6 worked Sole Proprietorship Tax Filing 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 tax filing work, not a specific client's file.
Case Study 1 · Missed incentive claimed
$105,000 Credit Claim Filed And Accepted Without Adjustment — Sole Proprietor Consultant, Regina
Client: A sole proprietor consultant · Where: Regina, Saskatchewan · Engagement: 3 weeks, fixed fee
Claim value$105,000
AcceptedWithout adjustment
RepeatableAnnually
The situation — A sole proprietor consultant, Regina, Saskatchewan
A sole proprietor consultant in Regina, Saskatchewan assumed the credits did not apply to a business its size. A partnership that crossed the T5013 threshold two years before anyone noticed meant they had applied all along.
What we did for A sole proprietor consultant, Regina, Saskatchewan
We identified the qualifying activity, built the documentation to support it, and reconciled each partner’s allocation, capital account and drawings, so what was reported for tax matched the agreement instead of the cash taken.
The result — A sole proprietor consultant, Regina, Saskatchewan
$105,000 recovered. Because the eligibility analysis is on file, the same claim can be repeated each year with a fraction of the effort.
Case Study 2 · Backlog brought current
Collections Halted And $14,500 Cut From A 3-Year Backlog — Freelance Developer, Moncton
Client: A freelance developer · Where: Moncton, New Brunswick · Engagement: 9 weeks, fixed fee
Balance reduced by$14,500
Backlog cleared3 years
CollectionsHalted
The situation — A freelance developer, Moncton, New Brunswick
By the time a freelance developer in Moncton, New Brunswick called, 3 years were outstanding and the CRA had assessed on estimates. Underneath it sat a partner taxed on an allocation in a year they had drawn nothing at all.
What we did for A freelance developer, Moncton, New Brunswick
We reconstructed the records year by year and 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 freelance developer, Moncton, New Brunswick
The account is current. Filing on real numbers rather than CRA estimates reduced the balance by $14,500, and a relief application addressed part of the accumulated interest.
Case Study 3 · Objection and relief
Desk-Review Assessment Of $76,000 Vacated — Limited Partnership, Toronto
Client: A limited partnership with passive investors · Where: Toronto, Ontario · Engagement: 10 weeks, fixed fee
Assessment vacated$76,000
Supporting recordsNow on file
AccountCleared
The situation — A limited partnership with passive investors, Toronto, Ontario
A limited partnership with passive investors in Toronto, Ontario was carrying $76,000 of penalties and interest arising from a proprietor planning around a September year-end that the rules did not permit, much of it accumulated during a period the CRA itself had delayed.
What we did for A limited partnership with passive investors, Toronto, Ontario
We rewrote the partnership allocation to match how the practice actually operated, effective for the following fiscal year and framed the relief application on the specific grounds the CRA guidelines recognise rather than on general hardship.
The result — A limited partnership with passive investors, Toronto, Ontario
The assessment was vacated. $76,000 came off the account, and the documentation now on file makes the same position straightforward to defend next time.
Case Study 4 · Records and systems rebuilt
Month-End Close Cut From 6 Weeks To 4 Days — Three-Partner Medical Clinic, Ottawa
Client: A three-partner medical clinic · Where: Ottawa, Ontario · Engagement: 5 weeks, fixed fee
Close time before6 weeks
Close time after4 days
Year-endReview, not rebuild
The situation — A three-partner medical clinic, Ottawa, Ontario
The accounting file at a three-partner medical clinic in Ottawa, Ontario was built on three partners operating on a handshake, with no written agreement covering allocations or a departure. The year-end had taken 6 weeks each of the last three years.
What we did for A three-partner medical clinic, Ottawa, Ontario
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 and moved the reconciliations into the monthly cycle, so the year-end stopped being a rebuild.
The result — A three-partner medical clinic, Ottawa, Ontario
The file reconciles. Month-end closes in 4 days instead of 6 weeks, and the year-end is a review rather than a reconstruction.
Case Study 5 · Planning that cut the bill
$55,000 Cut From The Annual Tax Bill — Corporate-Partner Partnership, Saskatoon
Client: A partnership with a corporate partner · Where: Saskatoon, Saskatchewan · Engagement: 7 weeks, fixed fee
First-year saving$55,000
RepeatsAnnually
Filing positionUnchanged in risk
The situation — A partnership with a corporate partner, Saskatoon, Saskatchewan
A partnership with a corporate partner in Saskatoon, Saskatchewan was compliant but paying more than it needed to. The prior year had been filed correctly and still left a partnership that crossed the T5013 threshold two years before anyone noticed on the table.
What we did for A partnership with a corporate partner, Saskatoon, Saskatchewan
We modelled the current position against the alternatives before changing anything, then 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 partnership with a corporate partner, Saskatoon, Saskatchewan
The change saved $55,000 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 · CRA review defended
$48,000 Proposed Adjustment Withdrawn In Full — Family-Staffed Proprietorship, Kitchener
Client: A proprietor whose spouse works in the business · Where: Kitchener, Ontario · Engagement: 10 weeks, fixed fee
Adjustment withdrawn$48,000
File closed in10 weeks
Penalties assessedNone
The situation — A proprietor whose spouse works in the business, Kitchener, Ontario
A proprietor whose spouse works in the business in Kitchener, Ontario received a proposal letter opening a review of sole proprietorship tax filing. The CRA had identified partner draws that had pushed one partner’s adjusted cost base negative and proposed an adjustment of $48,000, with 30 days to respond.
What we did for A proprietor whose spouse works in the business, Kitchener, Ontario
We treated the response as an evidence exercise rather than an argument. We filed the section 85 election with correct elected amounts and rolled the assets in without a taxable disposition, then indexed every supporting document against the specific line the auditor had questioned.
The result — A proprietor whose spouse works in the business, Kitchener, Ontario
The proposed adjustment was withdrawn in full — all $48,000 of it. The file closed in 10 weeks with no change to the assessed amounts and no penalty.
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.
