Year-End Tax Planning Checklist for BC Business Owners
Year-end tax planning works best before deadlines leave you with few choices. For BC business owners, the key is coordinating the company’s fiscal year with your personal calendar-year tax position.
Use this checklist to organize a discussion with your CPA, whether your business is in Vancouver, the Lower Mainland, Fraser Valley, Vancouver Island, or elsewhere in BC. Some actions must happen by year-end; others have later deadlines.
1. Review Salary and Dividends
Compare the combined corporate and personal tax cost of salary, dividends, or a blend. Consider CPP, RRSP room, personal cash needs, corporate tax accounts, and benefits affected by income. Document dividend approvals and process payroll properly.
Employment income is generally reported personally when received. A corporate accrual does not automatically make the bonus personal income in the same year.
2. Check Accrued Bonus Deadlines
An otherwise deductible bonus must be properly incurred, reasonable, and supported. To preserve the deduction in the accrual year under the unpaid remuneration rule, payment generally must occur within 180 days after the corporation’s year-end. Otherwise, the deduction is generally deferred to the payment year.
Set the payment and remittance dates well in advance. Review Income Tax Act section 78 and the CRA bonus payroll guidance.
3. Reconcile Shareholder Loans
Review amounts you owe the corporation, when each advance arose, and available exceptions. A common repayment exception requires repayment within one year after the end of the corporation’s tax year in which the loan arose. Repayment cannot be part of a prohibited series of loans and repayments, and interest benefits may still apply.
Do not assume a year-end journal entry or temporary repayment solves the issue. Coordinate any salary or dividend used to settle a balance with the required approvals and tax reporting.
4. Review Needed Equipment Purchases
Buy equipment because it serves the business. The tax deduction depends on the asset class, acquisition date, available-for-use rules, and applicable incentives not simply placing an order or paying a deposit before December 31.
Check delivery and installation timing, financing, GST/HST treatment, and expected cash flow. A deduction recovers only part of the cost through tax savings.
5. Confirm RRSP Room
Review your available deduction limit, prior contributions, and expected income before contributing. Contributions in the first 60 days of the following year may be relevant to the prior year, subject to the rules and available room.
Salary generally creates earned income for the following year’s RRSP room; dividends do not. Verify your records rather than relying solely on an account balance or an outdated notice.
6. Plan Charitable Giving
For an individual, eligible donations generally need to be made by December 31 to be available for that calendar year’s claim. Obtain an official receipt and review donation limits, carry forwards, and whether combining claims is useful.
Corporate donations follow the corporation’s taxation year and deduction rules. Gifts of securities or other property need additional analysis and processing time.
7. Review Capital Gains and Losses
Realized capital losses may offset capital gains, with qualifying net capital losses generally carried back three years or forward indefinitely. Confirm settlement timing and adjusted cost bases before selling.
The superficial loss rule can apply when you or an affiliated person acquires the same or identical property during the period from 30 days before to 30 days after the sale and owns, or has a right to acquire, the substituted property at the end of that period. Review transactions across relevant accounts and affiliated persons. See our tax articles and CRA capital loss guidance.
8. Check Tax Instalments
Compare instalments paid with the permitted calculation methods and expected liability. Reducing payments based on an income estimate can create interest if the estimate is too low. Review corporate, personal, and sales-tax obligations separately.
9. Review TFSA Contributions and Withdrawals
TFSA contributions are not deductible, and unused room carries forward. There is no requirement to use it by December 31. Withdrawals generally restore room on January 1 of the following year, so replacing a withdrawal in the same year can cause an over-contribution if you lack other room.
Eligibility, residency, age, and your complete transaction history matter when calculating available room.
10. Schedule the Planning Meeting Early
Bring current bookkeeping, forecast profits, shareholder balances, planned purchases, investment gains and losses, and personal cash requirements. Agree on specific actions, owners, and dates.
If the corporate year-end is not December 31, move corporate planning to the relevant fiscal deadline while retaining the personal calendar-year review. Review retained funds and ownership or estate plans before undertaking a restructuring.
Common Year-End Mistakes to Avoid
Assuming every prepaid expense is immediately deductible.
Buying unnecessary assets solely for a write-off.
Backdating documents or transactions.
Confusing a filing deadline with a payment deadline.
Making significant transfers without reviewing tax and legal consequences.
Speak With a BC CPA
TSB Chartered Professional Accountant Inc. serves business owners across British Columbia, including the Lower Mainland, Fraser Valley, and Vancouver Island. Book a free consultation to discuss your business and next steps.
Tristan Bagri, CPA
Founder & Director
Tristan@tsbcpa.ca | 778-707-4699
Frequently Asked Questions
Is Late December Too Late to Start?
Some options may remain, but processing and legal steps take time. Review what is still practical and build an earlier schedule for next year.
Does Every Item Follow December 31?
No. Personal calendar-year items and corporate fiscal-year items have different timing, and some elections or contributions have later deadlines.
Should I Accelerate or Defer Income?
Compare expected income, tax rates, cash flow, benefits, and the legal recognition rules. Timing cannot be changed merely by moving a bookkeeping entry.
Disclaimer: This article is for general information and is not legal or tax advice. Tax treatment depends on your circumstances and the rules for the relevant year. Consult a qualified professional before acting.
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