SMALL BUSINESS

TAX STRATEGIES:
A Complete Owner’s Manual

2023 TAX YEAR

IT’S THE START OF A NEW TAX SEASON.

It’s easy to feel overwhelmed by the demands of tax season and the filing requirements established by the
CRA, especially when you need to spend your time growing your business.

That’s why we’ve compiled everything you need to be ready for the
tax season in one handy toolkit.

ABOUT FBC
For more than 70 years, we have helped hard-working Canadian small business owners save time and money
by connecting them to a people-powered network of tax, bookkeeping, payroll and financial planning experts.
We deliver industry-specific support for your business that helps maximize your tax savings, simplify your
books and manage your payroll. Our paralegal team can get your business incorporated, file your minute
books and annual returns. And our financial and estate planning team can help you manage your wealth and
plan your transition to retirement.
Disclaimer: This material is provided for educational and informational purposes only. Always consult a specialist like FBC
regarding your specific tax and accounting situation.

© FBC 2024

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 2
 CONTENTS

Do I Have to File a Tax Return? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

What Happens if I Don’t File a Tax Return? . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Filing and Payment Deadlines for the 2023 Tax Year . . . . . . . . . . . . . . . . . 6

Do I Have to Make Tax Instalment Payments? . . . . . . . . . . . . . . . . . . . . . . . 8

Income Tax Rates for the 2023 Tax Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

RRSPs and Your Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Keeping Your Records in Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

What are Tax Deductions and Credits? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Available Tax Deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Available Tax Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Keep an Audit-Proof Mileage Log . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Do You Have an Expert in Your Corner? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Preparing for Your Tax Preparation Appointment . . . . . . . . . . . . . . . . . . . 36

Tax Preparation Checklist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 3
DO I HAVE TO FILE
A TAX RETURN?

If you haven’t made any income (or are showing a loss), you may think
there’s no reason to file a tax return. But by not filing your return, you’re
not only running the risk of losing access to benefits and credits that
could help you and your family, but you’re likely to run afoul of the CRA.
If you’re a sole proprietor either by running a business or through self-employment, your income is
viewed as personal income and must be included on your personal income tax return.
The amount you receive for credits like GST/HST or benefits like the Canada Child Benefit are all
determined by the net income you fill out on your tax return.
Filing a return also creates contribution room in your Registered Retirement Savings Plan (RRSP)
and your Tax-Free Savings Account (TFSA).
Last, but not least, you will avoid accumulating interest charges and penalties with the Canada
Revenue Agency (CRA), increasing your stress level and financial burden in the long run.

If your business suffered a loss, you could deduct that loss from
the income you’ve earned for the year which will lower your overall
taxable income and the amount of personal income tax you must pay.

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 4
WHAT HAPPENS IF I DON’T
FILE A TAX RETURN?

If you owe money to the CRA and file your taxes late, you’ll have to
pay a penalty of 5% of the balance owed plus 1% for each month you
are late, to a maximum of 12 months. If you are late multiple years, the
penalty can increase to 10% plus 2% for each month your return is late,
to a maximum of 20 months.
These percentages sound small, but they really begin to add up. Let’s look at an example. Janet
decided to wait to file her taxes until the following year (12 months later). She originally owed
$8,000, but with penalties she ended up owing $9,360.

Original balance owing $ 8,000.00

5% penalty for late filing $ 400.00

1% per month late x 12 months $ 960.00

TOTAL OWING FOR FILING 12 MONTHS LATE $ 9,360.00

Late filing penalties may still apply even if you are eligible to get penalty or interest relief.
If you cannot afford to pay the entire amount you owe at once, you may be able to arrange a
payment plan with Canada Revenue Agency (CRA).

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 5
FILING AND PAYMENT DEADLINES
FOR THE 2023 TAX YEAR

There are several important deadlines you should be aware of for your
2023 income tax return. These dates will vary depending on how your
business is structured.
It’s also important to pay on time. Postponing filings or payments will only push problems for a
couple of months, but not make them go away.

Personal and Self-Employment Income Tax Deadline

The standard personal income tax filing date for a self-employed Canadian is April 30. If you
are reporting self-employment income, you and your spouse or common-law partner have until
June 15, 2024, to file your returns. This will include your T1 (personal tax form) and your T2125,
Statement of Business or Professional Activities.
Here’s the catch: although the CRA gives you extra time to file, if you have any amount owing,
this amount must be paid by the personal tax deadline to avoid interest and penalties. So, it
really is in your best interest to meet the April 30, 2024 deadline this year.

What if I’m Paying Tax in Instalments?

Most individuals who have to pay tax instalments are required to pay quarterly on March 15, June
15, September 15 and December 15.
By making these quarterly payments to the CRA, you’re paying your taxes throughout the year,
instead of paying a lump sum by the personal tax filing deadline.
However, if your primary source of income is self-employment income from farming or fishing,
you only have one instalment payment due date per year. You will receive an instalment reminder
in November and must make your payments in the current year by December 31.
See more about paying tax in instalments on page 8.

