Choosing the Right Tax Year-End for Your Business

Selecting the right fiscal year-end is one of the most strategic tax decisions a Canadian business owner can make. Your year-end affects income deferral opportunities, filing deadlines, cash flow, audit risk, and overall profitability.

Mackisen, a Montreal-based CPA firm specializing in tax, audit, bookkeeping, and business loans, helps entrepreneurs choose a fiscal year-end that maximizes deferral, minimizes penalties, and supports long-term planning.

Legal Framework: What the Law Allows

• Incorporated businesses can choose any fiscal year-end within 53 weeks of incorporation (ITA s.249.1).

• The chosen year-end should remain consistent annually unless a formal change is approved.

• Professional corporations now have the same flexibility as other corporations.

When a Non-Calendar Year-End Makes Sense

A December 31 year-end isn’t always ideal. Consider alternatives based on:

• Cash flow cycle and seasonality

• Personal tax planning goals

• Stage of business (startup vs. mature)

Common Strategic Choices

• March 31: Aligns with government fiscal year; helpful for NPOs/public contracts.

• June 30: Useful for deferral if personal income is lower mid-year.

• September 30: Can defer taxes when most income is earned early in the year.

• Incorporation month-end: Simple operational choice.

Industry-Specific Ideas

• Retail: January 31 (post-holiday reconciliation and inventory).

• Construction: March 31 or after winter lull.

• Tech startups: June 30 (investor reporting cadence).

• Medical/Dental: July or August (summer slowdown planning).

Tax Deferral Advantages

A non-calendar year-end can delay when owner compensation hits your personal return.

Example:
With a July 31 corporate year-end, the T2 is due January 31. Bonuses/dividends related to that year are typically reported on your personal return the following April—often creating meaningful deferral for owner-managers.

Best for:

• Paying owner bonuses after year-end

• Reinvesting profits

• Optimizing the salary/dividend mix

Compliance Timing & Cash Flow

Avoiding a December 31 year-end can reduce the March/April crunch when personal and corporate filings collide.
Remember: corporate tax is due 2 months after year-end (often 3 months for CCPCs). Pick a date that avoids tight cash periods.

Audit Risk & Timing

Calendar year-ends cluster filings in the same season, which can increase review pressure. A staggered year-end can reduce time pressure and errors—two common audit triggers.

Meet Your CPA Before Year-End

Year-end planning isn’t “set it and forget it.” Reassess annually, especially after ownership changes, expansions, or income spikes. If changing your fiscal year, submit the proper CRA request.

Mackisen can help evaluate:

• Optimal deferral

• Owner compensation mix

• Compliance risk

• Financing timelines

Mackisen Advice: 10 DOs and DON’Ts

DO

• Align year-end with cash flow.

• Meet your CPA before your first year-end to plan bonuses/dividends.

• Consider CRA deadlines and accountant availability.

• Avoid peak busy seasons.

• Revisit year-end as conditions change.

• Use year-end to plan salary vs. dividends.

• Schedule bookkeeping/audits realistically.

• Explore deferral in startup years.

• Factor industry seasonality.

• Use year-end prep to improve audit readiness.

DON’T

• Default to Dec 31 without a strategy.

• Ignore personal tax implications.

• Pick a date that creates cash stress when taxes are due.

• Skip annual CPA check-ins.

• Assume every corporation must use a calendar year-end.

• Forget required CRA forms if changing year-end.

• Underestimate financial statement timing.

• DIY complex planning without advice.

• Overlook how timing affects audit selection.

• Wait until the last minute for bonuses/dividends.

How Mackisen Helps

We help Montreal entrepreneurs and SMEs:

• Select an optimal fiscal year-end

• Maximize deferral and deductions

• Coordinate personal income with corporate cycles

• Prepare year-end books and tax packages

• Issue T4/T5 slips

• Handle CRA communications and audit defense

• Align year-end with bank/loan requirements

Experience across 1,850+ files and $2.5M+ in client financing:

• Professional corporations

• Bookkeeping catch-up & clean closings

• Financial statements for lenders

• Annual tax strategy sessions

Related Services:
CRA Audit Representation • Corporate Tax Filing • Bookkeeping & Payroll • Financial Statements for Loans • Dividend Tax Planning

Industry Spotlights

• Tech Startups: Pick a year-end just before major fundraising to present fresh, clean financials.

• Professional Corps: Non-calendar year-ends make compensation planning and year-end bonuses smoother.

• Retail & eCommerce: January/February year-ends improve inventory accuracy post-holidays.

• Construction/Seasonal: Choose just after off-season to simplify WIP and revenue timing.

Conclusion: Optimize, Don’t Default

A smart fiscal year-end helps you:

• Legally defer income

• Reduce audit exposure

• Simplify reporting

• Save on taxes

Book a Free Year-End Strategy Consultation
Let Mackisen’s CPAs help you choose the right year-end and build your best tax year yet.