A manufacturer was not claiming the manufacturing and processing profits deduction. We qualified the activity and lowered its corporate rate.
A manufacturer was paying the general corporate rate on all its income. We reviewed its activities, quantified the portion that qualified as manufacturing and processing, and claimed the M&P profits deduction and applicable provincial incentives. The reclassification reduced the effective corporate tax rate on qualifying profits.
Manufacturing turns on inventory valuation, capital cost allowance on production equipment and the split between M&P and other income.
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.
Planning has to be in place before the transaction. The salary-versus-dividend mix, the timing of a capital purchase and the choice of year-end all change the outcome, but only prospectively.
Why it bites: Almost every planning opportunity we see missed was available and simply not taken in time; very few are recoverable after year-end.
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 by Udit Gupta, Founder and Tax Accountant for the 2025 tax year. 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.
Sources. CRA — Businesses · Income Tax Act (Justice Laws Website)