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 6
 Incorporated Business Tax Deadline
Tax returns for incorporated businesses are due 6 months after the corporation’s fiscal year-end.
If you, like many incorporated businesses made the calendar year-end (December 31) your fiscal year-end,
your tax deadline will be June 30 of the year following.
If your business is incorporated and has a balance that it still needs to pay, you have until 2 months after the
end of your fiscal tax year to pay it off (2 months after year-end).
There are some exceptions to this rule. Canadian-controlled private corporations with annual business income
less than $500,000 may have up to 3 months rather than 2 if they meet the eligibility criteria.
Generally, corporations must pay their taxes in monthly or quarterly instalments. There are some exceptions
to this rule which include (but are not limited to) the following:
• If your business is recently incorporated, you should not be required to make instalment payments until
you have started your second fiscal year
• Your tax balance due is less than $3,000
• You are in a short tax year (less than one month or in the case of a small CCPC, less than one quarter)
Instalment payments are due on the last day of every complete month of your tax year, or of every complete
quarter if you are an eligible small CCPC.

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 7
DO I HAVE TO MAKE TAX
INSTALMENT PAYMENTS?

What are Tax Instalments?

If your income does not have enough tax withheld or if you are self-employed, have rental or
investment income, certain pension payments, or have income from more than one job, you may
have been asked to pay tax instalments.
Instead of paying one lump sum of taxes on April 30 of the following year, you pay tax
instalments that same year in which you’re earning the income, similar to how an employer
deducts taxes from a pay cheque.
Tax instalment payments are always due by the following dates (except farmers and fishers who
have one due date on December 31):
• March 15
• June 15
• September 15
• December 15
Please note: you may have to pay tax instalments for next year’s taxes, if your net tax owing is more than
$3,000 for 2023 and in either 2022 or 2021.

Do I Have to Make Tax Instalment Payments?

Unfortunately, when it comes to instalment payments, the answer to this question is not so cut and dry.
As previously noted, instalment payments are typically calculated using your previous years’ net
taxing owing. However, this formula doesn’t take your current tax situation into account.
For example, let’s say you owed more than $3,000 in the past two years due to an unusual sell-
off of investments, then the calculation would indicate instalment payments are due. However,
if you do not owe any additional tax in the current tax year (maybe your employer remitted
sufficient tax and/or there were no unusual gains), then instalments aren’t due at all – despite
having owed more than $3,000 of net tax in prior years.
Note that the CRA will look at your prior-year tax return and send instalment reminders to you
based on your prior returns.
If you’re ever uncertain about whether you should pay your instalments, we recommend speaking
with a tax specialist to ensure you avoid Canada Revenue Agency (CRA) interest or penalties.

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 8
 Tax Instalment Interest and Penalties
The CRA will charge you instalment interest and penalties if you don’t pay your required instalments, if you’re
late in making payments, or you short your payments to them.
Because instalment interest is compounded daily at the prescribed interest rate (which is calculated quarterly
and therefore can change every 3 months) it can be different depending on your business and tax situation.
You will be charged instalment interest if all the following apply:
• You are required to pay by instalments
• You receive an instalment reminder that shows an amount to pay
• You did not make any of your instalment payments, paid late, or paid less than what you had to pay
Here’s how the CRA calculates your interest:

Interest on each Interest on Your total

instalment payment – each instalment = interest
you missed you paid charges

CRA calculates interest from CRA calculates the interest If more than $25,
your balance due date, based for the year starting from the then this is the
on the option that results in the payment date or January 1 amount you owe.
least amount of interest owed. (whichever date is later) up to
the balance due date.

Click here to book your free consultation

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 9
 Instalment Penalties
If you made late payments or didn’t pay the right amount, the CRA will also charge you a penalty on top of
interest. They only charge the instalment penalty if your interest charges are more than $1,000.
There are two ways they calculate the penalty, and they charge you whichever results in a higher amount:
1. If the flat rate of $1,000 is higher, you’re charged this amount
2. If 25% of the instalment interest you would have paid if you had not made instalment payments is
higher, you’re charged this amount
Here’s an example to show you how it works, according to the CRA:

EXAMPLE: INSTALMENT PENALTY AND INTEREST

For 2023, John made instalment payments that were less than what he should have paid. As a result,
his actual instalment interest charges for 2023 are $2,500.
If John had not made any instalment payments in 2023, his instalment interest charges would have been $3,200.
To determine John’s penalty, we first calculate which rate is higher:

Interest if no payments were made $ 3,200

Multiply by the percentage rate × 25%

Total using the 25% calculation $ 800

Since the flat rate ($1,000) is higher than the 25% calculation ($800), we use the flat rate to calculate
John’s penalty:

Actual interest charges $ 2,500

Minus the flat rate –$ 1,000

Difference between actual interest and rate $ 1,500

Now you divide the $1,500 by 2. John’s instalment penalty would be $750.

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 10
 How to Reduce Your Instalment Interest and Penalty Charges
It’s easy to get demoralized when you owe interest and penalties on top of your taxes. What you may not
know is that there is something you can do about it.
The CRA will reduce or eliminate interest and penalties if you:
• Overpay your next instalment payment, or
• Pay your next instalment early
These acts of good faith help you earn instalment credit interest. This credit interest can then be used against
interest charges on late payments for the same tax year. Note this credit interest is not refundable.

Fallen Behind?
Falling behind on your taxes or instalment payments is not uncommon. The most proactive things you can
do in this situation is get caught up as soon as possible.
If you’re behind by one or more years of filings or tax instalments, it may be worth it to connect with a
tax specialist to create a strategy to minimize your tax, interest and penalties.
With the right tax specialist backing you up, you can make a plan to take back control of your tax situation
and stop living with unnecessary stress.

