Corporate year-end tax planning in Canada: a December 31, 2026 checklist

In short: before December 31, 2026, set your salary and dividend mix, put any bonus you plan to accrue in writing, make sure new equipment is available for use, repay 2025 shareholder loans, and make corporate donations. After year-end, most corporations pay their tax by March 1, 2027 (eligible CCPCs by March 31), pay accrued bonuses by June 29, 2027, and file the T2 by June 30, 2027.

Corporate year-end tax planning in Canada has a hard stop. If your corporation’s tax year ends on December 31, the moves that change your 2026 tax bill have to happen by that date. After it, you are mostly reporting what already happened. Start the review 45 to 90 days out. This checklist covers what to do before December 31 and the deadlines that follow in 2027.

When is the T2 due for a December 31 year-end?

For a December 31, 2026 year-end, the T2 return is due June 30, 2027, but any tax owing is due months earlier.

Most corporations must pay by March 1, 2027. That is two months after year-end, moved from Sunday, February 28. A CCPC that qualifies for an extra month has until March 31, 2027.

T4 and T5 slips for 2026 are due March 1, 2027. A bonus you accrue for 2026 must be paid by June 29, 2027 to be deductible in 2026.

Notice the gap. Many owners think of June 30 as “the deadline,” but the tax itself is due months earlier, and interest runs from the balance-due day.

Our guide to CRA late-filing penalties and interest shows what that costs. Missed a past T2? Read what to do after a missed T2 deadline.

If your year-end isn’t December 31

The same moves apply in the last month of your own tax year, and every deadline counts from your year-end: two or three months to pay, six months to file, 180 days to pay an accrued bonus. Changing a year-end generally needs the CRA’s approval (T2 guide, chapter 1).

Which CCPCs get an extra month to pay their corporate tax?

A CCPC gets three months after year-end to pay only if all three of these are true, according to the CRA’s payment due dates page:

• It is a CCPC throughout the tax year.
• It claimed the small business deduction for the current or previous tax year.
• Its taxable income for the previous year doesn’t exceed its business limit. If it is associated with other corporations, the group’s combined taxable income can’t exceed their combined business limits.

Not sure? Plan for March 1, or ask whoever prepares your corporate tax return to confirm. Paying early costs nothing. Paying late costs interest.

Should you pay yourself salary or dividends before December 31?

This is the biggest year-end decision for most owner-managers. Settle it before the year closes, because amounts land on your personal return in the year you receive them.

Salary and dividends work very differently. Here are the points that matter at year-end, using the CRA’s published 2026 and 2027 limits:

• RRSP room. Your 2027 RRSP deduction limit grows by 18% of your 2026 earned income, up to the 2027 dollar limit of $35,390. Earned income comes from employment and self-employment, so it takes about $196,600 of 2026 earned income, such as salary, to earn the full amount. Dividends don’t count.
• CPP. Salary brings CPP contributions on earnings up to $74,600 in 2026, plus second additional contributions (CPP2) on earnings between $74,600 and $85,000. Dividends don’t.
• Slips. Salary means payroll remittances and a T4 slip by March 1, 2027. Dividends mean a T5 slip by the same date.
• Corporate deduction. Salary is generally deductible to the corporation. Dividends are paid from after-tax profits.

There is no single right mix. It depends on your personal tax bracket, your retirement plans, and how much cash the business needs. We cover the trade-offs in should I pay myself salary or dividends from my Canadian corporation.

Can your corporation deduct a bonus it hasn’t paid yet?

Yes, if it pays the bonus within 180 days of year-end. For a December 31, 2026 year-end, that means by June 29, 2027.

A corporation can accrue a bonus at year-end and deduct it in that year. If the bonus isn’t paid within 180 days, it isn’t deductible in 2026. It becomes deductible in the year it is paid instead, according to the CRA’s archived bulletin IT-109R2, Unpaid Amounts.

The CRA treats a payment made on the 180th day as on time. This is the rule in subsection 78(4) of the Income Tax Act.

Example: a $40,000 bonus accrued on December 31, 2026 and paid on May 15, 2027 is deducted by the corporation in 2026. You report it as 2027 employment income, on your 2027 T4, with source deductions taken through payroll when it is paid. Paid on July 2, 2027, it would move to the corporation’s 2027 return instead.

We recommend putting the bonus in writing before year-end, in a directors’ resolution dated on or before December 31.

