Profit and Loss Statement Preparation Case Studies
6 worked Profit and Loss Statement Preparation 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 profit and loss statement preparation work, not a specific client's file.
Case Study 1 · Planning that cut the bill
$27,000 Cut From The Annual Tax Bill — Two-Partner Engineering Firm, Toronto
The situation — A two-partner engineering firm, Toronto, Ontario
A two-partner engineering firm in Toronto, Ontario was compliant but paying more than it needed to. The prior year had been filed correctly. It still left work in progress carried at billing value one year and at cost the next, so neither year was comparable on the table.
What we did for A two-partner engineering firm, Toronto, Ontario
We modelled the current position against the alternatives before changing anything. Then we reconciled the general ledger to the GIFI schedules filed for each open year and corrected the two years where they disagreed.
The result — A two-partner engineering firm, Toronto, Ontario
The change saved $27,000 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 2 · Objection and relief
Desk-Review Assessment Of $45,000 Vacated — Family Wholesale Distributor, Halifax
Client: A family-owned wholesale distributor · Where: Halifax, Nova Scotia · Engagement: 4 weeks, fixed fee
Assessment vacated$45,000
Supporting recordsNow on file
AccountCleared
The situation — A family-owned wholesale distributor, Halifax, Nova Scotia
A family-owned wholesale distributor in Halifax, Nova Scotia was carrying $45,000 of penalties and interest. The charges arose from a year-end moved informally, leaving twelve months of trading reported as though nothing had changed. Much of that amount accumulated during a period the CRA itself had delayed.
What we did for A family-owned wholesale distributor, Halifax, Nova Scotia
We separated personal and corporate spending, cleared the shareholder loan through a documented salary and dividend mix, and restated the comparative year. We framed the relief application on the specific grounds the CRA guidelines recognise rather than on general hardship.
The result — A family-owned wholesale distributor, Halifax, Nova Scotia
The assessment was vacated. $45,000 came off the account, and the documentation now on file makes the same position straightforward to defend next time.
Case Study 3 · Missed incentive claimed
Incentive Review Recovered $28,000 Across 5 Open Years — Design Agency, Windsor
The situation — A 14-person design agency, Windsor, Ontario
An incentive review at a 14-person design agency in Windsor, Ontario started from a simple question: what has never been claimed? The answer ran to 5 years. It was driven by inter-company balances between two related corporations that had never been reconciled.
What we did for A 14-person design agency, Windsor, Ontario
We built a fixed-asset continuity schedule from the purchase invoices. We set the capital cost allowance claim class by class rather than claiming the maximum by default. We documented eligibility to the standard a reviewer would apply rather than the standard a claim form requires.
The result — A 14-person design agency, Windsor, Ontario
The credits produced $28,000 across the open years. The tracking now in place means the following year's claim is documented as the work happens rather than reconstructed afterwards.
Case Study 4 · Cash and remittance control
Instalments Rebased, $110,000 Of Cash Returned To The Business — Off-Calendar Year-End Supplier, Mississauga
Client: A supplier with an off-calendar fiscal year-end · Where: Mississauga, Ontario · Engagement: 10 weeks, fixed fee
Cash returned$110,000
Instalment basisCurrent year
ReviewedQuarterly
The situation — A supplier with an off-calendar fiscal year-end, Mississauga, Ontario
A supplier with an off-calendar fiscal year-end in Mississauga, Ontario was paying instalments calculated on a prior year. That year no longer reflected the business. A bank that refused to renew an operating line without compliant statements was tying up $110,000 of cash.
What we did for A supplier with an off-calendar fiscal year-end, Mississauga, Ontario
We rebased the instalments on the current-year estimate rather than the prior-year default. Alongside that, we moved accruals, prepaids and depreciation into a documented month-end checklist, so they stopped being year-end discoveries.
The result — A supplier with an off-calendar fiscal year-end, Mississauga, Ontario
$110,000 of cash stayed in the business, the penalty cycle ended, and the instalment position is reviewed each quarter against actual results.
Case Study 5 · Structure rebuilt
Reorganisation Completed Tax-Deferred, $25,500 Saved Each Year — Quarterly-Close Practice, Burnaby
Client: A professional practice that closes its books quarterly · Where: Burnaby, British Columbia · Engagement: 10 weeks, fixed fee
Annual saving$25,500
Tax on reorganisationDeferred
Elections filedOn time
The situation — A professional practice that closes its books quarterly, Burnaby, British Columbia
A professional practice that closes its books quarterly in Burnaby, British Columbia had outgrown the structure it started with. Two sets of numbers — one in the accounting file, one the owner actually ran the business on was the immediate problem. The longer-term one was that the structure blocked the next step.
What we did for A professional practice that closes its books quarterly, Burnaby, British Columbia
We mapped the current structure and modelled the target. Then we set a monthly close calendar with a fixed cut-off, so the year-end became a review of work already done rather than a twelve-month rebuild. The tax-deferred elections were filed on time and the supporting valuations documented.
The result — A professional practice that closes its books quarterly, Burnaby, British Columbia
The reorganisation completed without triggering tax, and the new structure saves approximately $25,500 a year while removing the exposure the old one carried.
Case Study 6 · CRA review defended
$69,000 Proposed Adjustment Withdrawn In Full — First Year-End Corporation, Kelowna
Client: An owner-managed corporation preparing its first year-end · Where: Kelowna, British Columbia · Engagement: 8 weeks, fixed fee
Adjustment withdrawn$69,000
File closed in8 weeks
Penalties assessedNone
The situation — An owner-managed corporation preparing its first year-end, Kelowna, British Columbia
An owner-managed corporation preparing its first year-end in Kelowna, British Columbia received a proposal letter opening a review of profit and loss statement preparation. The CRA had identified a shareholder loan account that had drifted for three years with no supporting entries. It proposed an adjustment of $69,000, with 30 days to respond.
What we did for An owner-managed corporation preparing its first year-end, Kelowna, British Columbia
We treated the response as an evidence exercise rather than an argument. We valued work in progress on one consistent basis and documented the method, so the comparative year could be relied on. We then indexed every supporting document against the specific line the auditor had questioned.
The result — An owner-managed corporation preparing its first year-end, Kelowna, British Columbia
The proposed adjustment was withdrawn in full — all $69,000 of it. The file closed in 8 weeks with no change to the assessed amounts and no penalty.
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.