The Price of Ignoring or Misrepresenting Your Taxes

It goes without saying that whatever your tax situation, ignoring the problem or under reporting income can
have far-reaching consequences.
Income tax fraud or evasion is taken very seriously by the CRA. Under the Income Tax Act, you may have
additional fines and penalties imposed on you if:
• You do not file a tax return when required to do so
• If you make false statements in your tax return
• Underreport your income to tax avoidance
If it is determined that you have acted fraudulently or have been found guilty of tax evasion, you can be
criminally prosecuted.
The best way to avoid these scenarios is to make a tax plan that ensures you’re paying the right amount of
tax, at the right time.

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 11
INCOME TAX RATES
FOR THE 2023 TAX YEAR

How do Income Tax Rates Work in Canada?

In a marginal tax rate system like Canada’s, taxpayer income is divided into tax brackets. These
brackets determine the rate of tax applied to the taxable income that falls within that range.
Oftentimes, people believe that if they move up a tax bracket, they’ll have to pay the higher rate
on their entire income. In reality, the first dollar you earn will be taxed at the rate for the lowest
tax bracket, and your last dollar earned will be taxed at the rate of the highest bracket for your
total taxable income. The taxable income you earn in between the lowest and your highest rate
will be taxed at the appropriate rate(s) for that range.

Personal Income Tax Rates

If you operate your business as a sole-proprietor or are self-employed, any income you earn
through your business is taxed at the personal rate. For 2023, personal income is taxed as follows:

Federal income tax rates for 2023

Tax rate Taxable income threshold

15% on the portion of taxable income that is $53,359 or less, plus

20.5% on the portion of taxable income over $53,359 up to $106,717, plus

26% on the portion of taxable income over $106,717 up to $165,430, plus

29% on the portion of taxable income over $165,430 up to $235,675, plus

33% on the portion of taxable income over $235,675

Source: https://www.canada.ca/en/revenue-agency/services/tax/individuals/frequently-asked-questions-individuals/canadian-income-tax-
rates-individuals-current-previous-years.html

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 12
 Provincial and Territorial Personal Income Tax Rates (excluding Quebec)
Tax for provinces and territories is calculated the same way as federal tax. Once you know your taxable
income (net income after claiming all deductions), you can then calculate your tax owing on that income.
Calculate your federal income tax first, followed by your provincial tax and add the two together.

Provinces and Territories Rates

Alberta 10% on the portion of taxable income that is $142,292 or less, plus
12% on the portion of taxable income over $142,292 up to $170,751, plus
13% on the portion of taxable income over $170,751 up to $227,668, plus
14% on the portion of taxable income over $227,668 up to $341,502, plus
15% on the portion of taxable income over $341,502
British Columbia 5.06% on the portion of taxable income that is $45,654 or less, plus
7.7% on the portion of taxable income over $45,654 up to $91,310, plus
10.5% on the portion of taxable income over $91,310 up to $104,835, plus
12.29% on the portion of taxable income over $104,835 up to $127,299, plus
14.7% on the portion of taxable income over $127,299 up to $172,602, plus
16.8% on the portion of taxable income over $172,602 up to $240,716, plus
20.5% on the portion of taxable income over $240,716
Manitoba 10.8% on the portion of taxable income that is $36,842 or less, plus
12.75% on the portion of taxable income over $36,842 up to $79,625, plus
17.4% on the portion of taxable income over $79,625
New Brunswick 9.4% on the portion of taxable income that is $47,715 or less, plus
14% on the portion of taxable income over $47,715 up to $95,431, plus
16% on the portion of taxable income over $95,431 up to $176,756, plus
19.5% on the portion of taxable income over $176,756
Newfoundland and Labrador 8.7% on the portion of taxable income that is $41,457 or less, plus
14.5% on the portion of taxable income over $41,457 up to $82,913, plus
15.8% on the portion of taxable income over $82,913 up to $148,027, plus
17.8% on the portion of taxable income over $148,027 up to $207,239, plus
19.8% on the portion of taxable income over $207,239 up to $264,750, plus
20.8% on the portion of taxable income over $264,750 up to $529,500, plus
21.3% on the portion of taxable income over $529,500 up to $1,059,000, plus
21.8% on the portion of taxable income over $1,059,000
Northwest Territories 5.9% on the portion of taxable income that is $48,326 or less, plus
8.6% on the portion of taxable income over $48,326 up to $96,655, plus
12.2% on the portion of taxable income over $96,655 up to $157,139, plus
14.05% on the portion of taxable income over $157,139
Nova Scotia 8.79% on the portion of taxable income that is $29,590 or less, plus
14.95% on the portion of taxable income over $29,590 up to $59,180, plus
16.67% on the portion of taxable income over $59,180 up to $93,000, plus
17.5% on the portion of taxable income over $93,000 up to $150,000, plus
21% on the portion of taxable income over $150,000

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 13
 Nunavut 4% on the portion of taxable income that is $50,877 or less, plus
7% on the portion of taxable income over $50,877 up to $101,754, plus
9% on the portion of taxable income over $101,754 up to $165,429, plus
11.5% on the portion of taxable income over $165,429
Ontario 5.05% on the portion of taxable income that is $49,231 or less, plus
9.15% on the portion of taxable income over $49,231 up to $98,463, plus
11.16% on the portion of taxable income over $98,463 up to $150,000, plus
12.16% on the portion of taxable income over $150,000 up to $220,000, plus
13.16% on the portion of taxable income over $220,000
Prince Edward Island 9.8% on the portion of taxable income that is $31,984 or less, plus
13.8% on the portion of taxable income over $31,984 up to $63,969, plus
16.7% on the portion of taxable income over $63,969
Saskatchewan 10.5% on the portion of taxable income that is $49,720 or less, plus
12.5% on the portion of taxable income over $49,720 up to $142,058, plus
14.5% on the portion of taxable income over $142,058
Yukon 6.4% on the portion of taxable income that is $53,359 or less, plus
9% on the portion of taxable income over $53,359 up to $106,717, plus
10.9% on the portion of taxable income over $106,717 up to $165,430, plus
12.8% on the portion of taxable income over $165,430 up to $500,000, plus
15% on the portion of taxable income over $500,000

