Year-end is treated as an accounting event: close the books, hand them over, wait for a tax bill. That framing is why so many owners get a number they don't like and can't do anything about.
The truth is that year-end is a deadline for decisions, not just for data. A handful of the biggest levers on your corporate tax bill only exist while the fiscal year is still open. Once the date passes they close, permanently, and the rest of the process is just measurement.
- Some things only work before year-end — buying and installing equipment, writing off dead inventory and bad debts, and deciding how you'll pay yourself. Miss the date and you wait a full year.
- Reconcile to external documents, not to your own file. Every balance sheet account should tie to a statement, a slip, a filed return, or a count.
- The shareholder loan is the account that causes real damage. If you owe the company money, it generally has to be repaid within one year of the end of the year the loan was made, or it becomes personal income.
- Payment is due before filing. The T2 isn't due for six months, but the tax is due in two — three for an eligible CCPC claiming the small business deduction.
- Slips come first. T4s and T5s are due at the end of February, months before the T2 — so your owner-compensation decision has to be made well before the return is prepared.
- The corporate annual return is not part of this. It's a separate filing to a separate government on a separate clock. See the annual return vs. the T2.
Read on for the before-year-end decisions, the reconciliation list, the owner-compensation items, what your accountant actually needs, and the deadline ladder that follows.
The decisions that expire at year-end
Start here, ideally sixty to ninety days out. Everything in this section is unavailable the moment your fiscal year closes.
Capital purchases have to be available for use
If you're planning to buy equipment, a vehicle, or computers, the timing matters — but not in the way most people assume. It isn't enough to have ordered it, or even paid for it. You generally can't claim capital cost allowance until the property is available for use. A machine sitting crated in the shop on your year-end date is not available for use.
Source: Income Tax Act, s. 13(26)–(27) — the available-for-use rules restricting when CCA may begin. Note also the half-year rule in Income Tax Regulations, s. 1100(2), which generally limits first-year CCA to half the normal amount.
The corollary is that a purchase made and installed just before year-end gets a full year's worth of claim ahead of one made a week later. If the equipment is genuinely needed, the timing is worth a conversation. If it isn't needed, buying it to "save tax" is spending a dollar to save roughly a quarter — see how CCA actually works before you talk yourself into it.
Write down dead inventory — after you count it
Inventory is valued at the lower of cost and fair market value. Obsolete, damaged and unsellable stock sitting on the books at cost is overstating your profit and your tax. But the write-down has to reflect the position at year-end, which means counting at year-end, not estimating in April.
Source: Income Tax Act, s. 10(1) — inventory is valued at the lower of cost and fair market value.
Deal with genuinely bad receivables
An account you've concluded is uncollectible can be written off, and the write-off belongs in the year you reached that conclusion. Go through the aged receivables before year-end and make an actual decision on the old ones instead of carrying them forward for another year out of optimism.
Source: Income Tax Act, s. 20(1)(p) — deduction for a debt established to have become a bad debt in the year.
Decide how you're paying yourself
Salary is a corporate deduction; a dividend isn't. That single fact means the salary-versus-dividend decision changes your corporate taxable income, and it has to be made while the year is still open. It also has consequences that run past year-end: salary requires a payroll account and source deductions, and generates a T4 due at the end of February.
If you're accruing a bonus to yourself to bring corporate income down, note the trap: an accrued bonus is only deductible if it's actually paid within 179 days of the year-end. Accrue it and forget to pay it and the deduction is denied — see the 179-day rule.
Source: Income Tax Act, s. 78(4) — unpaid remuneration not paid within 179 days after the end of the taxation year is deemed not to have been incurred as an expense in that year.
Look at the shareholder loan while you can still fix it
This is the one that does real damage, so it gets its own section below. The short version: check the balance before year-end, because the direction it's sitting in determines what happens next.
