6 worked Sole Proprietorship Registration 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 proprietorship registration work, not a specific client's file.
Case Study 1 · Planning that cut the bill
$42,000 Saved By Correcting What Prior Filings Had Missed — Sole Proprietor Consultant, Edmonton
Client: A sole proprietor consultant · Where: Edmonton, Alberta · Engagement: 6 weeks, fixed fee
Saving identified$42,000
RecurringYes
Positions documentedAll
The situation — A sole proprietor consultant, Edmonton, Alberta
A sole proprietor consultant in Edmonton, Alberta asked for a second opinion on sole proprietorship registration. That followed three years of rising tax. The review found a profit split applied in practice that the written agreement did not support.
What we did for A sole proprietor consultant, Edmonton, Alberta
We built the comparison first: current structure against two alternatives. Then we rewrote the partnership allocation to match how the practice actually operated, effective for the following fiscal year.
The result — A sole proprietor consultant, Edmonton, Alberta
First-year saving of $42,000, with the same benefit recurring. Every position taken is documented and supported in the file.
Case Study 2 · Objection and relief
Notice Of Objection Allowed In Full, $12,500 Reversed — Corporate-Partner Partnership, Halifax
Client: A partnership with a corporate partner · Where: Halifax, Nova Scotia · Engagement: 8 weeks, fixed fee
Amount reversed$12,500
ObjectionAllowed in full
Account balanceNil
The situation — A partnership with a corporate partner, Halifax, Nova Scotia
A partnership with a corporate partner in Halifax, Nova Scotia had been reassessed for $12,500. 11 days were left on the objection deadline. The reassessment rested on business income reported entirely on one spouse’s return despite shared operations.
What we did for A partnership with a corporate partner, Halifax, Nova Scotia
We filed the objection inside the deadline with a complete submission rather than a placeholder. Alongside it, 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.
The result — A partnership with a corporate partner, Halifax, Nova Scotia
The appeals officer allowed the objection in full. $12,500 was reversed and the account returned to a nil balance.
Case Study 3 · Missed incentive claimed
$94,000 In Credits Claimed That Prior Filings Had Missed — Two-Partner Architecture Practice, Regina
Client: A two-partner architecture practice · Where: Regina, Saskatchewan · Engagement: 7 weeks, fixed fee
Credits claimed$94,000
Years adjusted4
Review outcomeNo adjustment
The situation — A two-partner architecture practice, Regina, Saskatchewan
A two-partner architecture practice in Regina, Saskatchewan had been filing for 4 years. In that time, the incentives its activity qualified for were never claimed. Behind that sat a partnership that crossed the T5013 threshold two years before anyone noticed.
What we did for A two-partner architecture practice, Regina, Saskatchewan
We tested each activity against the eligibility criteria rather than the description on the invoice. Then 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 two-partner architecture practice, Regina, Saskatchewan
$94,000 in credits claimed, with the open prior years adjusted as well. The claim passed review without adjustment.
Case Study 4 · Cash and remittance control
Instalments Rebased, $116,000 Of Cash Returned To The Business — Property Joint Venture, Moncton
Client: A joint-venture property partnership · Where: Moncton, New Brunswick · Engagement: 5 weeks, fixed fee
Cash returned$116,000
Instalment basisCurrent year
ReviewedQuarterly
The situation — A joint-venture property partnership, Moncton, New Brunswick
A joint-venture property partnership in Moncton, New Brunswick was paying instalments calculated on a prior year. That year no longer reflected the business. A partner taxed on an allocation in a year they had drawn nothing at all was tying up $116,000 of cash.
What we did for A joint-venture property partnership, Moncton, New Brunswick
We rebased the instalments on the current-year estimate rather than the prior-year default. Alongside that, we filed the section 85 election with correct elected amounts and rolled the assets in without a taxable disposition.
The result — A joint-venture property partnership, Moncton, New Brunswick
$116,000 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
Corporate Structure Rebuilt For $25,500 Of Annual Savings — Limited Partnership, Toronto
Client: A limited partnership with passive investors · Where: Toronto, Ontario · Engagement: 3 weeks, fixed fee
Saving per year$25,500
DocumentationComplete
Transfer basisRollover
The situation — A limited partnership with passive investors, Toronto, Ontario
The structure at a limited partnership with passive investors in Toronto, Ontario dated from years earlier. It had been set up for a business that no longer existed. A proprietor planning around a September year-end that the rules did not permit had become expensive.
What we did for A limited partnership with passive investors, Toronto, Ontario
We drafted the allocation, admission and withdrawal terms into a written agreement before the next partner was admitted. The reorganisation used the rollover provisions rather than a taxable transfer, so no tax fell due on the restructuring itself.
The result — A limited partnership with passive investors, Toronto, Ontario
$25,500 of annual saving, achieved on a tax-deferred basis. The minute book, elections and valuations are all in the file.
Case Study 6 · CRA review defended
$130,000 Proposed Adjustment Withdrawn In Full — Farming Partnership, Ottawa
The situation — A farming partnership, Ottawa, Ontario
A farming partnership in Ottawa, Ontario received a proposal letter opening a review of sole proprietorship registration. The CRA had identified three partners operating on a handshake, with no written agreement covering allocations or a departure. It proposed an adjustment of $130,000, with 30 days to respond.
What we did for A farming partnership, Ottawa, Ontario
We treated the response as an evidence exercise rather than an argument. 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. We then indexed every supporting document against the specific line the auditor had questioned.
The result — A farming partnership, Ottawa, Ontario
The proposed adjustment was withdrawn in full — all $130,000 of it. The file closed in 10 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.