Source: https://www.canada.ca/en/revenue-agency/services/tax/individuals/frequently-asked-questions-individuals/canadian-income-tax-rates-individuals-
current-previous-years.html

Small Business Corporate Tax Rates

One of the benefits of incorporating your business is that Canadian controlled private corporations (CCPC)
can take advantage of the small business tax deduction.
Note that if you are considered a “personal services business”, you will not be eligible for the small business
tax deduction and your incorporated business will be subject to higher tax rates than those listed below. See
CRA’s “Tax Implications for Personal Business Services”

What is the Small Business Tax Deduction?

The Small Business Tax Deduction (SBD) provides small CCPC with a reduced rate of tax payable on annual
income up to $500,000 CAD (or $600,000 CAD in Saskatchewan).
Note that if your corporation holds in excess of $50,000 of passive investment income, you will see a
reduction in the amount that your active income is eligible for the small business tax rate.

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 14
 Corporate 2023 Tax Rates for CCPC (excluding Quebec)

Investment or
Small Business Active Business
SBD Limit Passive Income
Income Rate Income Rate
Rate

Federal 9.0% $500,000 15.0% 38.7%

Alberta 2.0% $500,000 8.0% 8.0%

British Columbia 2.0% $500,000 12.0% 12.0%

Manitoba 0.0% $500,000 12.0% 12.0%

New Brunswick 2.5% $500,000 14.0% 14.0%

Newfoundland & Labrador 3.0% $500,000 15.0% 15.0%

Nova Scotia 2.5% $500,000 14.0% 14.0%

Northwest Territories 2.0% $500,000 11.5% 11.5%

Nunavut 3.0% $500,000 12.0% 12.0%

Ontario 3.2% $500,000 11.5% 11.5%

Prince Edward Island 1.0% $500,000 16.0% 16.0%

Saskatchewan 0.5% $600,000 12.0% 12.0%

Yukon 0.0% $500,000 12.0% 12.0%

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 15
 Combined Federal and Provincial 2023 Tax Rates for CCPC
(excluding Quebec)

Small Business Personal Services Active Business Investment or Passive

Province/Territory Income Rate* Business Rate Income Rate Income Rate

Alberta 11.0% 41.0% 23.0% 46.67%

British Columbia 11.0% 45.0% 27.0% 50.67%

Manitoba 9.0% 45.0% 27.0% 50.67%

New Brunswick 11.5% 47.0% 29.0% 52.67%

Newfoundland &
12.0% 48.0% 30.0% 53.67%
Labrador

Nova Scotia 11.5% 47.0% 29.0% 52.67%

Northwest Territories 11.0% 44.5% 26.5% 50.17%

Nunavut 12.0% 45.0% 27.0% 50.67%

Ontario 12.2% 44.5% 26.5% 50.17%

Prince Edward Island 10.0% 49.0% 31.0% 54.67%

Saskatchewan 9.5% 45.0% 27.0% 50.67%

Yukon 9.0% 45.0% 27.0% 50.67%

* Note: the Small Business Deduction Limit is $500,000 for all listed provinces and territories, excluding Saskatchewan which
is set at $600,000.

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 16
RRSPs AND YOUR TAX RETURN

One of the best tools to lower your taxable income is through contributions to
your Registered Retirement Savings Plan (RRSP).

How RRSPs Work

RRSPs are a tax deferral mechanism. Contributions to an RRSP are deductible against your
current income so you receive immediate tax relief and tax-sheltered growth. When you
eventually go to withdraw the money in your retirement, it’s taxed at that time when you are
paying lower taxes.
To maximize the benefits of the RRSP, you should contribute to it when you’re in a higher tax
bracket and withdraw from it when you’re in a lower tax bracket. Contributing to an RRSP can
significantly bring down your taxable income.
If you’re a high earner, the amount you contribute to your RRSP will significantly lower your
taxable income.
Let’s look at an example:

• You make $120,000 in 2022 and contribute $15,000 to your RRSP

• The CRA will tax you on $105,000 of income instead of $120,000, since the contribution is
tax deductible
• You pay tax on the contribution in the year you withdraw it so if you take out the money in
your retirement when you have a lower income, you’ll pay less tax

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 17
 How Much Can You Contribute to an RRSP?
First, it is important to understand the difference between your deduction limit and your contribution limit:
• Your deduction limit is the amount you’re permitted to put into your RRSP and use as a deduction
on your income tax report. For the 2023 tax year, it is up to 18% of your reported 2022 income (to a
maximum of $30,780, whichever is less).
• Your contribution limit is equal to the current year’s deduction limit plus any unused deduction room
from previous years.
Since most people do not contribute the maximum amount to their RRSPs every year, your deduction limit
will be much lower than your contribution limit.
If you have multiple RRSPs, including one for a spouse, your deduction limit (as calculated above) applies to
all of them combined.
Here’s an example:

• Mary’s full-time, pre-tax employment income in 2022 was $80,000. Her maximum deduction limit for
the 2023 tax year would be calculated as follows: $80,000 × 18% = $14,400 (less than the maximum
limit of $29,210).
• Mary can deduct up to $14,400 through her RRSP contribution for the 2023 tax year.
• If Mary contributes $6,000 to her RRSP for 2023, she’ll have $8,400 that she can carry forward in
contribution room for the 2024 tax year. Assuming her deduction limit stays the same, she will be able to
contribute a total of $22,800 ($14,400 + $8,400).

