6 worked Professional Corporation 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 professional corporation tax return work, not a specific client's file.
Case Study 1 · CRA review defended
$30,500 Proposed Adjustment Withdrawn In Full — Second-Generation Manufacturer, Ottawa
Client: A second-generation family manufacturer · Where: Ottawa, Ontario · Engagement: 7 weeks, fixed fee
Adjustment withdrawn$30,500
File closed in7 weeks
Penalties assessedNone
The situation — A second-generation family manufacturer, Ottawa, Ontario
A second-generation family manufacturer in Ottawa, Ontario received a proposal letter opening a review of professional corporation tax return. The CRA had identified two corporations under common control filing as if each had its own $500,000 limit. It proposed an adjustment of $30,500, with 30 days to respond.
What we did for A second-generation family manufacturer, Ottawa, Ontario
We treated the response as an evidence exercise rather than an argument. We modelled salary against dividends across both the corporation and the shareholder’s personal return, then set the remuneration mix for the year. We then indexed every supporting document against the specific line the auditor had questioned.
The result — A second-generation family manufacturer, Ottawa, Ontario
The proposed adjustment was withdrawn in full — all $30,500 of it. The file closed in 7 weeks with no change to the assessed amounts and no penalty.
Case Study 2 · Objection and relief
$36,500 Of Penalties And Interest Cancelled On Relief — Import and Distribution Corporation, Barrie
Client: An import and distribution corporation · Where: Barrie, Ontario · Engagement: 11 weeks, fixed fee
Penalties and interest cancelled$36,500
Relief groundsAccepted
AssessmentAdjusted to filed position
The situation — An import and distribution corporation, Barrie, Ontario
An assessment of $36,500 landed at an import and distribution corporation in Barrie, Ontario following a desk review. It turned on a loss year carried forward by default when carrying it back would have produced a refund cheque. The auditor had not seen the records behind it.
What we did for An import and distribution corporation, Barrie, Ontario
We reviewed each capital cost allowance pool and set the claim at the level that kept the small business deduction fully used rather than wasted. We then set out the legislative basis for the position alongside the documents supporting it.
The result — An import and distribution corporation, Barrie, Ontario
$36,500 of penalties and interest was cancelled under the taxpayer relief provisions, and the underlying assessment was adjusted to match the filed position.
Case Study 3 · Scaling without breaking
Growth Handled Without A Missed Filing, $38,500 Freed — Holding and Operating Companies, London
Client: A holding company and its operating subsidiary · Where: London, Ontario · Engagement: 9 weeks, fixed fee
Cash freed$38,500
Compliance failuresNone
ReportingMonthly
The situation — A holding company and its operating subsidiary, London, Ontario
A holding company and its operating subsidiary in London, Ontario was opening in a second province. That meant different filing obligations and a different payroll regime. Dividends moved up to a holding company year after year with no safe-income support on file already sat in the file.
What we did for A holding company and its operating subsidiary, London, Ontario
We carried the non-capital loss back against the two profitable years and recovered tax already paid instead of holding a carry-forward balance. We then put monthly reporting in place. That let the owner see the cash effect of growth while there was still time to act on it.
The result — A holding company and its operating subsidiary, London, Ontario
Growth was absorbed without a compliance failure. $38,500 of cash was released, and the monthly reporting now flags a problem while it is still small.
Case Study 4 · Structure rebuilt
Corporate Structure Rebuilt For $72,000 Of Annual Savings — First-Profit Technology CCPC, Vancouver
Client: A technology CCPC approaching its first profitable year · Where: Vancouver, British Columbia · Engagement: 9 weeks, fixed fee
Saving per year$72,000
DocumentationComplete
Transfer basisRollover
The situation — A technology CCPC approaching its first profitable year, Vancouver, British Columbia
The structure at a technology CCPC approaching its first profitable year in Vancouver, British Columbia dated from years earlier. It had been set up for a business that no longer existed. Passive investment income that had crossed the $50,000 grind threshold unnoticed had become expensive.
What we did for A technology CCPC approaching its first profitable year, Vancouver, British Columbia
We mapped the association rules across the group, allocated the business limit deliberately on Schedule 23, and corrected the prior year by adjustment request. The reorganisation used the rollover provisions rather than a taxable transfer, so no tax fell due on the restructuring itself.
The result — A technology CCPC approaching its first profitable year, Vancouver, British Columbia
$72,000 of annual saving, achieved on a tax-deferred basis. The minute book, elections and valuations are all in the file.
Case Study 5 · Planning that cut the bill
$30,000 Cut From The Annual Tax Bill — Non-Calendar Year-End Corporation, Victoria
Client: A corporation with a non-calendar fiscal year-end · Where: Victoria, British Columbia · Engagement: 8 weeks, fixed fee
First-year saving$30,000
RepeatsAnnually
Filing positionUnchanged in risk
The situation — A corporation with a non-calendar fiscal year-end, Victoria, British Columbia
A corporation with a non-calendar fiscal year-end in Victoria, British Columbia was compliant but paying more than it needed to. The prior year had been filed correctly. It still left retained earnings building in the operating company with no plan for extracting them on the table.
What we did for A corporation with a non-calendar fiscal year-end, Victoria, British Columbia
We modelled the current position against the alternatives before changing anything. Then we reconstructed the capital dividend account from the underlying transactions and filed the subsection 83(2) election before the next distribution left the company.
The result — A corporation with a non-calendar fiscal year-end, Victoria, British Columbia
The change saved $30,000 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 6 · Backlog brought current
4 Years Filed, $54,000 Removed From The Assessed Balance — Incorporated Consultancy, Surrey
Client: An incorporated consultancy · Where: Surrey, British Columbia · Engagement: 5 weeks, fixed fee
Years filed4
Assessed balance removed$54,000
CollectionsStopped
The situation — An incorporated consultancy, Surrey, British Columbia
An incorporated consultancy in Surrey, British Columbia had not filed for 4 years. The CRA had issued arbitrary assessments. The business was carrying a distribution treated as tax-free capital dividend with no election ever filed. That came on top of a growing interest balance.
What we did for An incorporated consultancy, Surrey, British Columbia
We started with the oldest year and worked forward so each year's closing balances fed the next. We moved passive holdings into a separate structure so the operating company’s small business limit stopped grinding down. We filed the years in sequence rather than all at once.
The result — An incorporated consultancy, Surrey, British Columbia
Every year is now filed and assessed on actual figures. The notional assessments were vacated and $54,000 of the estimated balance came off, with a payment arrangement covering the rest.
Reviewed by Udit Gupta, Founder and Tax Accountant for the 2025 tax year. 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.
