A family practice faced a $75,000 audit over overhead splits with associates. We defended the shareholder and income structures, reducing the reassessment to $3,500.
The CRA disputed a family medicine clinic's 40/60 overhead allocation with its associate physicians, attempting to reclassify the revenue as fully taxable clinic income. We gathered the overhead agreements, documented direct expenses, and proved the splits complied with CRA medical-practitioner rules. The reassessment was cut from $75,000 to $3,500.
Health services are largely GST/HST-exempt, which blocks input tax credits on overhead and makes professional corporation rules the main planning lever.
A review is won on documentation created at the time, not on explanations offered afterwards. The CRA asks for the source records behind a figure, and an unsupported claim is simply disallowed.
Why it bites: Most reassessments we reverse are not the result of a wrong position — they are the result of a correct position with no contemporaneous paper trail behind it.
A CCPC files its T2 within six months of year-end, with the balance due two months after (three where the small business deduction is claimed). The 9% federal small business rate applies to the first $500,000 of active business income.
Why it bites: The filing and payment deadlines differ, and interest runs from the payment date. Filing on time while paying late still costs money.
The first fiscal year-end must fall within 53 weeks of incorporation and sets every filing deadline that follows. Share structure decided at incorporation governs who can receive dividends later.
Why it bites: Year-one choices are cheap to make and expensive to undo. Restructuring share classes after value has accrued triggers its own tax consequences.
Every engagement above was priced as a fixed fee agreed before the work started, and paid only once the client had reviewed the result. If any of this looks like your situation, the first step is a free 15-minute call — we will tell you plainly whether there is anything worth doing.
Reviewed for the 2025 tax year by Udit Gupta, Founder and Tax Accountant. This case study is based on a real client engagement handled by Tax Filings Canada; the client's name and identifying details have been changed. Outcomes depend on your own facts.