2022 income $ 80,000

2023 maximum deduction ($80,000 × 18%) $ 14,400
Less 2023 actual contribution – $ 6,000
Contribution carry-forward ($14,400 – $6,000) = $ 8,400
2024 CONTRIBUTION ROOM $ 22,800

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 18
If you over-contribute to your RRSP by more than $2,000 in any given year,
you may have to pay a tax of 1% per month on the amounts that exceed your
RRSP deduction limit.

The CRA keeps track of your contributions so the easiest way to find out what you can contribute in 2023,
is to review your latest notice of assessment or notice of reassessment. You can also find it on a T1028 form,
which the Canada Revenue Agency (CRA) sends you if there were changes to your RRSP deduction limit since
your last assessment.
This RRSP contribution deadline will vary based on the year; however, it will always be 60 days after December 31
of the taxation year. The deadline to contribute to your RRSP for the 2023 tax year is February 29, 2024.

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 19
KEEPING YOUR RECORDS
IN ORDER

The law requires you to keep records of all your transactions to be

able to support your income and expense claims. You must keep daily
records of your income and expenses, along with vouchers and receipts.
If you don’t maintain records and are audited by the CRA, you could face hefty fines and penalties.
When it comes to record-keeping, remember:
• Your records may be inspected by tax auditors – they should be filed along with cancelled
cheques and other vouchers to support your book entries.
• Besides being essential for providing you with accurate, up-to-date information on the
financial position of your business, good records help you with business planning and satisfy
lenders when you go to apply for a loan or additional credit.
• Keep your records for at least six years after your last Notice of Assessment, which is as
far back as the CRA will ask to see them in the event of an audit. You can keep the physical
receipts or digital copies.
• Make sure the income you report is supported with original documents, which include sales
invoices, bank deposit slips, fee statements, contracts and receipts.
• The CRA won’t accept your bank or credit card statements to justify deductible business
expenses—you need an itemized receipt that corresponds with the transaction.
• The receipts must show the date of the purchase, name and address of the seller or supplier,
your name and address, the full description of the goods or services and the seller’s business
number if they register for GST/HST. If you don’t have receipts, the CRA could disallow your
expense claims.

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 20
WHAT ARE TAX DEDUCTIONS
AND CREDITS?

We’ll outline tax credits and deductions that may help small business
owners pay less tax, but first, let’s explore the differences between tax
deductions and tax credits.

Tax deductions versus tax credits

Tax deductions or tax “write-offs” are allowable business expenses that lower your taxable
income before tax is applied. A tax credit will directly reduce the final amount of tax you must
pay to the Canada Revenue Agency (CRA).
Small business tax deductions include business expenses such as rent, office supplies,
advertising, and promotion. The total impact of the deduction on your taxable income depends
on your variable tax rate – this means it will always be calculated as a percentage. You are also
required to claim tax deductions in the same tax year the expense was incurred.
In general, tax credits are calculated as a percentage of the total amount you paid. For example,
let’s say your unincorporated small business donates $150 to a charitable organization. You
would be eligible for a federal charitable tax credit of up to 15% of that amount or $22.50.
Unlike deductions, credits reduce the tax amount owing on a dollar-for-dollar basis. For example, if
your total tax credits combined equalled $100, you would subtract $100 from your total tax owed.

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 21
AVAILABLE TAX DEDUCTIONS

We’ve compiled a list of top tax deductions that can help lower your tax bill.

Advertising
You can deduct expenses for online advertising, advertising on Canadian radio and television
stations and Canadian newspapers and magazines, as well as promotional materials like business
cards and pamphlets.
Sponsorship of local sports teams, and other branded charitable donations, can be claimed as
advertising if the materials include your branding and logo, which could potentially increase
awareness of your business.

Bad Debts
If you are owed money from a client but are unable to collect it within a year, you may be able to
claim it.
Not all bad debt is eligible. The CRA will not let you claim bad debts related to a mortgage or
debts that result from a conditional sales agreement. We always advise that business owners
speak to a tax professional for more information.

Business Taxes, Licenses and Memberships

You can deduct annual license fees (beverage, trade, motor vehicle licenses) and some business
taxes (municipal taxes, land transfer taxes, gross receipt tax, health and education tax and
hospital tax). You can also deduct annual dues or fees for trade or commercial associations, as
well as magazine subscriptions, if they’re expenses incurred to earn business income.
Note: golf club memberships are not tax deductible. They’re one of the items specifically restricted by the CRA
when it comes to tax deductions.

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 22
 Business-Use-Of-Home Expenses
You can deduct expenses for the business use of a workspace in your home. This includes part of your
maintenance costs (cleaning materials, utilities, home insurance) along with part of your property taxes,
mortgage interest and capital cost allowance.

DID YOU CALCULATE YOUR DEDUCTION FOR

BUSINESS-USE-OF- HOME EXPENSES?

