Low-Cost RDTOH and Dividend Refund Planning for Canadian Businesses

Yes, the CRA does telephone people, usually about a balance owing, a missing return, an audit or to verify information, and calls can come from many different numbers, so caller ID proves nothing either way. A real agent never demands payment by gift card, cryptocurrency or e-transfer, never threatens immediate arrest or deportation, and never asks for a password. If a call feels wrong, hang up, check your balance and mail in My Account, then call back using a number from canada.ca.

Some are. Legal fees are deductible when they relate to earning income or defending a tax position, such as collecting salary or wages owed to you, objecting to or appealing an assessment, or running a business. Fees paid to obtain or enforce support are generally deductible for the recipient. Fees for the divorce itself, for custody, or for personal disputes are not, and fees to acquire property are usually added to that property's cost instead.

Gather every slip you receive: T4 for employment, T4A for pensions, self-employment or other income, T5 for investment income and T3 for trust and fund distributions. Add RRSP and FHSA receipts, tuition, medical, donation and childcare receipts, rent or property tax details if your province gives a credit, and last year's notice of assessment for carryforwards. Self-employed filers need full income and expense records. Keep everything six years after the tax year.

For personal income tax, your account number is your social insurance number. For a business it is the nine-digit business number plus the two-letter program identifier and four-digit reference, so corporation tax, GST/HST and payroll each have their own account. Select the matching payment type and the correct tax year or period as well: a payment posted to the wrong program or year leaves the balance you meant to clear still outstanding and still accruing interest.

A tax specialist prepares and files returns, works out how the rules apply to your particular facts, and deals with the CRA on reviews, audits and objections. On the planning side that covers timing income, choosing between salary and dividends, structuring a sale of a business, or correcting a filed year through an adjustment request. Fees vary with complexity, so get the price in writing before work starts and confirm whether CRA follow-up is included.

No. Borrowed money is not income because you have to repay it, so a personal or business loan is not reported as income on your return. Interest you pay may be deductible if the money earns business or investment income. Two situations do bite: a debt that is forgiven can create income or reduce a cost base, and an interest-free or low-interest loan from your own corporation can produce a taxable benefit. Get advice before lending to yourself.

A business lets you deduct the real costs of earning income, such as supplies, subcontractors, software and a reasonable share of home office, phone and vehicle costs, so you are taxed on profit rather than revenue, and a loss can often offset other income. Incorporating adds the federal small business rate of 9% on the first $500,000 of active business income for 2026, plus control over when you take money out. Personal spending dressed up as a business expense is not deductible.

Claim every genuine business expense and keep the paperwork, then use the structural levers rather than guesswork. A corporation pays the federal small business rate of 9% on the first $500,000 of active business income for 2026 instead of personal rates, so leaving profit inside the company defers tax until you draw it. Time purchases and income around the year end, pay a reasonable salary to create RRSP room, and split income only where the rules truly allow it.

Spread or shelter it. Contributing to an RRSP in the same year, if you have room, offsets the income directly; the RRSP dollar limit is $33,810 for 2026 and $32,490 for 2025. Where the lump sum is a retiring allowance, part may be transferred to an RRSP outside your normal room. Qualifying retroactive lump sums can be taxed as if received in the earlier years. Ask the payer to reduce withholding only with CRA approval.

Only if you are authorised first. The CRA will not discuss an account with anyone who is not on file as a representative, even a spouse or adult child. The taxpayer can add you online through My Account, or you can submit an AUT-01 with their signature. For someone who cannot sign, the CRA needs legal documents such as a power of attorney or estate paperwork. Authorisation can be limited to view-only access.

Yes. Rent you receive for a room in your own home is taxable income, reported gross with the related expenses deducted. You can claim only the share tied to the rented space, usually split by floor area or number of rooms, plus that share of shared costs such as heat, insurance and property tax. Renting to a relative below cost means you report the income but no loss. Keep receipts and a written note of how you split the space.

Part I tax is the main income tax the Income Tax Act imposes on individuals, corporations and trusts on their taxable income, so when a corporate return shows Part I tax, that is its ordinary federal income tax. For 2026, a Canadian-controlled private corporation pays the 9% federal small business rate on the first $500,000 of active business income and the 15% general net rate above that. Other Parts of the Act carry separate levies, including tax on a private corporation's investment income.