By OptiVal Editorial Desk
December 31 is three months away, and most of the tax moves available to a Canadian small business have to happen before the calendar flips. January-you cannot backdate a bonus, un-borrow a shareholder loan, or buy equipment in 2026. This year-end close checklist covers the moves to make before December 31, the cleanup that makes your T2 cheaper, and the January-to-March jobs that follow.
Year-end close checklist: the moves to make before December 31
1. Accrue owner and staff bonuses now, pay by late June. A bonus accrued at year-end is deductible in 2026 as long as it is actually paid within 179 days of year-end. For a December 31 year-end, that means paid by late June 2027. Miss the window and the deduction moves to 2027. Decide the amounts in December, document the resolution, and put the payment date in your calendar.
2. Repay shareholder loans before the clock runs out. If you borrowed from your corporation during the year, the loan generally has to be repaid within one year after the end of the corporation’s tax year, or the amount lands on your personal return as income. For a December 31 year-end, a loan taken in 2026 must be repaid by December 31, 2027. Mark the date. The CRA does not accept “I forgot” and the income inclusion is the painful kind: taxable with no offsetting deduction.
3. Time equipment purchases for 2026 if the tax math favours it. This is a genuinely good year to buy. Under law passed in March 2026 (Bill C-15), manufacturing and processing machinery (Class 53), clean energy equipment (Class 43.1), and zero-emission vehicles (Classes 54, 55 and 56) acquired on or after January 1, 2025 and available for use before 2030 qualify for a 100% first-year capital cost allowance. Buy a $60,000 qualifying machine and put it in service before December 31, and the full $60,000 can come off 2026 income. Other assets get an enhanced first-year allowance (three times the normal first-year deduction) under the reinstated accelerated investment incentive. One honest caveat: the September 2026 “Productivity Mega Deduction” announcement would extend immediate expensing to far more assets permanently, but as of now it is draft legislation, not law. Do not plan 2026 purchases around it.
4. Declare 2026 dividends before year-end if you want them in 2026. Dividends are taxed in the year they are declared and paid (or deemed paid). If you are on the fence between a late-2026 and an early-2027 dividend, one 2026-specific wrinkle: Ontario’s non-eligible dividend tax credit drops from 2.9863% to 1.9863% starting in 2027. Small dollars, but free ones. Before designating anything eligible, confirm your GRIP balance so the designation holds up.
5. Review the instalment position. If your 2026 corporate tax bill will top $3,000, expect the CRA to want instalments through 2027. Better to see it coming in December than to meet it as a surprise demand letter in March.
Clean up the books before your accountant sees them
Your T2 costs what your books cost. A clean file means fewer billable hours and fewer missed deductions. Before year-end:
Reconcile every bank account and credit card to December 31. Unreconciled accounts are where deductions go to die.
Count inventory (or do a proper estimate with documentation). Your cost of goods sold, and therefore your taxable income, depends on it.
Review receivables and write off what is genuinely uncollectible. A bad debt is deductible when it is established to have become bad in the year, not when you finally give up two years later.
Review payables and accrued expenses so 2026 costs land in 2026.
Separate personal from business one more time. Every personal charge buried in the corporate card is a 20-minute conversation at T2 time.
Gather vehicle logbooks, home-office measurements, and donation receipts now, while they still exist.
If the books are months behind, a cleanup engagement before year-end beats a reconstruction in April. Cleanup work runs $45/hr, and it is almost always cheaper than paying your accountant to do archaeology.
After the ball drops: the January-to-March jobs
T4 and T5 slips. Due the last day of February following the calendar year. In 2027, February 28 falls on a Sunday, so the deadline rolls to Monday, March 1, 2027. This covers salary, bonuses, taxable benefits (T4s) and dividends (T5s). Late slips draw penalties fast.
T2 corporate return. Due six months after your year-end (June 30, 2027 for a December year-end). But the balance owing is due much sooner: within two months of year-end, or three months if you are an eligible small CCPC. Interest starts running after the payment date even if the return itself is not due yet.
RRSP contributions. The deadline for 2026-tax-year RRSP contributions is the first 60 days of 2027, which lands on March 1, 2027. If you took salary this year, check your notice of assessment for available room.
New-year decisions. January is when you set the salary-vs-dividend mix for 2027, review whether your instalments are adequate, and decide if any planned capital spending should be accelerated into the current immediate-expensing window.
Year-end is the one time of year when a few hours of planning reliably pay for themselves. If you want a second set of eyes on the bonus accruals, the shareholder loan balance, or the dividend timing before December 31, that is exactly what our year-end planning sessions cover: T2 returns from $449 (see pricing), tax planning and consulting at $125/hr. Book a free consultation and we will walk through your checklist on your actual numbers.
