Budget-Friendly Succession Planning for Canadian Businesses

Yes. Most people file electronically through NETFILE using CRA-certified software, which submits the return directly and confirms receipt immediately. Filing online is also what makes a fast refund possible: for 2025 returns filed in 2026 the CRA service standard is about two weeks online, against a considerably longer standard for a paper return, and registering direct deposit removes the cheque step. CRA online filing for 2025 returns opened 23 February 2026 and closes 29 January 2027.

For the 2026 tax year, federal rates are 14% on the first $58,523 of taxable income, 20.5% from there to $117,045, 26% to $181,440, 29% to $258,482, and 33% above that. Each rate applies only to the income inside its own band, so moving into a higher bracket does not raise the tax on the income below it. Provincial or territorial tax is added on top.

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.

Severance is employment income in the year you receive it, taxed at your marginal rate like salary. Your employer withholds tax at source using lump-sum withholding rates, which are often lower than your final rate, so a balance can come due at filing. A retiring allowance can sometimes be transferred directly to an RRSP, sheltering it until withdrawal. Legal fees to collect severance may be deductible. Check the CRA's retiring allowances guidance before signing.

An exemption trust is an American estate planning structure that preserves a deceased spouse's federal estate tax exemption, so there is no direct Canadian equivalent. Canada levies no estate or inheritance tax. Instead, capital property is treated as sold at fair market value on death and the resulting gains are reported on the final return, while a qualifying transfer or spousal trust can defer that tax until the surviving spouse dies. Families with United States ties need advice on both systems.

List your assets and debts, name an executor and an alternate, name guardians for minor children, set out who receives what, and record where the signed original is kept. On the tax side, death triggers a final T1 return and a deemed disposition of most capital property, so keep records of cost base, registered plan beneficiary designations and life insurance. A lawyer drafts the will itself; plan the tax consequences alongside the drafting rather than afterwards.

Register in Represent a Client from the CRA sign-in page; the RepID is issued straight away once your identity is confirmed. A RepID identifies you personally, a group identifier covers a team, and a business number is used where a firm acts. The identifier alone opens nothing: each client must then authorise you online from their own CRA account, or sign an AUT-01 for the CRA to process, before you can see their information.

Rental profit is added to your other income and taxed at your normal rates. Report gross rent, deduct the costs of earning it, and carry the net amount into your return. Interest, property tax, insurance, utilities, repairs, management and condo fees are current expenses; improvements are capital and are either added to the building's cost or written off slowly through capital cost allowance. Selling later triggers a capital gain, half taxable for 2025 and 2026, plus possible recapture.

Unreported income costs far more than the tax alone. The CRA adds interest, and where you omit income in one year and also omitted income in any of the three preceding years, a repeated-failure penalty applies to the unreported amount. If the omission looks deliberate, a gross negligence penalty is much heavier, and evasion can be prosecuted. Fixing it yourself with a T1-ADJ or the Voluntary Disclosures Program is cheaper.

Yes, as a deduction rather than a credit. Child care costs you paid so you could work, run a business or attend school are deducted on your T1, usually by the lower-income spouse, with limits set by each child's age and status and capped by a share of earned income. Keep receipts showing the provider's name and, for an individual caregiver, their social insurance number. Day camps can qualify; recreational lessons do not.

A reasonable allowance paid to cover meals and incidental costs while you travel for work on your employer's business is generally not taxable and is not reported as income. It becomes taxable when it is not tied to travel, is really extra pay, or exceeds what the costs reasonably require. Overtime meal allowances and allowances for travel inside your normal work area follow their own rules, so check the CRA's employer guide on allowances before treating a payment as tax free.

Two different taxes are in play. GST/HST is not charged on long-term residential rent, which is an exempt supply, so the landlord adds no tax and cannot claim input tax credits on those costs. Commercial rent and most short-term accommodation are taxable once the landlord is registered, at 13% HST in Ontario or 5% GST in Alberta. Separately, the rent received is income to the landlord, reported on the T1 or T2 after deductible expenses.