You’re able to claim this expense as a tax deduction if the workspace in your home is the principal place
of business, or you use the space only to earn business income and meet regularly with your customers
in the workspace.
To claim this expense and avoid CRA scrutiny, make sure you’ve calculated the percentage of your home
that’s used for your business and apply that percentage to the tax deduction. For example:

Total living space 1,000 ft2

Total office space 100 ft2
Percentage of home used for business
(1,000 ft 2 ÷ 100 ft 2)
10%

Annual electricity bill $ 1,000

Multiply by percentage of home used for business × 10%
TOTAL DEDUCTION $ 100

Depreciation Expense
If you purchase a capital asset (furniture, equipment, computers, etc.), you cannot claim the full purchase
amount in one year. Instead, you claim the depreciation amount (Capital Cost Allowance or CCA) based on
the rate allowed for by the CRA. Please speak with a tax specialist to ensure you’re using the correct CCA
class and that you are claiming the correct amount.

Interest and Bank Charges

You can deduct interest on money that was borrowed for business purposes or for buying property for
your business. You can’t deduct the principal of loan or mortgage payments, or any money borrowed for
personal purposes.
You can deduct the fee you pay to reduce the interest rate on your loan, along with any penalty a bank
charges you to pay off your loan before it is due. Talk to your tax specialist for more information.

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 23
 Insurance Premiums
You can deduct insurance premiums you pay for insurance on buildings, machinery, and equipment you use
for your business.

Legal and Accounting Fees

Fees for accounting, bookkeeping, tax preparation and finances can be deducted, along with legal fees.

Meals and Entertainment

You can deduct 50 per cent of your total meal and entertainment expenses for business purposes.

Motor Vehicle Expenses

If you’re self-employed and use your car regularly for business-related activities, you can deduct a portion of
your license and registration fees, fuel and oil costs, insurance, maintenance and repairs and leasing costs.
See Keep an Audit-ProofMileage Log.

Office Expenses
This includes small items like pens, pencils, paper clips and stationery. You can’t claim calculators, filing
cabinets, chairs and desks, which qualify as capital items.

Rent
You can deduct rent incurred for property used in your business.

Repairs and Maintenance

You can deduct the cost of labour and materials for any minor repairs or maintenance done to property you
use to earn income.

Salaries, Wages and Benefits

You can deduct employees’ gross salaries and other benefits incurred by you as the employer. As the
employer, you must deduct your part of CPP contributions and employment insurance premiums. You can
also deduct workers’ compensation amounts payable on employees’ remuneration. You can deduct salaries
paid to yourself or business partners ONLY if you are incorporated and pay yourself a salary through the
corporation.

Travel Expenses
You can deduct travel expenses, including transportation fares and hotel accommodation.

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 24
AVAILABLE TAX CREDITS

When you’re a small business owner, every dollar counts. That’s why it’s so
important to use every tool available to lower your tax burden, including
tax credits.

Tax credits for small business

Investment Tax Credits

According to CRA rules, small business owners may be eligible to claim one of the following
investment tax credits (ITC) if any of the following applies:
• You bought certain new buildings, machinery, or equipment and they were used in certain
areas of Canada in qualifying activities such as farming, fishing, logging, manufacturing, or
processing (see Atlantic investment tax credit)
• You have done work that qualifies for scientific research and experimental development
(SR&ED) tax incentives (see Scientific research and experimental development tax incentive)
• You employ an eligible apprentice and want to claim an Apprenticeship Job Creation Tax Credit
• You have unclaimed credits earned in the last 10 years
What if you qualified for investment tax credits, but did not claim them? You can carry forward
credits earned in tax years that end after 1997 for up to 20 years. You can also carry back the
credit you earn for up to 3 years. You may be able to claim a refund of your unused ITCs as well.
There are eligibility rules and requirements that must be met before claiming investment tax
credits, so consult a tax professional to ensure you’re following the rules.

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 25
1. ATLANTIC INVESTMENT TAX CREDIT
This credit support investments in qualified property – like equipment, buildings, and machines – mainly used
for farming or fishing, logging, manufacturing, processing, storing grain, or harvesting peat.
Investments in newly acquired property used mainly in Atlantic Canada and the Atlantic Region are calculated
using a specified percentage of 10%. If you have a manufacturing or processing business in that region, please
speak with a tax specialist to ensure you’re correctly applying this credit.

2. SCIENTIFIC RESEARCH AND EXPERIMENTAL DEVELOPMENT TAX CREDIT

The Scientific Research and Experimental Development Tax Credit (SR&ED) program allows you to deduct
scientific research and development expenses to reduce your taxable income.
Your SR&ED investment tax credit will be at least 15% for individuals and can be as much as 35% of your
qualified expenditures for corporations. As with any ITCs, you can carry them back 3 years or forward
20 years and apply them against tax payable for other years.
According to the CRA, to claim the Scientific Research and Experimental Development (SR&ED) investment
tax credit (ITC), the work must meet two requirements:
• The work is conducted for the advancement of scientific knowledge or to achieve a technological
advancement, and,
• The work is a systematic investigation or search that is carried out in a field of science or technology
utilizing experiment or analysis
Depending on where you live, you may also qualify for additional tax credits and grants through provincial
governments and territories.
SR&ED tax credits have many complex rules around eligibility. As always, it’s best to talk to a tax specialist
before applying them or incurring expenses that may not qualify for the credit.

3. APPRENTICESHIP JOB CREATION TAX CREDIT

• If your small business has hired an apprentice, you can claim 10% of their wages, up to a maximum of
$2,000 per eligible employee.
An eligible apprentice is someone who works for you in a qualifying trade in the first two years of their field
of expertise. Any unused credit can be carried back 3 years and carried forward up to 20 years (to help offset
larger tax bills).

