Low-Cost Accounting Records Reconstruction for Canadian Businesses

Yes. A mortgage is a liability on the balance sheet, carried at the outstanding principal and normally split between the portion due within twelve months and the long-term remainder. The property sits on the other side as an asset. Only interest is an expense; principal repayments reduce the liability and never reach the income statement. For a rental or business property, that same interest-versus-principal split is what determines the deductible amount on the tax return.

Rental income is revenue, not an asset. In double-entry bookkeeping you credit a rental income account and debit cash or accounts receivable, so the income sits on the income statement while the receivable or bank balance sits on the balance sheet. The property itself is the asset, and the rent it produces is periodic revenue. Rent collected in advance is a liability, deferred revenue, until the month it relates to arrives.

A Canadian business can face corporate income tax federally and provincially, GST/HST or provincial sales tax on what it sells, payroll withholding with employer CPP and EI, property tax on premises it owns, and payroll or health levies in some provinces. An unincorporated business reports its profit on a T2125 with the owner's T1 instead of paying corporate tax. Which ones apply depends on structure, where you operate, and whether you have employees.

Total your income, subtract deductions such as RRSP contributions and child care, apply your credits, then compare the resulting tax with the tax already withheld on your slips and any instalments paid. Tax software runs that comparison as you enter slips and shows a running balance before you submit. After filing, the notice of assessment confirms the figure, and CRA My Account shows the refund or amount owing and where it stands.

Sign in to CRA My Account and open the tax returns and tax information slips sections. Slips your employers, banks and payers filed with the CRA appear there, including T4, T4A and T5, usually by late March for the previous year. You can also download notices of assessment, prior-year returns and your RRSP and TFSA room statements. Slips arrive at different times, so confirm everything you expect is listed before you file.

Net tax owing is your total tax payable for the year minus tax already withheld at source and certain credits, so it is roughly the balance left to pay when the return is filed. The CRA uses it to decide whether you must pay quarterly instalments, comparing the current year against the two before it. Cross the limit and instalment reminders follow. The current threshold and the calculation are set out on the CRA's instalment payments page.

No, earning more still leaves you better off. Canada uses graduated rates, so a higher bracket applies only to the income above that threshold, not to everything you earn. Federal rates for 2026 begin at 14% and rise through 20.5%, 26% and 29% to 33%, with provincial rates on top. Extra income never leaves you with less after tax. What can shrink as income rises are income-tested benefits and credits, so check those first.

Before. A price reduction the seller gives at the time of sale, such as a store-funded coupon, a percentage off or a marked sale price, reduces the consideration, and GST/HST is then charged on the discounted amount shown on the receipt. Manufacturer coupons and rebates paid after the sale are handled differently, and the tax may be calculated on the pre-discount price. The receipt shows the taxable amount the tax was computed on.

Yes, in three separate layers. Federal excise duty is built into the price before the product reaches the shelf, each province or territory adds its own tobacco tax, and GST/HST then applies to the selling price including those taxes. The duty and the provincial tax are charged by quantity of product rather than as a percentage of price, which is why the shelf price differs so much between provinces.

Taxable income is what remains after deductions. A personal return moves through stages: total income from all sources, then net income after deductions such as registered retirement savings plan contributions, child care costs and union dues, then taxable income after any further deductions. Tax is calculated on that taxable income using the federal and provincial brackets, and non-refundable credits are applied afterwards, which is why a credit and a deduction are not worth the same amount.

Interest on a student line of credit or an ordinary bank loan cannot be claimed. The student loan interest credit applies only to interest on loans issued under the Canada Student Loans Act, the Canada Student Financial Assistance Act, a provincial or territorial student loan programme or similar legislation. A line of credit stays ineligible even where the money went to tuition, and rolling a government loan into a line of credit ends eligibility permanently.

Taxable income is built in steps. First add every source of income for the year, including employment, self-employment, pensions, investment income and the taxable portion of capital gains. Then subtract permitted deductions such as RRSP contributions, union dues, child care costs and deductible support payments to reach net income, and subtract the remaining deductions to reach taxable income. Tax is calculated on that figure using the federal and provincial brackets, and credits then reduce the tax itself.