Year-End Tax Checklist for Ontario Small Businesses (Fiscal 2026)

A good year-end tax checklist for an Ontario small business covers five things: clean, reconciled books; a deliberate plan for how the owner gets paid; timing of bonuses and asset purchases; a calendar of filing deadlines; and records that will stand up if the CRA asks. Most of the savings come from decisions made before your year-end, not after. Here’s what to review for fiscal 2026.

Why start year-end planning before your year-end?

Once the year closes, most choices are locked in. You can’t go back and buy equipment in November, pay yourself a salary in December, or declare a dividend in the old year. Starting six to eight weeks ahead leaves time to run the numbers and act.

Fiscal 2026 has an Ontario twist. Ontario’s small business rate dropped from 3.2% to 2.2% on July 1, 2026, according to the province’s corporate income tax page. With the 9% federal rate, the combined rate on active business income up to $500,000 is 11.2% from July 1, 2026 (12.2% before). A tax year that straddles July 1 is prorated, so a December 31, 2026 year-end works out to about 11.7%.

Federal Budget 2026 is being tabled on November 5, 2026. If your year-end falls after that date, check whether anything in the budget affects your plans.

Are your books clean and reconciled?

Every other decision depends on accurate numbers. Before year-end, work through this list:

• Reconcile every bank, credit card and loan account to its statement
• Review accounts receivable and write off debts that truly can’t be collected
• Record unpaid bills and accrued expenses that belong to this year
• Count inventory, if you carry any, and value it consistently
• Reconcile HST collected and input tax credits to your returns
• Reconcile payroll to your remittances so T4s match
• Review the shareholder loan account for debit balances

That last item matters. A loan from your corporation that isn’t repaid within one year after the end of the corporation’s tax year is taxed as personal income. A balance created in a December 31, 2026 year-end has to be cleared by December 31, 2027. Our shareholder loans guide explains the options. If your books are behind, our bookkeeping team can get them current before your accountant starts the year-end file.

How should you pay yourself before year-end?

Decide on your owner pay mix deliberately, not by default. A few 2026 numbers to weigh:

• RRSP room: new room equals 18% of the previous year’s earned income, up to the dollar limit. Dividends don’t count as earned income. The 2027 limit is $35,390, which takes about $196,600 of 2026 earned income to reach in full.
• CPP: salary up to $74,600 attracts CPP at 5.95% from you and 5.95% from your corporation, plus CPP2 at 4% each on earnings between $74,600 and $85,000.
• Dividend timing: Ontario’s non-eligible dividend tax credit drops from 2.9863% to 1.9863% on January 1, 2027. The same non-eligible dividend costs a little more personal tax in 2027.

Our full guide to salary vs. dividends in Ontario walks through the trade-offs in detail.

Can you accrue a bonus and deduct it this year?

Yes, within limits. Under subsection 78(4) of the Income Tax Act, salary or other remuneration that is unpaid 180 days after the end of the tax year is treated as an expense of the year it is actually paid. In plain terms, you can deduct a bonus in this year’s corporate return, as long as it is paid within 180 days.

A bonus makes the most sense when corporate income would otherwise exceed the $500,000 small business limit, or when you want salary for RRSP room. Paying out income only to have it taxed at higher personal rates is not always a win, so run the numbers first.

Should you buy equipment before year-end?

Buying an asset before year-end can bring capital cost allowance (CCA) into the current year. Two practical rules:

• The asset must be available for use by year-end. Paying a deposit in December for equipment delivered in February doesn’t count for this year.
• First-year rules vary. The half-year rule normally limits the first-year claim, but accelerated first-year incentives have changed several times in recent years, so confirm what applies to your purchase.

For passenger vehicles bought in 2026, the CCA cost ceiling is $39,000 for Class 10.1 and $61,000 for zero-emission vehicles in Class 54, before tax. Leasing costs are capped at $1,100 a month.

Don’t buy something you don’t need for the deduction. Even once its full cost has been written off over the years, a $10,000 purchase saves only about $1,170 of tax at the blended rate, so it still costs you $8,830.

What are the key deadlines after your year-end?

Here is the calendar for a corporation with a December 31, 2026 year-end, based on the federal 2026 tax deadlines page and the fact that February 28, 2027 is a Sunday.

What about HST and instalments?

HST. Reconcile HST collected to your sales and confirm every input tax credit has a valid invoice. If you are not registered, check whether your taxable sales passed $30,000 in a single quarter or over four consecutive quarters, because registration is due within 29 days. Your filing frequency depends on annual taxable supplies: annual up to $1.5 million, quarterly above that up to $6 million, and monthly above $6 million.

Instalments. Corporations generally pay monthly instalments, or quarterly if they qualify as eligible small CCPCs. Individuals with rental or self-employment income may owe quarterly instalments on March 15, June 15, September 15 and December 15. Year-end is a good time to compare what you have paid with what you will owe, and to top up before interest grows.

Does your business owe Ontario Employer Health Tax?

Ontario’s Employer Health Tax applies to Ontario payroll. Eligible employers are exempt on the first $1,000,000 of annual Ontario remuneration. Associated employers share one exemption, and an employer whose group payroll is over $5 million can’t claim it (registered charities are an exception). The rate rises with total payroll, reaching 1.95% for payroll over $400,000.

If your payroll exceeds your exemption, you are responsible for registering, and the annual return is due by March 15 of the following year. Growing businesses, and owners with several companies, should check whether a new hire or an associated corporation changes the picture.

Which records should you keep?

The CRA requires you to keep records for six years from the end of the last tax year they relate to, and longer if an objection or appeal is open. At year-end, make sure you also have:

• Directors’ resolutions for dividends, bonuses and salary
• An updated minute book and shareholder register
• Signed agreements for loans between you and the corporation
• Vehicle logbooks and home office support
• Year-end inventory counts and asset purchase invoices

Good records turn a CRA review into a short conversation. Our guide on preparing for a CRA audit explains what auditors ask for.

How MNJ CPA can help

We run year-end planning meetings for owner-managed corporations, prepare year-end financial statements and T2 returns, and keep track of the deadlines that follow. If your fiscal year ends in the next few months, see our corporate tax services or contact us to book a planning session.