An online store had never tracked inventory properly, overstating profit. We rebuilt COGS and corrected $19,000 of overpaid tax.
A growing e-commerce business expensed inventory as purchased rather than as sold, overstating both profit and tax in high-purchasing years. We rebuilt the inventory and cost-of-goods-sold accounting, restated the affected years, and filed adjustments. The correction recovered roughly $19,000 of overpaid tax and gave the owner accurate margins.
E-commerce sits across provincial sales tax regimes, marketplace collection rules and inventory held in other jurisdictions.
The CRA requires business records to be kept for six years from the end of the tax year they relate to, in a form that allows the return to be verified.
Why it bites: Where records cannot support the return, the CRA is entitled to assess on its own estimate — and the burden of disproving that estimate falls on the taxpayer.
Inventory is valued at the lower of cost and net realisable value, applied consistently. Changing method without CRA consent reopens prior years.
Why it bites: Obsolete stock carried at cost overstates income, and the write-down is usually taken years after it was justified.
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.
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, Certified Tax Accountant. Figures describe a real engagement; outcomes depend on your own facts. Client details are omitted for confidentiality.
