6 worked Independent Contractor Tax Return case studies — the position a client typically comes to us with, what we do, and what it is worth. Each is an illustrative example built on the rules that apply to independent contractor tax return work, not a specific client's file.
Case Study 1 · Structure rebuilt
Reorganisation Completed Tax-Deferred, $62,000 Saved Each Year — Family-Staffed Proprietorship, Kitchener
Client: A proprietor whose spouse works in the business · Where: Kitchener, Ontario · Engagement: 10 weeks, fixed fee
Annual saving$62,000
Tax on reorganisationDeferred
Elections filedOn time
The situation — A proprietor whose spouse works in the business, Kitchener, Ontario
A proprietor whose spouse works in the business in Kitchener, Ontario had outgrown the structure it started with. A partner taxed on an allocation in a year they had drawn nothing at all was the immediate problem; the longer-term one was that the structure blocked the next step.
What we did for A proprietor whose spouse works in the business, Kitchener, Ontario
We mapped the current structure, modelled the target, and kept the proprietorship on a December 31 fiscal period and moved the year-end question into the incorporation plan where it could actually be answered — with the tax-deferred elections filed on time and the supporting valuations documented.
The result — A proprietor whose spouse works in the business, Kitchener, Ontario
The reorganisation completed without triggering tax, and the new structure saves approximately $62,000 a year while removing the exposure the old one carried.
Case Study 2 · Sale and succession
$435,000 Sheltered By The Lifetime Capital Gains Exemption — Corporate-Partner Partnership, Edmonton
Client: A partnership with a corporate partner · Where: Edmonton, Alberta · Engagement: 8 weeks, fixed fee
Gain sheltered$435,000
ClosingOn schedule
Share qualificationMet
The situation — A partnership with a corporate partner, Edmonton, Alberta
A partnership with a corporate partner in Edmonton, Alberta had an offer on the table and 34 months to close. The shares did not qualify for the capital gains exemption, and passive assets sitting inside the operating company, disqualifying the shares was part of the reason.
What we did for A partnership with a corporate partner, Edmonton, Alberta
We purified the corporation so the shares met the qualifying tests, then reconciled each partner’s allocation, capital account and drawings, so what was reported for tax matched the agreement instead of the cash taken well ahead of the closing date.
The result — A partnership with a corporate partner, Edmonton, Alberta
The sale closed on schedule with $435,000 sheltered by the lifetime capital gains exemption across the shareholders.
Case Study 3 · CRA review defended
$57,000 Reassessment Reduced To Nil On Review — Three-Partner Medical Clinic, Victoria
Client: A three-partner medical clinic · Where: Victoria, British Columbia · Engagement: 9 weeks, fixed fee
Reassessment reduced toNil
Tax protected$57,000
Prior filingsUndisturbed
The situation — A three-partner medical clinic, Victoria, British Columbia
A review notice arrived at a three-partner medical clinic in Victoria, British Columbia covering independent contractor tax return for two tax years. The auditor's working position was an adjustment of $57,000, driven by three partners operating on a handshake, with no written agreement covering allocations or a departure.
What we did for A three-partner medical clinic, Victoria, British Columbia
Rather than negotiate, we rebuilt the record. We filed the section 85 election with correct elected amounts and rolled the assets in without a taxable disposition and submitted a point-by-point response that answered each proposed adjustment with the document behind it.
The result — A three-partner medical clinic, Victoria, British Columbia
The auditor accepted the documented position and closed the review without adjustment, protecting $57,000 and leaving the prior filings undisturbed.
Case Study 4 · Planning that cut the bill
$11,500 Cut From The Annual Tax Bill — Limited Partnership, Winnipeg
Client: A limited partnership with passive investors · Where: Winnipeg, Manitoba · Engagement: 11 weeks, fixed fee
First-year saving$11,500
RepeatsAnnually
Filing positionUnchanged in risk
The situation — A limited partnership with passive investors, Winnipeg, Manitoba
A limited partnership with passive investors in Winnipeg, Manitoba was compliant but paying more than it needed to. The prior year had been filed correctly and still left an incorporation completed without the section 85 election, triggering an unnecessary gain on the table.
What we did for A limited partnership with passive investors, Winnipeg, Manitoba
We modelled the current position against the alternatives before changing anything, then rewrote the partnership allocation to match how the practice actually operated, effective for the following fiscal year.
The result — A limited partnership with passive investors, Winnipeg, Manitoba
The change saved $11,500 in the first year and repeats annually. Nothing about the filings became more aggressive; the position is simply the one the rules already allowed.
Case Study 5 · Records and systems rebuilt
11 Months Reconciled And $18,500 Of Input Tax Recovered — Freelance Developer, Moncton
Client: A freelance developer · Where: Moncton, New Brunswick · Engagement: 8 weeks, fixed fee
Months reconciled11
Input tax recovered$18,500
Close time4 days
The situation — A freelance developer, Moncton, New Brunswick
A freelance developer in Moncton, New Brunswick was carrying partner draws that had pushed one partner’s adjusted cost base negative. Nothing reconciled, and every filing started with 11 months of cleanup.
What we did for A freelance developer, Moncton, New Brunswick
We rebuilt from source rather than correcting on top of the existing file. We restructured the draw policy so no partner’s adjusted cost base went negative again, and reported the deemed gain correctly for the year it arose, then set the routine that keeps it clean.
The result — A freelance developer, Moncton, New Brunswick
11 months reconciled to the bank. The close now takes 4 days, and $18,500 of previously unclaimable input tax was recovered in the process.
Case Study 6 · Objection and relief
Notice Of Objection Allowed In Full, $68,000 Reversed — Sole Proprietor Consultant, Surrey
Client: A sole proprietor consultant · Where: Surrey, British Columbia · Engagement: 7 weeks, fixed fee
Amount reversed$68,000
ObjectionAllowed in full
Account balanceNil
The situation — A sole proprietor consultant, Surrey, British Columbia
A sole proprietor consultant in Surrey, British Columbia had been reassessed for $68,000 and had 19 days left on the objection deadline. The reassessment rested on a proprietor planning around a September year-end that the rules did not permit.
What we did for A sole proprietor consultant, Surrey, British Columbia
We filed the objection inside the deadline with a complete submission rather than a placeholder, and filed the outstanding T5013 returns with full partner allocations and requested penalty relief on the basis of the first-time nature of the failure.
The result — A sole proprietor consultant, Surrey, British Columbia
The appeals officer allowed the objection in full. $68,000 was reversed and the account returned to a nil balance.
Reviewed for the 2025 tax year by Udit Gupta, Founder and Tax Accountant. These case studies are illustrative worked examples composed from the CRA rules that apply to this type of work, not specific client files; figures are representative and outcomes depend on your own facts.