Every account ties to something outside your own file
Here's the standard I'd apply: a balance sheet account is not "done" because it looks reasonable. It's done when it agrees to a document that someone other than you produced.
- Bank accounts — reconciled to the year-end statement, with no stale outstanding items. Cheques uncashed for six months are a sign something is wrong, not a timing difference.
- Credit cards and lines of credit — reconciled to statements, with the full balance recorded as a liability rather than expenses recorded only when paid.
- Accounts receivable — the aged listing agrees to the control account, and every line is a real invoice you still expect to collect.
- Accounts payable — the aged listing agrees, and includes invoices received after year-end that relate to goods and services delivered before it. This is where most accrual errors live.
- GST/HST — the control account agrees to the returns actually filed for the period. A drifting balance here almost always means a return was never posted, or ITCs were claimed that shouldn't have been. (See filing the return.)
- Payroll clearing and source deductions — the year's remittances agree to your CRA payroll account, and the year-end liability agrees to the last remittance made after year-end.
- Inventory — a physical count at year-end, valued and signed off, not a rolling estimate.
- Fixed assets — additions supported by invoices, disposals actually removed, and nothing sitting in the account that was really a repair. (See capital versus expense.)
- Loans and leases — the year-end principal agrees to the lender's statement, with interest split out rather than buried in the payment.
- Prepaid and accrued — insurance, licences and subscriptions paid in advance spread over the right periods; expenses incurred but unbilled accrued.
- Shareholder loan — reconciled line by line, with every personal item identified. Never a plug.
- Retained earnings — moved only by net income, dividends declared, and properly-supported prior-period corrections. (See what belongs in retained earnings.)
The shareholder loan account
Of everything on the balance sheet, this is the account that turns a routine year-end into a tax problem. It records money moving between you and your corporation personally, and after twelve months of e-transfers, personal charges on the company card and the occasional owner top-up, it is rarely what anyone expects.
The direction matters enormously:
- The company owes you (you funded it) — fine. You can draw that back tax-free as a repayment of what you lent.
- You owe the company (you took more out than you put in) — this is the exposure. A shareholder loan that isn't repaid within one year after the end of the corporation's taxation year in which it was made generally gets included in your personal income for the year it was made.
Source: Income Tax Act, s. 15(2) and 15(2.6) — s. 15(2) does not apply to a loan repaid within one year after the end of the taxation year of the lender in which the loan was made, provided the repayment is not part of a series of loans and repayments.
Two things people get wrong. First, the clock is generous but finite, and "repay and immediately re-borrow" doesn't work — the series-of-loans test exists precisely for that. Second, the fix has to be a real transaction: repay the cash, or declare a salary or dividend that clears it. Reclassifying the balance in the accounting file is not a repayment. The full mechanics are in the shareholder loan trap and how to pay yourself.
What your accountant actually needs
A complete package turns a year-end into a short engagement. An incomplete one turns it into three rounds of questions across two months, usually billed hourly.
- A trial balance and general ledger for the full year, with the file closed and no post-year-end entries mixed in.
- Year-end bank, credit card, loan and investment statements — the actual statements, not screenshots of balances.
- Bank reconciliations at year-end for every account.
- Aged receivables and aged payables at year-end.
- The inventory count sheet, valued and dated.
- Invoices for every fixed asset addition, and details of anything sold or scrapped.
- Copies of all GST/HST returns filed during the year and the payroll remittance summary.
- Loan and lease agreements for anything new.
- A note on how you paid yourself, and what you'd like to do for the year if it isn't settled.
- Anything unusual, flagged rather than buried — a new shareholder, a large one-off contract, an insurance claim, a government grant, a related-party transaction.
That last one saves more money than the rest combined. Accountants price uncertainty. Surfacing the odd items yourself is cheaper than having them found.
The deadline ladder
Year-end starts a sequence, and the order surprises people: you pay before you file, and you issue slips before you do either.
