6 worked Self-Employed 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 self-employed tax return work, not a specific client's file.
Case Study 1 · CRA review defended
$54,000 Proposed Adjustment Withdrawn In Full — Family-Staffed Proprietorship, Lethbridge
Client: A proprietor whose spouse works in the business · Where: Lethbridge, Alberta · Engagement: 4 weeks, fixed fee
Adjustment withdrawn$54,000
File closed in4 weeks
Penalties assessedNone
The situation — A proprietor whose spouse works in the business, Lethbridge, Alberta
A proprietor whose spouse works in the business in Lethbridge, Alberta received a proposal letter opening a review of self-employed tax return. The CRA had identified a partner taxed on an allocation in a year they had drawn nothing at all and proposed an adjustment of $54,000, with 30 days to respond.
What we did for A proprietor whose spouse works in the business, Lethbridge, Alberta
We treated the response as an evidence exercise rather than an argument. We 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, then indexed every supporting document against the specific line the auditor had questioned.
The result — A proprietor whose spouse works in the business, Lethbridge, Alberta
The proposed adjustment was withdrawn in full — all $54,000 of it. The file closed in 4 weeks with no change to the assessed amounts and no penalty.
Case Study 2 · Objection and relief
Desk-Review Assessment Of $20,500 Vacated — Food-Truck Proprietorship, Regina
Client: A food-truck sole proprietorship · Where: Regina, Saskatchewan · Engagement: 7 weeks, fixed fee
Assessment vacated$20,500
Supporting recordsNow on file
AccountCleared
The situation — A food-truck sole proprietorship, Regina, Saskatchewan
A food-truck sole proprietorship in Regina, Saskatchewan was carrying $20,500 of penalties and interest arising from a profit split applied in practice that the written agreement did not support, much of it accumulated during a period the CRA itself had delayed.
What we did for A food-truck sole proprietorship, Regina, Saskatchewan
We reconciled each partner’s allocation, capital account and drawings, so what was reported for tax matched the agreement instead of the cash taken and framed the relief application on the specific grounds the CRA guidelines recognise rather than on general hardship.
The result — A food-truck sole proprietorship, Regina, Saskatchewan
The assessment was vacated. $20,500 came off the account, and the documentation now on file makes the same position straightforward to defend next time.
Case Study 3 · Scaling without breaking
Second-Province Expansion Handled, $131,000 Of Cash Released — Unincorporated Trades Business, Ottawa
Client: An unincorporated trades business · Where: Ottawa, Ontario · Engagement: 9 weeks, fixed fee
Cash released$131,000
New registrationsComplete on day one
Compliance gapsNone
The situation — An unincorporated trades business, Ottawa, Ontario
Revenue at an unincorporated trades business in Ottawa, Ontario was up sharply and cash was tighter than ever. Underneath it sat three partners operating on a handshake, with no written agreement covering allocations or a departure.
What we did for An unincorporated trades business, Ottawa, Ontario
We filed the section 85 election with correct elected amounts and rolled the assets in without a taxable disposition. Every new obligation — registration, remittance frequency, provincial filing — was set up before it was triggered, not after.
The result — An unincorporated trades business, Ottawa, Ontario
$131,000 of cash was released from the working capital cycle, and the expansion completed with every registration and filing obligation covered from day one.
Case Study 4 · Structure rebuilt
Reorganisation Completed Tax-Deferred, $16,500 Saved Each Year — Spousal Retail Partnership, Barrie
The situation — A husband-and-wife retail partnership, Barrie, Ontario
A husband-and-wife retail partnership in Barrie, Ontario had outgrown the structure it started with. An incorporation completed without the section 85 election, triggering an unnecessary gain was the immediate problem; the longer-term one was that the structure blocked the next step.
What we did for A husband-and-wife retail partnership, Barrie, Ontario
We mapped the current structure, modelled the target, and rewrote the partnership allocation to match how the practice actually operated, effective for the following fiscal year — with the tax-deferred elections filed on time and the supporting valuations documented.
The result — A husband-and-wife retail partnership, Barrie, Ontario
The reorganisation completed without triggering tax, and the new structure saves approximately $16,500 a year while removing the exposure the old one carried.
Case Study 5 · Planning that cut the bill
$47,000 Saved By Correcting What Prior Filings Had Missed — Retiring Partner, London
Client: A retiring partner leaving a professional partnership · Where: London, Ontario · Engagement: 7 weeks, fixed fee
Saving identified$47,000
RecurringYes
Positions documentedAll
The situation — A retiring partner leaving a professional partnership, London, Ontario
A retiring partner leaving a professional partnership in London, Ontario asked for a second opinion on self-employed tax return after three years of rising tax. The review found partner draws that had pushed one partner’s adjusted cost base negative.
What we did for A retiring partner leaving a professional partnership, London, Ontario
We built the comparison first — current structure against two alternatives — and then 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.
The result — A retiring partner leaving a professional partnership, London, Ontario
First-year saving of $47,000, with the same benefit recurring. Every position taken is documented and supported in the file.
Case Study 6 · Backlog brought current
Collections Halted And $70,000 Cut From A 5-Year Backlog — Freelance Developer, Vancouver
Client: A freelance developer · Where: Vancouver, British Columbia · Engagement: 4 weeks, fixed fee
Balance reduced by$70,000
Backlog cleared5 years
CollectionsHalted
The situation — A freelance developer, Vancouver, British Columbia
By the time a freelance developer in Vancouver, British Columbia called, 5 years were outstanding and the CRA had assessed on estimates. Underneath it sat a proprietor planning around a September year-end that the rules did not permit.
What we did for A freelance developer, Vancouver, British Columbia
We reconstructed the records year by year 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. Each filing replaced an arbitrary assessment with a real one.
The result — A freelance developer, Vancouver, British Columbia
The account is current. Filing on real numbers rather than CRA estimates reduced the balance by $70,000, and a relief application addressed part of the accumulated interest.
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.
