Year-end is the moment to make deliberate choices that are difficult or impossible to fix afterward — how to pay yourself, what to distribute tax-free, how to manage instalments, and which filings come due. Work through this checklist with your accountant before the fiscal year closes; several items must be decided before year-end, not after. The phases below run from pre-year-end decisions to remuneration, distributions, instalments, and the filing calendar.

Why year-end timing matters

Many of the most valuable decisions for an incorporated business are time-sensitive. Some can only be made before the fiscal year closes; others depend on elections filed by specific dates. Treating year-end as a planning event rather than a filing chore is what separates a smooth result from a missed opportunity.

Compensation decisions (salary vs. dividends) generally have to be set before amounts are declared or accrued.
Some elections — such as the capital dividend election — must be filed on or before the dividend becomes payable.
Shortfalls in instalments accumulate non-deductible interest that cannot be recovered after the fact.
Shareholder-loan repayment timing is measured from the year-end, so the clock is already running.

Build in time to review these with your accountant well before the last day of the fiscal year.

Before year-end: decisions that cannot wait

These are the items where the window closes when the fiscal year does.

Confirm the corporation's fiscal year-end and the resulting filing and payment dates.
Review whether to accelerate or defer income and expenses across the year-end line, where timing is genuinely available.
Decide on the remuneration mix (salary vs. dividends) before declaring or accruing anything — see below.
Confirm there is room to pay any planned bonus that you intend to deduct this year but pay within 179 days after year-end.
Review shareholder-loan balances. Amounts drawn must generally be repaid within one year of the corporation's year-end to avoid an income inclusion under subsection 15(2).

Remuneration mix: salary vs. dividends

There is no single right answer — the balance depends on cash needs, registered-plan room, and the corporation's tax attributes. Walk through these factors.

Salary is deductible to the corporation, creates RRSP contribution room, and is subject to source deductions (CPP, income tax) — and CPP is a real cost on both sides.
Dividends are paid from after-tax corporate income, carry no CPP, and do not create RRSP room. Eligible vs. non-eligible dividends carry different personal tax rates.
Pay enough salary to maximise RRSP room and Canada Pension Plan participation if those are goals.
Watch Tax on Split Income (TOSI) before paying dividends to family members — the rules constrain income-splitting unless an exception applies.
Consider whether keeping taxable income within the small-business-deduction limit, or managing passive investment income that grinds that limit, affects the optimal mix.

Bonuses, accruals, and reasonableness

A year-end bonus can shift income into the right year and the right hands, but only if it is structured and documented correctly.

An accrued bonus is deductible in the corporation's year if it is paid within 179 days after year-end — confirm the cash will be there.
Document the bonus with directors' resolutions and ensure source deductions are remitted when it is paid.
Keep management fees, bonuses, and inter-company charges reasonable and supportable — excessive or unsupported amounts are a common reassessment target.
Coordinate the bonus with the salary-vs-dividend decision rather than treating it as a separate afterthought.

Capital Dividend Account (CDA)

The CDA is one of the most valuable — and most often missed — planning tools for a private corporation.

Track the CDA balance: it includes the non-taxable half of capital gains, certain life-insurance proceeds, and other prescribed amounts.
Where a positive balance exists, consider paying a capital dividend, which is received tax-free by Canadian-resident shareholders.
File the capital dividend election (Form T2054) on or before the dividend becomes payable — a late or excessive election can attract a penalty under Part III.
Confirm the balance with a current CDA calculation before declaring, since over-declaring is costly to unwind.

Instalments

Corporations that owe more than the small threshold must pay tax in instalments through the year, and the interest on shortfalls is non-deductible.

Confirm whether the corporation is required to make monthly (or quarterly, for eligible small CCPCs) instalments.
Reconcile instalments paid to date against the estimated year's liability and top up before year-end where there is a shortfall.
Remember that balance-due for most Canadian-controlled private corporations is payable two months after year-end (three months for eligible small CCPCs claiming the small-business deduction), even though the return is due later.
Review payroll source-deduction and GST/HST remittances for the year — directors can be personally liable for unremitted amounts.

Passive investment income and the small-business deduction

Corporations that accumulate investment income inside the company need to watch a rule that can quietly raise the tax rate on active income.

Track adjusted aggregate investment income for the year. Where it exceeds the lower threshold, the small-business deduction limit begins to grind, and it is fully eliminated at the upper threshold.
Losing the small-business deduction means active business income is taxed at the higher general corporate rate — a meaningful cost.
Consider whether to defer realising investment gains, hold growth-oriented (rather than income-oriented) investments, or move passive assets to a separate structure where appropriate.
Coordinate this with the remuneration mix: paying out more salary or dividends can reduce retained passive capital over time.

Other year-end items to review

Document any management fees, bonuses, or inter-company charges with support and reasonableness in mind.
Reconcile shareholder loans and confirm repayment timing to avoid subsection 15(2) inclusions.
Review automobile and home-office benefits and ensure logs support them.
Confirm prescribed-rate loan arrangements (if any) have the required interest paid by January 30 of the following year.
Consider whether passive investment income is approaching the threshold that grinds the small-business deduction.
Review capital-asset additions and dispositions during the year and confirm capital-cost-allowance treatment.
Confirm any scientific research and experimental development (SR&ED) claims are supported with contemporaneous documentation.

After year-end: closing the loop

A few items are best handled in the weeks just after the fiscal year closes, while the year is still fresh.

Pay any accrued bonus within the 179-day window and remit the associated source deductions.
Pay interest on prescribed-rate loans by January 30 to keep the arrangement effective.
Reconcile the year's instalments against the final liability and pay the balance owing by the two- or three-month deadline.
Prepare and file T4 and T5 slips by the end of February for the prior calendar year's salary and dividends.
Gather records for the T2 and any T1135 filing while transactions are easy to trace.

The filing calendar

Corporate deadlines run from the fiscal year-end, not the calendar year — note each one.

T2 corporate return: due six months after the fiscal year-end.
Balance of tax owing: due two months after year-end (three months for eligible small CCPCs).
T4 / T5 slips: generally due by the end of February for the prior calendar year's salary and dividends.
GST/HST return: per your assigned reporting period.
T1135 (foreign property over $100,000 cost): due with the T2 where applicable.

For related reading, see our guides on section 85 rollovers, succession planning for business owners, and directors' liability for source deductions and GST/HST, plus the tax planning and corporate reorganizations service overviews.

This checklist is general information, not legal advice. Tax rules change and every situation is different — confirm how these items apply to your circumstances with a qualified advisor before acting.

Corporate Year-End Tax Checklist