Corporate Fiscal Year-End Planning

Introduction
Effective corporate fiscal year-end planning is essential for every Canadian corporation, whether it is a small business, a professional corporation, a startup, or a large enterprise. A corporation’s fiscal year-end determines tax deadlines, filing obligations, dividend planning opportunities, compensation structuring, capital cost allowance choices and overall tax efficiency. Many corporations neglect year-end planning and face unnecessary taxes, penalties, missed deductions or negative CRA attention. Québec adds provincial rules that require separate filings, making corporate fiscal year-end planning even more important for businesses operating in the province. This guide explains the steps, strategies and legal obligations that form a complete corporate year-end planning process.

Legal and Regulatory Framework
Corporate fiscal year-end planning is based on the Income Tax Act, Excise Tax Act, and Québec’s Taxation Act. All corporations must file a T2 return within six months of their fiscal year-end. Corporations operating in Québec must also file a CO-17 return. Corporate taxes payable are due two or three months after year-end depending on whether the corporation qualifies for the small business deduction.

Corporate fiscal year-end planning requires businesses to:
• calculate and report active business income
• apply capital cost allowance (CCA) rules
• track shareholder loans to avoid taxable benefits
• classify dividends and salaries correctly
• evaluate small business deduction eligibility
• reconcile GST/HST and QST returns
• file T4, T5 and RL-series slips

Corporations must also track taxable capital for associated corporations and comply with payroll, GST/HST and QST obligations. Understanding corporate fiscal year-end planning ensures full compliance with both federal and Québec rules.

Key Court Decisions
Courts have repeatedly addressed issues linked to corporate fiscal year-end planning. Decisions emphasize that corporations must maintain accurate financial records and apply tax rules consistently. Cases involving late filings confirmed that penalties apply automatically when deadlines are missed. When corporations attempted to reclassify personal expenses as business expenses, courts upheld CRA reassessments and penalties.

Other cases confirmed that dividends must be properly documented and declared, while shareholder loans must follow strict repayment rules. Québec courts also issued rulings where corporations misreported year-end adjustments, emphasizing the province’s strict enforcement of tax accuracy. These cases highlight why proper corporate fiscal year-end planning is essential for audit-proof compliance.

Why CRA Targets This Issue
The CRA monitors corporate fiscal year-end planning because it directly influences taxable income and tax revenue. Common triggers for CRA reviews include:
• inconsistent year-end income patterns
• large shareholder loan balances
• incorrect CCA claims
• unpaid GST/HST or QST
• improper dividend declarations
• corporate expenses that appear personal
• discrepancies between T2, GST and payroll filings

CRA systems compare annual returns with payroll remittances, GST filings and T5/T4 slips to detect inconsistencies. Québec conducts its own audits, focusing on QST, payroll compliance and provincial corporate tax rules. Strong corporate fiscal year-end planning helps reduce these risks.

Mackisen Strategy
Mackisen CPA applies a full, structured approach to corporate fiscal year-end planning. Our process includes:
• reviewing bookkeeping accuracy and adjusting entries
• analyzing revenue recognition and expense timing
• optimizing CCA to reduce current or future taxes
• structuring salary and dividend combinations
• reconciling shareholder loans to avoid taxable benefits
• preparing T5 and RL-3 dividend slips
• preparing T4 and RL-1 payroll slips
• confirming small business deduction eligibility
• analyzing taxable capital and associated corporation rules
• reviewing GST/HST and QST filings
• evaluating opportunities for corporate restructuring

We also review opportunities for year-end bonuses, management fees, intercompany dividends, and tax deferral. Proper corporate fiscal year-end planning ensures that the corporation starts the new fiscal year strong and compliant.

Real Client Experience
Many corporations seek Mackisen after realizing the importance of corporate fiscal year-end planning. One client consistently filed late and accumulated penalties. Mackisen organized their financial statements, corrected errors and implemented a strict monthly reconciliation schedule.

Another corporation overstated CCA and faced CRA reassessment. We recalculated CCA, amended prior returns and strengthened documentation. A Québec client failed to reconcile QST filings with corporate income, triggering provincial review. Mackisen corrected filings and prevented penalties.

A professional corporation struggled with shareholder loan issues due to excess personal withdrawals. We restructured compensation, cleared loans and eliminated taxable benefits. These examples show how critical corporate fiscal year-end planning is to staying compliant and reducing taxes.

Common Questions
Business owners frequently ask whether they can change their year-end. Yes—corporations may request CRA approval, often for tax planning or operational reasons. Many ask whether dividends or salary is better at year-end. The answer depends on income, CPP planning, RRSP room and corporate profits.

Others ask whether CCA must be claimed. CCA is optional and can be deferred strategically. Québec corporations ask whether provincial filings mirror federal rules. Québec follows similar principles but requires separate reporting and adjustments. Understanding these questions improves corporate fiscal year-end planning.

Why Mackisen
With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps businesses stay compliant while recovering the taxes they’re entitled to. Whether you’re filing your first GST/QST return or optimizing multi-year refunds, our expert team ensures precision, transparency and protection from audit risk. When conducting corporate fiscal year-end planning, Mackisen provides full financial cleanup, tax optimization, compliance verification and long-term strategy to reduce taxes and protect the corporation.