Year-end is when your business numbers deserve a closer look. A few decisions made before your fiscal year closes can affect your tax bill, cash flow, and next year’s plans. 

This year end tax planning checklist walks you through the key steps to review before closing your books. It covers deductions, taxable income, owner compensation, tax credits, RRSPs, corporate taxes, and more. 

If your business follows the calendar year, these steps are especially relevant as you approach December 31, 2026. If you use another fiscal year, apply the checklist to your own year-end. 

What should you include in a year-end tax planning checklist? 

Start with these 12+ steps before your fiscal year closes: 

When should Canadian businesses start year-end tax planning?

Start several weeks before your fiscal year-end. This gives you time to find errors and make informed decisions. 

Waiting until tax filing season can limit your options. Some planning decisions need to happen before the tax year closes. 

For calendar-year businesses, year end tax planning 2026 should happen before December 31, 2026. Businesses with different fiscal year-ends should use their own closing date. 

Are your bookkeeping records complete and accurate?

Before planning your taxes, make sure your numbers are reliable. Review whether you have recorded: 

• • • All sales and customer payments
    • Vendor bills and business expenses
  • • Payroll transactions
  • • Loan payments and interest
  • • Bank fees and other charges
  • • GST/HST transactions
  • • Business receipts and invoices

    
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    Look for missing transactions, duplicate entries, and expenses recorded incorrectly. 

    Good tax planning starts with accurate financial information. Your accountant can make better decisions when your books tell the complete story. 

    Have you reconciled your accounts?

    Your bookkeeping records should match your actual financial accounts. You must reconcile your: 

    • • • • • • Business bank accounts
            • • Credit cards
            • • Lines of credit
            • • Business loans
            • • Payment platforms

    Check outstanding transactions and unexplained differences before year-end. 

    This step helps you enter tax planning with reliable numbers. It also makes your year-end financial statements easier to prepare. 

    What business expenses can you deduct before year-end?

    Review every legitimate business expense that may reduce your taxable income. Common deductible expenses can include: 

    • • • • • • • Advertising and marketing
              • • Professional and accounting fees
              • • Business insurance
              • • Software subscriptions
              • • Office expenses
              • • Salaries and wages
              • • Business travel
              • • Interest on business-related borrowing

    The expense generally needs to be incurred to earn business income and meet CRA requirements. 

    Keep receipts and supporting records for every deduction you claim. Your accountant can help determine whether a specific expense qualifies. 

    Should you accelerate expenses or defer income?

    Income and expenses can sometimes be timed differently around year-end. The right approach depends on your accounting method, business situation, and tax position. 

    Before making a decision, review: 

    • • • • • Expected year-end income
          • • Outstanding invoices
          • • Vendor bills and business expenses
          • • Cash available
          • • Expected income next year
          • • Your current and future tax position

    
    Tax savings should fit your cash flow and business needs. Spending money simply to create a deduction may not be useful. 

    What tax credits could your business claim?

    A tax deduction reduces income used to calculate tax. A tax credit reduces the tax payable itself. 

    Review whether your business may qualify for relevant tax credit programs or incentives. 

    Depending on your business, these could include: 

    • • • • SR&ED incentives
          • GST/HST input tax credits
          • Provincial or territorial credits
          • Industry-specific programs

    
    Eligibility rules can be detailed. Keep documentation that supports your claim and confirm the requirements before filing. 

    Tax rules can vary based on your business structure, province, and fiscal year. Always confirm current requirements with the Canada Revenue Agency or your tax professional. 

    Should you buy equipment before year-end?

    Buying equipment can have tax implications, but the purchase itself does not automatically create an immediate deduction. 

    Business equipment and other capital assets may be subject to Capital Cost Allowance, commonly called CCA. 

    Before making a purchase, consider: 

    • • • • Whether you actually need the asset
          • When it will be available for use
          • The applicable CCA class
          • Your expected taxable income
          • Your available cash
          • The long-term value of the purchase

    
    A year-end purchase should make business sense alongside its tax treatment. 

    What should you check if your business holds inventory?

    Inventory can affect your business income and year-end financial statements. 

    Before closing your books, review: 

    • • • • • Physical inventory quantities
            • Inventory records
            • Damaged or obsolete stock
            • Inventory costs
            • Cost of goods sold
            • Differences between physical and recorded inventory

            
            Keep a clear record of your year-end inventory count. 

            If you run a service-based business without inventory, this step may not apply. 

            Should you pay yourself a salary, bonus, or dividend?

            Owner compensation deserves a separate review during year end tax planning for businesses. 

            Salary, bonuses, and dividends can have different corporate and personal tax consequences. Consider: 

            Option	What to review
            Salary	Corporate deduction, CPP, personal taxable income
            Bonus	Timing, deductibility, payroll requirements
            Dividend	Personal tax treatment and dividend tax credit

            Your choice can also affect RRSP contribution room and your personal tax position. 

