https://wealthnorth.ca/taxes/corporate-tax/Recent content in Canadian Corporate Tax Guide: Incorporation, CCPC & Business Structures 2026 on WealthNorthHugo -- gohugo.ioen-caFri, 10 Apr 2026 08:00:00 -0400https://wealthnorth.ca/taxes/corporate-tax/corporate-tax-instalments-canada/Tue, 07 Apr 2026 10:00:00 -0400https://wealthnorth.ca/taxes/corporate-tax/corporate-tax-instalments-canada/Who Must Pay Instalments Situation Instalments Required? Current year tax owing > $3,000 (federal) ✅ Yes Previous year tax owing > $3,000 (federal) ✅ Yes Tax owing ≤ $3,000 in both current and prior year ❌ No — pay in full by balance-due day New corporation (first tax year) ❌ No instalments in first year Tax-exempt organization ❌ No Monthly vs Quarterly Instalments Monthly (Default — Most Corporations) Feature Detail Who All corporations not eligible for quarterly Due dates Last day of each month of the fiscal year Number of payments 12 per year Balance-due day 2 months after fiscal year-end (3 months for eligible CCPCs) Quarterly (Eligible CCPCs Only) Requirement Detail Must be a CCPC Canadian-controlled private corporation Small business deduction claimed In the previous tax year Taxable income Under $500,000 in prior year Taxable capital Under $10 million Perfect compliance No outstanding returns or balances Due dates Last day of each fiscal quarter Number of payments 4 per year Quarterly Due Dates (Calendar Year-End) Quarter Period Due Date Q1 January–March March 31 Q2 April–June June 30 Q3 July–September September 30 Q4 October–December December 31 Three Methods to Calculate Instalments Method How It’s Calculated Best When Current-year method 1/12 (or 1/4) of estimated current-year tax You can accurately estimate this year’s tax Prior-year method 1/12 (or 1/4) of prior year’s total tax Income is similar year-over-year Two-year method First 2 payments based on second prior year; remaining 10 based on prior year minus first 2 Income is growing — reduces early payments Calculation Example: Prior-Year Method Corporation with $60,000 total tax owing last year, monthly instalments:https://wealthnorth.ca/taxes/corporate-tax/probate-fees-by-province-canada/Wed, 01 Apr 2026 12:00:00 -0400https://wealthnorth.ca/taxes/corporate-tax/probate-fees-by-province-canada/Probate fees can represent a significant percentage of your estate — particularly in Ontario and BC. The good news: several straightforward strategies can dramatically reduce or eliminate them. Probate fees by province — complete table Province Fee structure Fee on $250K estate Fee on $1M estate Ontario 1.5% over $50K $3,000 $14,250 BC 1.4% over $50K $2,800 $13,300 Nova Scotia Sliding scale ~$2,300 ~$14,965 Saskatchewan Sliding scale ~$2,000 ~$7,500 New Brunswick Sliding scale ~$1,500 ~$5,000 PEI Sliding scale ~$1,200 ~$4,500 Manitoba ~0.https://wealthnorth.ca/taxes/corporate-tax/management-company-canada/Wed, 01 Apr 2026 08:00:00 -0400https://wealthnorth.ca/taxes/corporate-tax/management-company-canada/What Is a Management Company? A management company is a separate corporation — usually owned by an owner-manager’s spouse, family trust, or adult family members — that provides services to the main operating business and receives management fees in return. The structure is legitimate when: Services are genuinely rendered Fees are reasonable for the services Proper documentation exists The recipients are actual workers in the business The goal is to move income from the operating company (where only the primary owner benefits) to the management company (where multiple family members can benefit), reducing the family’s combined tax bill.https://wealthnorth.ca/taxes/corporate-tax/passive-income-in-corporation-canada/Wed, 01 Apr 2026 08:00:00 -0400https://wealthnorth.ca/taxes/corporate-tax/passive-income-in-corporation-canada/What Is Passive Income in a Corporation? Passive income in a corporate context refers to investment earnings the corporation receives that are not from its core active business operations. Common examples: Interest on savings, GICs, bonds held inside the corporation Rental income from properties not used in the active business Capital gains on investment securities (50% taxable