6 worked Sole Proprietor Tax Planning 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 sole proprietor tax planning work, not a specific client's file.
Case Study 1 · Missed incentive claimed
$51,000 In Credits Claimed That Prior Filings Had Missed — Two-Partner Architecture Practice, Surrey
Client: A two-partner architecture practice · Where: Surrey, British Columbia · Engagement: 4 weeks, fixed fee
Credits claimed$51,000
Years adjusted4
Review outcomeNo adjustment
The situation — A two-partner architecture practice, Surrey, British Columbia
A two-partner architecture practice in Surrey, British Columbia had been filing for 4 years. In that time, the incentives its activity qualified for were never claimed. Behind that sat a profit split applied in practice that the written agreement did not support.
What we did for A two-partner architecture practice, Surrey, British Columbia
We tested each activity against the eligibility criteria rather than the description on the invoice. Then we drafted the allocation, admission and withdrawal terms into a written agreement before the next partner was admitted.
The result — A two-partner architecture practice, Surrey, British Columbia
$51,000 in credits claimed, with the open prior years adjusted as well. The claim passed review without adjustment.
Case Study 2 · Backlog brought current
Collections Halted And $127,000 Cut From A 3-Year Backlog — Three-Partner Medical Clinic, Brampton
Client: A three-partner medical clinic · Where: Brampton, Ontario · Engagement: 4 weeks, fixed fee
Balance reduced by$127,000
Backlog cleared3 years
CollectionsHalted
The situation — A three-partner medical clinic, Brampton, Ontario
By the time a three-partner medical clinic in Brampton, Ontario called, 3 years were outstanding. The CRA had assessed on estimates. Underneath it sat an incorporation completed without the section 85 election, triggering an unnecessary gain.
What we did for A three-partner medical clinic, Brampton, Ontario
We reconstructed the records year by year. We split the shared overhead on a documented basis, so each partner’s reported share carried only the expenses that belonged to it. Each filing replaced an arbitrary assessment with a real one.
The result — A three-partner medical clinic, Brampton, Ontario
The account is current. Filing on real numbers rather than CRA estimates reduced the balance by $127,000, and a relief application addressed part of the accumulated interest.
Case Study 3 · Objection and relief
Notice Of Objection Allowed In Full, $94,000 Reversed — Property Joint Venture, Windsor
The situation — A joint-venture property partnership, Windsor, Ontario
A joint-venture property partnership in Windsor, Ontario had been reassessed for $94,000. 17 days were left on the objection deadline. The reassessment rested on a profit split applied in practice that the written agreement did not support.
What we did for A joint-venture property partnership, Windsor, Ontario
We filed the objection inside the deadline with a complete submission rather than a placeholder. Alongside it, we 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 joint-venture property partnership, Windsor, Ontario
The appeals officer allowed the objection in full. $94,000 was reversed and the account returned to a nil balance.
Case Study 4 · Records and systems rebuilt
31 Months Reconciled And $5,700 Of Input Tax Recovered — Food-Truck Proprietorship, Lethbridge
Client: A food-truck sole proprietorship · Where: Lethbridge, Alberta · Engagement: 8 weeks, fixed fee
Months reconciled31
Input tax recovered$5,700
Close time7 days
The situation — A food-truck sole proprietorship, Lethbridge, Alberta
Nothing reconciled at a food-truck sole proprietorship in Lethbridge, Alberta. Every filing started with 31 months of cleanup. The file was carrying a partnership that crossed the T5013 threshold two years before anyone noticed.
What we did for A food-truck sole proprietorship, Lethbridge, Alberta
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 we set the routine that keeps it clean.
The result — A food-truck sole proprietorship, Lethbridge, Alberta
31 months reconciled to the bank. The close now takes 7 days, and $5,700 of previously unclaimable input tax was recovered in the process.
Case Study 5 · Planning that cut the bill
Remuneration Review Saved $10,000 Across Corporate And Personal Returns — Limited Partnership, Edmonton
Client: A limited partnership with passive investors · Where: Edmonton, Alberta · Engagement: 6 weeks, fixed fee
Combined saving$10,000
ScopeCorporate + personal
Future yearsNo rework needed
The situation — A limited partnership with passive investors, Edmonton, Alberta
Nothing was wrong at a limited partnership with passive investors in Edmonton, Alberta. The filings were on time and accurate. What they were not was planned. Three partners operating on a handshake, with no written agreement covering allocations or a departure had never been reviewed.
What we did for A limited partnership with passive investors, Edmonton, Alberta
We rewrote the partnership allocation to match how the practice actually operated, effective for the following fiscal year. We ran the numbers across both the corporate and personal returns, so the saving was real rather than deferred into someone else's hands.
The result — A limited partnership with passive investors, Edmonton, Alberta
$10,000 came off the combined corporate and personal tax bill, and the structure holds for future years without further work.
Client: A husband-and-wife retail partnership · Where: Halifax, Nova Scotia · Engagement: 7 weeks, fixed fee
Proposed tax cleared$122,000
Review duration7 weeks
OutcomeNo change
The situation — A husband-and-wife retail partnership, Halifax, Nova Scotia
A husband-and-wife retail partnership in Halifax, Nova Scotia was selected for review. A partner taxed on an allocation in a year they had drawn nothing at all had shown up in the CRA's automated matching. The proposed adjustment on sole proprietor tax planning came to $122,000.
What we did for A husband-and-wife retail partnership, Halifax, Nova Scotia
We filed the section 85 election with correct elected amounts and rolled the assets in without a taxable disposition. Every figure in the response traced to a source record the auditor could verify without asking a second question.
The result — A husband-and-wife retail partnership, Halifax, Nova Scotia
The review closed with no change. $122,000 of proposed tax came off the table, and the documentation now in place makes the next review a short one.
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.