Charitable Tax Credits

If you’re an unincorporated small business, you will receive a tax credit for any charitable donations.
Note: charitable donations are a Division C tax deduction for incorporated businesses. If you have any questions about
donations and their tax implications, please speak to a tax specialist.

Before making a charitable donation, you should determine the eligible amount you can claim and confirm
that the registered charity meets all CRA requirements.

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 26
For example, Ramona’s unincorporated real estate business donates $1,000 to a local theatre company which
is also a registered charity. As a “thank you,” they give her free tickets to a show that are valued at $150. In
this case, Ramona has received an advantage of $150 and therefore the eligible amount of the gift is only
$850 ($1,000 – $150 = $850).
According to the CRA, once you determine your donations are eligible, in any one year you can claim:
• Donations made by December 31 of the applicable tax year
• Any unclaimed donations made in the previous five years
• Any unclaimed donations made by your spouse or common-law partner in the year or the previous
five years.
You can claim eligible amounts of gifts up to a limit of 75% of your net income; gifts of certified cultural
property or ecologically sensitive land can be claimed up to 100% of your income.
There are two charitable tax credits: one rate for the federal government and one rate for the province or
territory in which you live. Use the charitable donation tax credit rates table to calculate your credit.
The CRA provides the following example to illustrate how this calculation works. A donor in Alberta with a
taxable income of $40,000 donates $700 in 2023. Their tax credit is calculated as the total of:

Federal credit calculation Tax credit value

15% on the first $200 $30
29% on the remaining $500 $145
Total federal credit $175

Provincial credit calculation Tax credit value

10% on the first $200 $20
21% on the remaining $500 $105
Total provincial credit $125

Total federal Total provincial Total charitable

credit credit tax credit
$175 $125 $300

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 27
Input Tax Credit
If you have a registered GST/HST number, you may be eligible to recover GST/HST paid or payable on
purchases and expenses related to your small business, by claiming input tax credits.
To claim this credit, keep track of GST/HST paid on all eligible small business expenses so that you can claim them
when you file your GST/HST return. Be sure to keep your receipts should you be required to back up your claims.

What expenses are eligible for input tax credits?

To claim an input tax credit, the expense(s) must be reasonable in quality, nature, and cost as it relates to the
nature of your small business. The following expenses may be eligible for input tax credits:
• Business-use-of-home expenses
• Delivery and freight charges
• Fuel costs
• Legal, accounting, and other professional fees
• Maintenance and repairs
• Meals and entertainment (allowable part only)
• Motor vehicle expenses
• Office expenses
• Rent
• Telephone and utilities
• Travel
The following expenses are NOT eligible for the input tax credit:
• Certain capital property
• Taxable supplies of property and services bought or imported to make exempt supplies of property and
services
• Membership fees or dues to any club whose main purpose is to provide recreation, dining, or sporting
facilities (including fitness clubs, golf clubs, and hunting and fishing clubs), unless you acquire the
memberships to resell in the course of your business
Property or services you bought or imported for your non-business consumption, use, or enjoyment.

Click here to book your free consultation

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 28
KEEP AN AUDIT-PROOF
MILEAGE LOG

A big perk of using your personal vehicle for business is writing off your
motor vehicle expenses.
But if you’re doing this without keeping a mileage log, the CRA could reject your claims for
these expenses.
The good news is that by following our advice, you can avoid CRA scrutiny and still lower your tax bill.

What Qualifies as Business Use of a Motor Vehicle?

Simply put, if you are self-employed and use your personal vehicle to earn business income, the
CRA considers this to be business use of a motor vehicle.
This entitles you to deduct a portion of vehicle expenses such as fuel and maintenance costs
based on your mileage. However, the CRA is very specific about what vehicle kilometers count
and don’t count.
For example, driving from your home to your place of work is considered personal travel (or a
commute) and does not qualify as business use of your personal vehicle.
The CRA has stated that ONLY in the following situations, driving to or from home would qualify
as business use of your vehicle:
• Travel from your home to a client’s place of business (or other location to attend a business
meeting) and travel directly back home
• Travel from your home to a client’s place of business (or other location to attend a business
meeting) and back to your office/place of work
• Travel from a client’s place of business (or other location to attend a business meeting) and
back home
The devil is in the details which is why it’s so critical to keep a detailed record of your mileage in
a logbook.

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 29
 What is a Mileage Log or Logbook?
A mileage log, also known as a logbook, is a record of your business travel for the entire year.
If you are self-employed and want to claim expenses on a vehicle used for business, you must keep a detailed
logbook record. It should include:
• The date
• Your starting point
• Your destination
• The purpose of your trip
• Your starting mileage
• Your ending mileage
• Total kilometres driven on the trip

How do you Keep a Mileage Log?

There are lots of options on how to keep a log: you can go old school with a pen and paper; kick it up a notch
by making your own spreadsheet; or even download a mileage app to your phone.
The CRA doesn’t care how you keep your record – they just want a detailed one so they can verify your
expense claims.
When it comes to logbooks, the more information, the better. If it ever comes down to an audit, the CRA
will likely ask for your logbook and pour through it. As time marches on, it’s all too easy to forget important
details about where you went and why.
Ease of use is just one reason so many FBC Tax Members choose to go digital with a mileage app.
Using GPS technology, these apps record your mileage as you travel. When the trip is over, you simply classify
the trip as personal or business. At the end of the year, you simply download a report and keep for your records.
Whatever method you chose, keeping track of your mileage needs to become another driving habit, as natural
as doing up your seat belt or shoulder-checking before changing lanes.

Why do you Need to Keep a Mileage Log?