Protect the small business deduction before year-end

For a small business corporation, the small business deduction is usually the biggest saving there is. It cuts the federal rate on active business income from 15% to 9%, up to a business limit of $500,000 for a corporation that isn’t associated with another (T2 guide).

Passive income is the trap for owners who leave profits invested inside the company. For every $1 of adjusted aggregate investment income above $50,000, the business limit falls by $5. In the CRA’s own example, $75,000 of investment income leaves a limit of $375,000. At $150,000, the limit is nil (CRA small business deduction rules).

Associated corporations add their investment income together. The cut is based on the taxation years that ended in the preceding calendar year, so what your corporation earns in 2026 can shrink its 2027 limit.

Ontario also lowered its small business rate from 3.2% to 2.2% effective July 1, 2026, prorated for tax years that straddle that date. A personal services business gets no small business deduction at all.

Recover refundable tax and pay out the capital dividend account

If your corporation holds investments, check two balances before December 31.

Refundable tax (RDTOH). Part of the tax on investment income comes back when the corporation pays taxable dividends: the lesser of 38⅓% of the dividends paid in the year and the refundable balance at year-end (T2 guide, chapter 6). A dividend paid by December 31, 2026 counts toward a 2026 refund.

Capital dividend account (CDA). The CDA mainly holds the non-taxable half of the corporation’s capital gains. It can be paid out as a tax-free capital dividend, but only with an election on Form T2054, filed by the earlier of the day the dividend is paid and the day it becomes payable.

Investment moves inside the corporation: losses, gains and donations

• Losses. To use a capital loss in 2026, the trade has to settle by December 31, so sell by Wednesday, December 30, 2026. Buying the same shares back within 30 days, even personally, can suspend the loss, because you and a corporation you control are affiliated. See tax-loss selling and the superficial loss rule.
• Gains. A gain taken in December lands in 2026; in January, 2027. The inclusion rate is still one-half, since the proposed increase was cancelled in March 2025. See capital gains tax in Canada.
• Donations. Donating listed securities instead of cash means no taxable gain, and the full gain goes to the capital dividend account. Donate by December 31 to claim it for 2026.

Can you claim CCA on equipment bought in December 2026?

Buying something isn’t enough to claim capital cost allowance (CCA) on it. The CRA’s CCA basics say you can usually claim CCA only when the property becomes available for use.

For property other than a building, that is usually the earliest of:

1. The date you first use it to earn income.
2. The time it is delivered or made available to you and can produce a saleable product or service.
3. The second tax year after the year you acquire it.
4. The time just before you dispose of it.

So a machine ordered on December 20 and delivered in January generally won’t produce a 2026 claim. If a purchase is meant to help your 2026 numbers, confirm delivery and set-up dates with the supplier now.

Budget 2025’s Productivity Super-Deduction became law with Bill C-15 on March 26, 2026 (Finance Canada).

What about the Productivity Mega Deduction? On September 15, 2026, Finance Canada proposed permanent immediate expensing for most depreciable property acquired on or after that date. As of October 15, 2026, it is draft legislation, not law. Even if it passes, the available-for-use rule still decides the year. Don’t buy equipment just for the deduction.

Clear 2025 shareholder loans by December 31

Under subsection 15(2) of the Income Tax Act, a loan from your corporation is generally included in your income for the year the loan was made. It escapes that if repaid within one year after the end of the corporation’s tax year in which the loan was made.

That relief doesn’t apply if the repayment is part of a series of loans and repayments (CRA Folio S3-F1-C1). So a 2025 loan in a December year-end company has to be dealt with by December 31, 2026, as our guide to shareholder loans in Canada explains.

Check family pay against TOSI before year-end

Salary paid to a spouse or child has to be reasonable for the work they actually do, or the corporation can’t deduct it.

Dividends to family members can be taxed at the top personal rate under the tax on split income (TOSI) rules unless an exclusion applies, such as for a spouse when the owner is 65 or older, or for adults who work in the business regularly (generally at least 20 hours a week). Review it before December 31, because pay and dividends count in the year they are paid.

Your corporate year-end tax planning checklist

Beyond the big decisions, work through this list before December 31. It makes the T2 faster and cheaper to prepare.

