Budget-Friendly Shareholder Compensation Planning for Canadian Businesses

With direct deposit registered the refund is paid straight to the bank account on file, and about two weeks is the usual CRA standard for a 2025 return filed online. An out-of-date account is a common cause of delay, so update it in My Account before you file. A paper return runs on a considerably longer standard before any payment is issued at all.

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.

Payroll treats each cheque as though you earned that amount every period, so a bonus, overtime, retroactive raise or an extra shift makes the cheque look like a higher annual income and more tax comes off it. A change in pay frequency, a new TD1, or a taxable benefit added mid-year does the same. CPP and EI stop for the year once their maximums are reached, so take-home often rises later on. Your return reconciles the total.

Pay through CRA My Business Account, your bank's online tax payment service, pre-authorised debit or a third-party payment provider, always quoting the business number and the tax year the money is for. For most provinces the CRA collects the provincial share along with the federal amount. Alberta and Quebec administer their own corporate income tax, so a corporation with a permanent establishment there files and pays that part separately to the provincial authority. Instalments use the same channels as the final balance.

If you are incorporated, you can take salary, dividends, or a mix of both. Salary is deductible to the corporation, builds RRSP room and CPP entitlement, and requires payroll registration and regular remittances. Dividends need no payroll but come out of after-tax corporate income and create no RRSP room. Sole proprietors and partners simply draw money and pay tax on the business profit. The right mix depends on your cash needs and the corporation's tax position, so model both.

For a personal vehicle, no: the GST/HST or provincial sales tax on the purchase is not deductible. For a vehicle bought by a business, a GST/HST registrant normally recovers the federal portion as an input tax credit rather than a deduction, and provincial sales tax that cannot be recovered forms part of the vehicle's cost for depreciation. Where use is mixed, only the business share counts. Keep the bill of sale and a mileage log.

Usually yes. Severance, retiring allowances, bonuses, back pay, commuted pensions and RRSP withdrawals are taxable in the year received, and the payer withholds at a flat lump-sum rate that may be higher or lower than your real marginal rate, so a refund or balance can appear at filing. A qualifying retroactive lump sum covering earlier years can be spread back over them on request. Amounts transferred directly to an RRSP defer the tax.

Both federal and provincial tax apply, and the rates are graduated rather than flat. For 2026 the lowest federal bracket is taxed at 14%, and the federal basic personal amount of $16,452 shelters the first slice of income, so tax on $49,000 works out well below 14% of the whole amount. Your province adds its own bracket and credits, and CPP and EI also come off employment pay. Use the CRA's payroll deductions calculator.

Salary is taxed at graduated federal and provincial rates, and your employer deducts tax at source on every pay along with CPP or QPP contributions and EI premiums. The withholding is only an estimate built from your pay and your TD1 forms, so a bonus, a second job or a mid-year raise can leave you over or under-withheld until you file. Your T4 reports the year's totals and the return trues up the difference.

Yes. Property tax is a municipal charge on the property rather than an income tax, and it does not stop at any age. Relief does exist in places: several provinces and municipalities run deferral programs that let older or lower-income owners postpone payment until the property is sold, usually with interest, and some offer a grant or rebate. These are applied for each year through the province or municipality, not on your T1. Check your municipality's tax page for what is offered.

Regular pay is taxed as though the current period repeats for the rest of the year, so a period with heavy overtime can be withheld as if that higher amount were your normal income; a bonus is handled by a different method that adds it to your estimated annual pay and withholds only the extra tax it produces, and commission earners can file a TD1X so deductions track their actual commission income. Two jobs, credits claimed twice on separate TD1 forms, or extra tax you asked to have withheld will also push the deduction up. CPP and EI come off until the annual maximums are reached. Anything over-withheld comes back as a refund when you file.

A statement of account summarises one tax account: the balance owing or credit, payments and instalments received, transfers applied from other accounts, and interest or penalties charged. The CRA issues it with certain notices and on request, and it can be viewed in My Account or My Business Account. Check it against your own records before paying, because a surprise balance often turns out to be a payment posted to the wrong period or program.