            The right mix depends on your corporation, income, cash flow, and broader financial plans. Discuss the options with your accountant before making a year-end decision. 

            How should you review your personal tax position?

            Business owners should look at the corporation and their personal taxes together. Your review may include: 

            • • • • Personal tax brackets
                  • Salary and dividend income
                  • RRSP contribution room
                  • TFSA contribution room
                  • Other sources of taxable income
                  • Personal deductions and credits

                  
                  For 2026, federal personal tax rates range from 14% to 33%, with provincial tax added separately. Your actual tax depends on your province and total taxable income. 

                  Can an RRSP contribution reduce your taxable income?

                  Yes. An eligible RRSP contribution can generally be claimed as a deduction, subject to your available RRSP deduction limit. 

                  For a business owner, salary can also create RRSP contribution room because RRSP room is generally based partly on earned income from the previous year. 

                  Before contributing, check your available room through your CRA account. Over-contributions can create additional tax. 

                  If you are planning for the 2026 tax year, remember that RRSP contributions made during the first 60 days of 2027 can generally fall into the relevant contribution period. Confirm the exact deadline with the CRA when planning your contribution. 

                  Should you review TFSA opportunities?

                  A TFSA does not provide a deduction for contributions. However, investment income earned inside a TFSA is generally tax-free. 

                  The tax-free savings account limit for 2026 is $7,000. Your actual available room can be higher because unused room carries forward and qualifying withdrawals are added back in later years. 

                  Check your available contribution room before contributing. Your CRA records and financial institution records should also be reviewed for accuracy. 

                  Could your business have a corporate tax refund?

                  Review your tax instalments, previous payments, and current tax position before filing. 

                  A corporation may also have losses that could potentially be applied to other tax years, depending on the circumstances. 

                  This can affect potential corporate tax refunds and the amount of tax your business ultimately pays. 

                  Ask your accountant to review available losses, instalments, and carryback opportunities before finalizing the return. 

                  What corporate tax planning should you review before year-end? 

                  For Year-End Corporate Tax Planning, review your corporation’s tax position before the books close. 

                  This may include: 

                  • • • • CCPC status
                        • Small business deduction eligibility
                        • Associated corporations
                        • Business income
                        • Passive investment income
                        • Owner compensation
                        • Retained earnings
                        • Corporate tax instalments

                        
                        The federal net corporate tax rate for a CCPC claiming the small business deduction is 9%. British Columbia’s lower provincial rate is 2%, with a $500,000 business limit. Eligibility rules apply. 

                        What year-end tax tips matter for small businesses in BC? 

                        For Year-End Tax Tips for Small Businesses in BC, start with your federal and provincial tax position. 

                        BC businesses should also review GST and PST obligations where applicable. Your accountant can help determine which provincial rules apply to your business. 

                        Keep provincial tax considerations separate from federal planning. Rates, credits, and filing requirements can differ across Canada. 

                        What tax deadlines should Canadian businesses remember? 

                        Your deadlines depend on your business structure and fiscal year. For corporations, the T2 return is generally due within six months of the end of the corporation’s tax year. 

                        Corporate tax balances are generally due two months after year-end. Certain qualifying CCPCs may have three months to pay their balance. 

                        Also track GST/HST, payroll, T4, and personal tax deadlines that apply to you. 

                        What should you give your accountant for year-end tax preparation? 

                        Prepare your documents before your accountant starts the return. You must include: 

                        • • • • Bank and credit card statements
                              • Sales records
                              • Expense receipts
                              • Accounts receivable
                              • Accounts payable
                              • Payroll records
                              • Loan statements
                              • Asset purchase records
                              • Inventory records
                              • GST/HST filings
                              • Previous tax returns
                              • CRA notices

                              
                              A complete file reduces back-and-forth and helps your accountant work from accurate information. 

                              Make year-end tax planning easier with better financial records 

                              Your year end tax planning checklist becomes much easier when your financial information is organized throughout the year. 

                              With the right accounting system, you can track income, expenses, receipts, invoices, taxes, and financial reports in one place. That gives you clearer numbers before year-end arrives. 

                              Start your year-end review early. Check your records, understand your tax position, and discuss major decisions with your accountant before your fiscal year closes. 

                              Frequently Asked Questions

                              What is year-end tax planning for a small business?
                              

                              It means reviewing your finances before year-end to plan deductions, credits, income, and taxes.

                              What expenses can a Canadian small business claim?

                              Common deductions include software, advertising, professional fees, salaries, insurance, and other eligible business expenses.

                              Is salary or dividend better for a business owner?
                              

                              It depends on your tax position. Salary can build RRSP room, while dividends have different tax treatment.

                              When should a business start year-end tax planning?

                              Start a few weeks before year-end so you have time to review your numbers and plan ahead.