The T2 is due six months after year-end, but the tax itself is due in two months — extended to three for a Canadian-controlled private corporation that claimed the small business deduction and meets the conditions. Filing on time while paying late still accrues interest. Full dates are in the 2026 deadline calendar.
And note what runs on a completely different calendar: T4 and T5 slips are due at the end of February for the preceding calendar year, regardless of your fiscal year-end. A corporation with a June year-end still issues slips in February — which is why the owner-compensation decision can't wait for the T2 to be prepared.
Ravi found out in July what he could have fixed in September
Meet Ravi, who runs Summit Line Fabrication, a metal fabrication shop in Cambridge, Ontario, with a September 30 year-end. Good year: revenue up, two new employees, a press brake bought in October.
He sent his file to the accountant in June, nine months later. Three things came back that couldn't be undone.
The press brake, delivered September 24 and commissioned October 8, wasn't available for use at year-end. No CCA in the year he'd assumed. Two weeks of scheduling, and the deduction moved a full year.
His shareholder loan sat at $61,000 owing to the company — accumulated e-transfers he'd thought of as "taking money out of my own business." No salary or dividend had been declared, so nothing had cleared it. It was heading straight for a personal income inclusion.
And roughly $9,000 of receivables from a general contractor that went under in the spring were still sitting in AR at full value, because nobody had made a decision about them before the books closed.
None of these were errors in the bookkeeping. The bookkeeping was fine. They were decisions that nobody made while the window was open.
What should have happened
A ninety-minute conversation in early September. Schedule the press brake install two weeks earlier, or accept the deferral knowingly. Declare a salary or dividend to clear the shareholder loan while there was still time to plan the personal tax around it. Walk the aged receivables and write off what was genuinely gone.
Same business, same numbers, materially different outcome — and the only difference is that someone looked at the file before the date instead of after it.
Year-end is a deadline, not a report
If the first time anyone looks closely at your year is the month your accountant prepares the return, you've already spent every option you had. The reconciliation work matters and has to be right — but it's measurement. The decisions are what move the number, and they all live before the date.
Put a year-end planning conversation in the calendar sixty days out, permanently. It's the highest-return hour in the corporate compliance year.
Want year-end to be a non-event?
Clean monthly books mean nothing is discovered in June that could have been fixed in September. A 15-minute call is enough to see what that would look like for your business.
Book a Free 15-Minute CallThis article is for informational purposes only and does not constitute tax, legal, or accounting advice. Tax rules and deadlines change, and how they apply depends on your corporation's circumstances, year-end and province. The figures used are illustrative. Consult a qualified professional about your own year-end.
Primary sources, linked so you can read and interpret them yourself. Government links open on official Government of Canada websites.
- Income Tax Act — s. 150(1)(a) (T2 due six months after year-end), s. 15(2) and 15(2.6) (shareholder loans), s. 78(4) (the 179-day rule for unpaid remuneration)
- Income Tax Act — s. 13(26)–(27) (available-for-use), s. 10(1) (inventory valuation), s. 20(1)(p) (bad debts), and s. 230 (books and records)
- Income Tax Regulations — s. 1100(2) (the half-year rule)
- CRA — Balance due when filing a return (two months, or three for an eligible CCPC)
- CRA — When to file information returns (T4 and T5 by the last day of February)
- Related reading: The Annual Return Is Not the T2, The Shareholder Loan Trap, Salary vs. Dividend, Capital Cost Allowance, and The 2026 Tax Deadline Calendar
Rodney Maiato is the founder of CDL Accounting Solutions, a remote bookkeeping practice helping Canadian incorporated small businesses keep clean, audit-ready books without the year-end scramble. He brings 15+ years in accounting — from junior accountant to assistant controller, where he managed a team of 7 and oversaw the books of 25+ companies, plus payroll for 100+ employees across several provinces — and is a Payroll Compliance Professional (PCP) Candidate with the National Payroll Institute. He also builds the automation behind CDL, including its text-in receipt intake system.