portion) Foreign dividends received Income from an investment portfolio built up inside the corporation When a Canadian-controlled private corporation (CCPC) accumulates cash and invests it, the resulting passive income can trigger the Small Business Deduction grind — one of the most significant tax traps for successful incorporated business owners.https://wealthnorth.ca/taxes/corporate-tax/professional-corporation-canada/Wed, 01 Apr 2026 08:00:00 -0400https://wealthnorth.ca/taxes/corporate-tax/professional-corporation-canada/What Is a Professional Corporation? A professional corporation (PC) is a specific type of corporation permitted under provincial legislation for licensed professionals. Unlike a standard corporation, a professional corporation comes with restrictions on who can own shares, what the corporation can do, and what it can be called — but it still offers the same fundamental tax planning tools as any other CCPC. The core benefit: instead of earning $400,000 as personal income and paying up to 53.https://wealthnorth.ca/taxes/corporate-tax/salary-vs-dividend-from-corporation-canada/Wed, 01 Apr 2026 08:00:00 -0400https://wealthnorth.ca/taxes/corporate-tax/salary-vs-dividend-from-corporation-canada/Integration Theory — How the Tax Math Works (Ontario, 2026) Scenario: $100,000 of active business income, Ontario Path Step 1 Step 2 (personal) Total Tax After-Tax Sole proprietor Tax at ~35% average personal rate N/A ~$35,000 ~$65,000 Corp — full salary Corporate deduction; salary income taxed personally Same ~35% avg ~$35,000 ~$65,000 Corp — dividends (eligible) Corp tax 12.2% = $12,200; after-tax corp = $87,800 Personal tax on $87,800 eligible dividend after DTC ~24% ~$12,200 + ~$21,072 = $33,272 ~$66,728 Corp — retain in corp Corp tax 12.https://wealthnorth.ca/taxes/corporate-tax/selling-your-business-canada/Wed, 01 Apr 2026 08:00:00 -0400https://wealthnorth.ca/taxes/corporate-tax/selling-your-business-canada/The Fundamental Choice: Asset Sale vs Share Sale When you sell a private business in Canada, the transaction structure determines how much of the proceeds you keep after tax. There are two main structures: Asset Sale Share Sale What is sold Specific assets inside the corporation Shares of the corporation itself Who sells The corporation The shareholder(s) personally Tax paid by Corporation (then shareholder on dividend) Shareholder personally LCGE available No Yes (if QSBC shares) Capital gains treatment Depends on asset type Yes — gain on shares is capital Buyer’s preference Usually preferred Usually less preferred Seller’s preference Usually avoided Usually preferred Why Sellers Strongly Prefer Share Sales 1.https://wealthnorth.ca/taxes/corporate-tax/family-trust-canada/Thu, 26 Mar 2026 08:00:00 -0400https://wealthnorth.ca/taxes/corporate-tax/family-trust-canada/What Is a Family Trust? A family trust is a legal arrangement with three parties: Party Role Settlor Creates the trust and transfers initial assets Trustee(s) Manages the trust and makes decisions Beneficiaries Family members who receive income or capital The trust holds assets separately from the settlor’s estate, with income and capital distributed according to the trust agreement. Types of Family Trusts Inter Vivos (Living) Trust Feature Inter Vivos Trust Created During settlor’s lifetime Tax rate Top marginal rate (unless distributed) Purpose Income splitting, asset protection 21-year rule Applies Testamentary Trust Feature Testamentary Trust Created Through a will, upon death Tax rate Graduated rates (certain trusts) Purpose Estate planning, minor beneficiaries 21-year rule Applies from date of creation Benefits of Family Trusts Tax Planning Benefit How It Works Income splitting Distribute income to lower-bracket family members Capital gains planning Multiply capital gains exemptions Dividend splitting Canadian dividend tax credit to beneficiaries Tax deferral Hold appreciated assets without triggering gains Asset Protection Benefit How It Works Creditor protection Properly structured trusts can protect assets Marital protection Assets stay in family bloodline Spendthrift protection Control distributions to beneficiaries Cottage succession