1. Reconcile every account. Bring each bank and credit card account up to December 31.
2. Separate personal expenses. Pull out anything personal the company paid for.
3. Check your instalments. Compare 2026 instalments with your expected tax. Monthly instalments are due one month less a day from the start of the tax year, then monthly. None are needed if tax payable is $3,000 or less in either year (CRA).
4. Set your salary and dividend mix. Decide it, pay it, and put bonuses and dividends in written resolutions before the year closes.
5. Check RDTOH, CDA and family pay before you declare dividends.
6. Sell losing investments by December 30 so the trades settle in 2026.
7. Collect asset receipts with delivery dates for CCA, and write off bad debts you can’t collect.
8. Make corporate donations by December 31 if you want them in the 2026 return.
9. List everyone you paid in 2026, so T4 and T5 slips are ready for March 1. More than five slips of one type must be filed electronically.

One common mistake: prepaying next year’s rent or subscriptions in December doesn’t move the deduction into 2026. Prepaid expenses are deducted in the year they relate to.

Sound like a lot? Most of it is one afternoon if the books are current. If they aren’t, December is the time to fix that, not May.

After December 31: what to do before the T2

Corporate year-end tax planning doesn’t end on December 31. The next six months, in order:

1. Close the books and prepare the year-end financial statements.
2. File T4 and T5 slips, and pay the balance owing, by March 1, 2027 (March 31 for an eligible CCPC’s balance).
3. Map the statements to GIFI and the required T2 schedules.
4. Pay accrued 2026 bonuses by June 29, 2027.
5. File the T2 electronically by June 30, 2027. Our T2 preparation and filing service covers this step.
6. Set your 2027 corporate instalments from the 2026 numbers.

Interest on unpaid tax starts the day after the balance-due day (7% a year for October to December 2026, per the CRA’s 2026 Q4 prescribed rates), and filing late adds a penalty on top. Our guide to the T2 late-filing penalty has the rates and examples.

Do you need an accountant for corporate year-end?

Some owners handle the books themselves and bring in help only for the T2. That can work. It may be worth getting help with corporate year-end tax planning before December 31 if:

• You haven’t decided your salary and dividend mix for 2026.
• The corporation holds investments and passive income is near $50,000.
• There is a shareholder loan balance, or you are planning a large purchase.
• You missed a filing or payment date last year.

Our corporate tax filing services in Canada cover year-end planning and the T2 itself, including for professional corporations. We work with owners remotely across Canada, so where you are doesn’t matter.

Corporate year-end FAQ

When do I have to pay corporate tax for a December 31 year-end?

Generally two months after year-end. February 28, 2027 is a Sunday, so a payment received by Monday, March 1, 2027 is on time. An eligible CCPC has until March 31, 2027.

How long do I have to pay an accrued year-end bonus?

180 days after the end of the tax year. For a December 31, 2026 year-end, that is June 29, 2027. If it isn’t paid by then, it’s deductible only in the year it is paid. The person who receives it reports it as income in the year it is paid.

How much passive income can my corporation earn before it loses the small business deduction?

Up to $50,000 of adjusted aggregate investment income, counted together with associated corporations. Above that, the $500,000 business limit drops by $5 for every $1 and is nil at $150,000. The cut applies the next year, so 2026 investment income reduces the 2027 limit.

Does my corporation have to pay tax instalments?

Only if its tax payable is more than $3,000 in both the current and the previous tax year. Otherwise none are required, but the balance is still due two or three months after year-end.

Do dividends create RRSP room?

No. RRSP room is based on earned income, which is built from employment and self-employment income. Dividends are not included.

What if my corporation’s year-end isn’t December 31?

The same steps apply in the last month of your tax year. Every deadline counts from your year-end: two or three months to pay, six months to file the T2, 180 days to pay an accrued bonus.

Sources: CRA: When to file your corporation income tax return; Due dates for payments; When to file information returns; MP, DB, RRSP, DPSP, ALDA, TFSA limits, YMPE and YAMPE; CPP rates and maximums; CPP2 rates and maximums; Corporation tax rates; T4012 chapter 4 and chapter 6; Small business deduction rules; T2054; IT-109R2 (archived); Folio S3-F1-C1; Basic information about CCA; Instalment requirements; 2026 Q4 prescribed interest rates; Corporation income tax return; Definitions for RRSPs. Finance Canada: Budget 2025 legislation passes (March 26, 2026) and Productivity Mega Deduction (September 15, 2026). Ontario Ministry of Finance: Corporate income tax. Prime Minister’s Office: Capital gains tax increase cancelled (March 21, 2025). All checked October 15, 2026.

This article is general information, not tax advice for your corporation. Rules and proposals change; check current CRA guidance or speak with an accountant before acting.