member paid by the corporation
  • Shareholdings and share classes confirmed against the minute book
Filings after year-end

Filings after year-end

  • T4 and T5 slips issued by the last day of February
  • T2 return due six months after the year-end date; balance owing generally due earlier, so the payment date is checked
  • Ontario annual return through the Ontario Business Registry within six months of year-end
  • GST/HST return for the period, reconciled to the ledger before filing
  • Year-end file handed to whoever signs the statements, with working papers and reconciliations

This checklist describes general rules for an owner-managed corporation. It is not advice for any particular situation; the numbers change each year and should be confirmed before acting.

Sources

The rules referred to above (the RRSP limit, CPP, the 180-day bonus rule, dividend designation, the $500,000 business limit and the passive income reduction, the tax on split income, slip and return deadlines, the Ontario annual return) come from these official pages:

The article on year-end planning, with each rule explained