Avoid forced sale for estate taxes Estate Planning Benefit How It Works Avoid probate Trust assets don’t go through probate Privacy Trust arrangements are not public Controlled distribution Specify timing and conditions Multi-generational Pass wealth across generations Tax on Split Income (TOSI) Rules The TOSI rules (nicknamed “kiddie tax”) significantly limit income splitting; related attribution mechanics are covered in attribution rules in Canada:https://wealthnorth.ca/taxes/corporate-tax/testamentary-vs-inter-vivos-trust/Thu, 26 Mar 2026 08:00:00 -0400https://wealthnorth.ca/taxes/corporate-tax/testamentary-vs-inter-vivos-trust/Overview: Two Types of Trusts Feature Inter Vivos Trust Testamentary Trust Also called Living trust Estate trust Created During settlor’s lifetime Through a will, on death Effective Immediately Upon death Funded Lifetime transfers Estate assets Tax rate (undistributed) Top marginal (~50%) Usually top marginal* 21-year rule Yes Yes (from creation) *Exceptions: Graduated Rate Estates (first 36 months) and Qualified Disability Trusts. Inter Vivos (Living) Trusts Characteristics Feature Details Creation Trust deed signed during lifetime Settlor Usually contributes initial asset Funding Transfer assets or subscribe for shares Revocable or not?https://wealthnorth.ca/taxes/corporate-tax/ccpc-tax-planning-guide/Wed, 25 Mar 2026 08:00:00 -0400https://wealthnorth.ca/taxes/corporate-tax/ccpc-tax-planning-guide/Owning a CCPC (Canadian-Controlled Private Corporation) gives you access to the most powerful tax planning tools in Canada: the small business deduction (12.2% combined rate on the first $500K of active income vs 26.5% above), the enhanced lifetime capital gains exemption ($1,016,836 in 2025), and the ability to choose when and how you pay yourself through salary, dividends, or a combination. The salary-vs-dividend decision alone can save or cost you thousands per year depending on your income level, RRSP room needs, and CPP strategy.https://wealthnorth.ca/taxes/corporate-tax/executor-tax-guide-canada/Wed, 25 Mar 2026 08:00:00 -0400https://wealthnorth.ca/taxes/corporate-tax/executor-tax-guide-canada/As executor, you are personally liable for filing the deceased’s final income tax returns and paying any taxes owed before distributing the estate. Executor Tax Timeline Timing Action Form/Filing Immediately Notify CRA of death (call 1-800-959-8281) Phone + letter Immediately Notify financial institutions, CPP/OAS, employer Death certificate Within 30 days Apply for CPP death benefit ($2,500) ISP1200 Within 90 days File T3 Direct Deposit form (optional) T3DD By April 30 (or 6 months after death) File final T1 return T1 By April 30 (following year) File optional elective returns (rights or things) T1 Within 90 days of T3 year-end File T3 trust return (if estate earns income) T3 Before distributing assets Request clearance certificate TX19 After clearance received Distribute remaining assets to beneficiaries — Filing Deadlines for Final Return Date of Death Final Return Deadline Notes Jan 1 – Oct 31 April 30 of following year Standard deadline Nov 1 – Dec 31 6 months after date of death Extended deadline Self-employed (Jan 1 – Dec 15) June 15 of following year Self-employment deadline Self-employed (Dec 16 – Dec 31) 6 months after date of death Extended Deemed Disposition: Tax on Death Asset Type Tax Treatment on Death Exception Principal residence Exempt (PRE applies) Must designate on final return Investment property Deemed sold at FMV → capital gain Can roll to spouse (tax-free) Stocks/ETFs Deemed sold at FMV → capital gain Can roll to spouse RRSP/RRIF Full balance included as income Roll to spouse or dependent child TFSA Tax-free to beneficiary/successor Successor holder continues TFSA Business assets Deemed sold at FMV Various rollovers available Personal property (over $1,000) Deemed sold at FMV Under $1,000 exempt Depreciable property Recapture + capital gain possible Roll to spouse RRSP/RRIF on Death Scenario Tax Treatment Spouse is beneficiary Tax-free rollover to spouse’s RRSP/RRIF Financially dependent child/grandchild (under 18) Transfer to term annuity to age 18 Financially dependent child (infirm) Transfer to RDSP or annuity Adult child is beneficiary Full RRSP/RRIF included in deceased’s income Estate is beneficiary Full RRSP/RRIF included in deceased’s income No beneficiary designated RRSP/RRIF goes to estate; full income inclusion RRSP/RRIF Tax Example Item Amount RRSP/RRIF balance at death $500,000 Other income in year of death $50,000 Total income on final return $550,000 Approximate federal + provincial tax (ON) ~$215,000 After-tax to beneficiaries ~$335,000 Optional Elective Returns Return Type What It Covers Benefit Rights or things (T1) Income earned but not received before death (vacation pay, dividends declared pre-death, matured bond coupons) Second set of graduated tax brackets Deceased partner/proprietor (T1) Business income from fiscal year ending after death Separate return for business income Testamentary trust beneficiary (T1) Trust income from trust year ending after death Separate graduated brackets Each elective return gets its own basic personal amount and graduated tax brackets — potentially saving $5,000–$15,000+ in tax.https://wealthnorth.ca/taxes/corporate-tax/how-to-set-up-holding-company-canada/Wed, 25 Mar 2026 08:00:00 -0400https://wealthnorth.ca/taxes/corporate-tax/how-to-set-up-holding-company-canada/How a Holding Company Structure Works Component Role Tax Treatment Operating company (opco) Runs the business, earns active income 9–12.2% on first $500K (SBD rate) Holding company (holdco) Receives dividends from opco, holds investments Tax-free inter-corporate dividends Shareholder (you) Owns holdco shares, receives dividends Personal tax on dividends received Investment portfolio (in holdco) Grows inside holdco Passive income taxed at ~50.2%, refundable on dividend payout Flow of funds: Opco earns profit → pays corporate tax (9–12.https://wealthnorth.ca/taxes/corporate-tax/incorporated-professional-tax-guide/Wed, 25 Mar 2026 08:00:00 -0400https://wealthnorth.ca/taxes/corporate-tax/incorporated-professional-tax-guide/Who Can Incorporate by Province Province Doctors Dentists Lawyers Accountants Engineers Other Health Ontario Yes Yes Yes Yes Yes Most regulated BC Yes Yes Yes Yes Yes Most regulated Alberta Yes Yes Yes Yes Yes Most regulated Quebec No* No* No* No* No* No* Manitoba Yes Yes Yes Yes Yes Most regulated Saskatchewan Yes Yes Yes Yes Yes Most regulated Nova Scotia Yes Yes Yes Yes Yes Most regulated New Brunswick Yes Yes Yes Yes Yes Most regulated Quebec allows “expense-sharing companies” but not true professional corporations with the same tax advantages.https://wealthnorth.ca/taxes/corporate-tax/bare-trust-rules-canada/Mon, 23 Mar 2026 08:00:00 -0400https://wealthnorth.ca/taxes/corporate-tax/bare-trust-rules-canada/Canada’s bare trust reporting rules, effective for the 2024 tax year and beyond, caught millions of Canadians off guard. If you hold property on behalf of someone else — a parent on a child’s mortgage, a child on a parent’s bank account for convenience, a numbered company holding real estate — you likely have a bare trust and must file a T3 return annually or face penalties up to $25,000. The gross negligence penalty alone is 5% of the highest fair market value of the property held, making this one of the most consequential tax filing requirements CRA has introduced in years.https://wealthnorth.ca/taxes/corporate-tax/dividend-vs-salary-calculator/Wed, 18 Mar 2026 10:00:00 -0400https://wealthnorth.ca/taxes/corporate-tax/dividend-vs-salary-calculator/Dividend vs Salary Calculator Compare tax implications of salary versus dividends from your Canadian-controlled private corporation (CCPC). Quick Comparison: $100,000 Personal Income Ontario Method Corporate Tax Personal Tax CPP Total Tax Net Cash All salary $0 $22,000 $4,066 $26,066 $73,934 All dividends $12,200 $8,900 $0 $21,100 $78,900 Mixed optimal ~$3,000 $16,500 $4,066 $23,566 $76,434 Dividends often lower tax but no CPP/RRSP room Tax on Salary vs Eligible Dividends To Net $50,000 After Tax (Ontario) Payout Type Gross Needed Corporate Tax Personal Tax Total Tax Salary $67,000 $0 $13,000 $13,000 Eligible dividend $62,000* $7,560 $4,300 $11,860 *Corporation needs to earn $69,560 to pay $62,000 dividend after corp tax