6 worked Termination and Severance Payroll 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 termination and severance payroll work, not a specific client's file.
Case Study 1 · Sale and succession
$435,000 Sheltered By The Lifetime Capital Gains Exemption — Stock-Option Tech Team, Kelowna
Client: A growing tech team with stock options · Where: Kelowna, British Columbia · Engagement: 7 weeks, fixed fee
Gain sheltered$435,000
ClosingOn schedule
Share qualificationMet
The situation — A growing tech team with stock options, Kelowna, British Columbia
A growing tech team with stock options in Kelowna, British Columbia had an offer on the table and 13 months to close. The shares did not qualify for the capital gains exemption. A minute book with no resolutions behind a decade of dividends was part of the reason.
What we did for A growing tech team with stock options, Kelowna, British Columbia
We purified the corporation so the shares met the qualifying tests. We reconciled the payroll register, general ledger and T4 summary to the cent, then filed the amended slips. All of it was done well ahead of the closing date.
The result — A growing tech team with stock options, Kelowna, British Columbia
The sale closed on schedule with $435,000 sheltered by the lifetime capital gains exemption across the shareholders.
Case Study 2 · Records and systems rebuilt
Month-End Close Cut From 11 Weeks To 4 Days — Part-Time Program Employer, London
Client: A charity with part-time program staff · Where: London, Ontario · Engagement: 8 weeks, fixed fee
Close time before11 weeks
Close time after4 days
Year-endReview, not rebuild
The situation — A charity with part-time program staff, London, Ontario
The accounting file at a charity with part-time program staff in London, Ontario had a weak foundation. It was built on T4 slips filed weeks after the deadline with no relief request made on the per-slip penalty. The year-end had taken 11 weeks each of the last three years.
What we did for A charity with part-time program staff, London, Ontario
We reviewed each contractor against the CRA’s control and integration tests and converted those who met the employment tests. We priced the transition before it was forced by a ruling. We also moved the reconciliations into the monthly cycle, so the year-end stopped being a rebuild.
The result — A charity with part-time program staff, London, Ontario
The file reconciles. Month-end closes in 4 days instead of 11 weeks, and the year-end is a review rather than a reconstruction.
Case Study 3 · Missed incentive claimed
$67,000 Credit Claim Filed And Accepted Without Adjustment — Seasonal Landscaping Employer, Calgary
Client: A landscaping company with seasonal staff · Where: Calgary, Alberta · Engagement: 4 weeks, fixed fee
Claim value$67,000
AcceptedWithout adjustment
RepeatableAnnually
The situation — A landscaping company with seasonal staff, Calgary, Alberta
A landscaping company with seasonal staff in Calgary, Alberta assumed the credits did not apply to a business its size. Long-term contractors who met every test for employment meant they had applied all along.
What we did for A landscaping company with seasonal staff, Calgary, Alberta
We identified the qualifying activity and built the documentation to support it. Then we wrote each pay code against its income tax, CPP and EI treatment. That way, a new benefit could not reach the payroll without a decision on how it was withheld.
The result — A landscaping company with seasonal staff, Calgary, Alberta
$67,000 recovered. Because the eligibility analysis is on file, the same claim can be repeated each year with a fraction of the effort.
Client: A restaurant with heavy seasonal turnover · Where: Kitchener, Ontario · Engagement: 9 weeks, fixed fee
Penalty cancelled$130,000
Relief applicationGranted
ReturnAccepted as filed
The situation — A restaurant with heavy seasonal turnover, Kitchener, Ontario
A restaurant with heavy seasonal turnover in Kitchener, Ontario had already missed one deadline and was about to miss a second. Behind it sat remittances still going out monthly after the business had moved to the accelerated threshold. A penalty of $130,000 was accruing.
What we did for A restaurant with heavy seasonal turnover, Kitchener, Ontario
We split the work into what had to happen before the deadline and what could follow it. Then we corrected the CPP and EI withholding for the balance of the year. We set the employee up to recover the over-deduction on the personal return.
The result — A restaurant with heavy seasonal turnover, Kitchener, Ontario
The outstanding return was accepted as filed, and the taxpayer relief application cancelled $130,000 of the penalty already assessed on the earlier year.
Client: A logistics operator with drivers in three provinces · Where: Ottawa, Ontario · Engagement: 6 weeks, fixed fee
Proposed tax cleared$124,000
Review duration6 weeks
OutcomeNo change
The situation — A logistics operator with drivers in three provinces, Ottawa, Ontario
A logistics operator with drivers in three provinces in Ottawa, Ontario was selected for review. A bonus accrued to bring the year-end tax bill down and still unpaid more than a year later had shown up in the CRA's automated matching. The proposed adjustment on termination and severance payroll came to $124,000.
What we did for A logistics operator with drivers in three provinces, Ottawa, Ontario
We paid the accrued bonus inside the 180-day window and kept the deduction in the year it was accrued. Every figure in the response traced to a source record the auditor could verify without asking a second question.
The result — A logistics operator with drivers in three provinces, Ottawa, Ontario
The review closed with no change. $124,000 of proposed tax came off the table, and the documentation now in place makes the next review a short one.
Case Study 6 · Objection and relief
Notice Of Objection Allowed In Full, $110,000 Reversed — Mixed-Crew Construction Firm, Moncton
Client: A construction firm with union and non-union crews · Where: Moncton, New Brunswick · Engagement: 7 weeks, fixed fee
Amount reversed$110,000
ObjectionAllowed in full
Account balanceNil
The situation — A construction firm with union and non-union crews, Moncton, New Brunswick
A construction firm with union and non-union crews in Moncton, New Brunswick had been reassessed for $110,000. 13 days were left on the objection deadline. The reassessment rested on long-term contractors who met every test for employment.
What we did for A construction firm with union and non-union crews, Moncton, New Brunswick
We filed the objection inside the deadline with a complete submission rather than a placeholder. Alongside it, we reconstructed vehicle logbooks, calculated the standby charge and operating benefit properly, and amended the affected T4s.
The result — A construction firm with union and non-union crews, Moncton, New Brunswick
The appeals officer allowed the objection in full. $110,000 was reversed and the account returned to a nil balance.
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.