As stated above, if you can’t provide a record of your mileage, the CRA will disallow your vehicle expenses as
a tax deduction. Ultimately, this translates to you paying more taxes and making less money.
When people don’t have a logbook, they tend to pull numbers out of thin air and take their best guess. But
you can’t guess your way out an audit; the CRA will always expect concrete and detailed proof.
From our experience, FBC Tax Members are often surprised at how much more they’re able to claim just by
keeping better mileage records. It might only be an extra 5%, but that that’s more money in your pocket.

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 30
 What Expenses are Eligible for the Business Use of Vehicle Deduction?
A portion of the following expenses are eligible when using your vehicle for business:
• Licence and registration fees
• Fuel and oil costs
• Insurance
• Interest on money borrowed to buy a motor vehicle
• Maintenance and repairs
• Leasing cost
You can also deduct the full amount of the following:
• Parking fees related to your business activities
• Supplementary business insurance for your motor vehicle

How do you Calculate and Deduct Vehicle Expenses?

For each tax year – from January 1 to December 31 – you must record your total kilometres from the year, and
the kilometres you drove while earning business income. Remember:
• Don’t forget to record your odometer reading at the beginning of the tax year, and at the end of
the tax year.
• If you change vehicles, note the dates of the change and the odometer reading for the new or
leased vehicle.
When you go to file your taxes, you will use your logbook to calculate what percentage of your vehicle was used
to earn business income. You will then use this percentage to figure out how much you can deduct in order to
lower your tax bill.
Let’s look at an example:

Odometer reading beginning of the year 12,000 km

Odometer reading end of the year 70,000 km
Total km driven for the year (70,000 km – 12,000 km) 58,000 km
Kilometres logged as business use of vehicle 32,000 km
Percentage of deductible vehicle expenses
(32,000 km ÷ 58,000 km) 55%

Annual vehicle expenses $ 9,000

Multiply annual vehicle expenses by use percentage 55%
VEHICLE DEDUCTION AMOUNT $ 4,950

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 31
If you use more than one vehicle for your business, keep a separate record for
each one that shows the total kilometres driven in one year and the business
kilometres driven, and all the associated expenses with each vehicle.
You’ll have to calculate the expenses separately for each vehicle.

What Records do you Need Besides a Logbook?

How Long Should you Keep Them?
Aside from a copy of your logbook for the CRA, keep all your receipts for automobile expense deductions.
Again, keeping your receipts organized is key to protecting yourself in the case of an audit.
Remember, anything pertaining to the vehicle is an eligible expense if it’s a business vehicle. Don’t lose
receipts because if you do, you lose out on deductions.
We always recommend keeping your logbooks and associated receipts for 7 years (6 years after your last
Notice of Assessment). This is the gold standard for audit protection when it comes to tax and accounting.
This way, if the CRA ever does challenge your automobile expenses, or reassess you after you’ve filed, you
will have all the proof you need.

What if you’ve Purchased or Leased a Vehicle?

If you’ve purchased a vehicle, you can claim the cost of the vehicle itself over time through the Capital Cost
Allowance (CCA).
One thing to note is that the kind of vehicle you own can affect the expenses you can deduct. The CRA
has different rules (particularly as they relate to Capital Cost Allowance) based on its definition of “motor
vehicles”, “passenger vehicles”, “zero-emission passenger vehicles” and “zero-emission vehicles.”
There are also rules that apply if you jointly own or lease your vehicle.
As always, your best bet is to talk to a tax professional to ensure you’re properly applying your deductions
and CCAs.

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 32
DO YOU HAVE AN EXPERT
IN YOUR CORNER?

An experienced tax specialist that understands your business and your

industry can be the difference between taking a loss and making a profit.
The right tax specialist should give continuous and ongoing support to:

• Keep your books and records in order

• Track your progress, and compare past and present financial positions

• Plan and forecast future financial positions and provide accurate information to help you
make sound business decisions

• Understand your business and have experience preparing tax returns specific to your industry

Click here to book your free consultation

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 33
 5 SIGNS YOU HAVE THE RIGHT
TAX PROVIDER
1 They Do More than Just File Your Taxes on Time
Keeping on top of filings is the bare minimum level of service any tax provider. Besides helping
you avoid paying needless CRA late filing penalties and fees, they should stay up to date with tax
rules and regulations, so you receive all the credits to which you’re entitled.

2 They’ll Build a Long-term Tax Strategy

The problem with using tax software or other one-and-done solutions is that there is no long-
term planning and no tax continuity that comes with it.
An experienced tax specialist knows that paying less tax means planning ahead. They should not
only give you an overview of your current financial situation but should provide long-term tax
planning strategy that will reduce your yearly tax bill now and over the long run.

3 They Stand Behind Their Work

It’s not a matter of “if” your audited by the CRA, but “when”. A trusted tax specialist should be
there to not only support you when you are audited but represent you so you don’t have to take
time away from your business to deal with the audit process.

4 They Give You Confidence in Your Current Tax Position

Knowledge is power. While you don’t need to memorize the tax code, you should at least
understand your current tax situation, your tax return, and your long-term tax strategy. If your
current provider doesn’t give you this kind of insight, it may be time to get a second opinion.

5 They Offer an Integrated Approach to Accounting,

Tax Planning and More
At some point, every small business owner hits the paperwork wall: they either don’t have the
time or the expertise to stay on top of bookkeeping and payroll while running their business.
A professional tax provider should offer you accounting and other back-office support under one
convenient umbrella. Outsourcing things like payroll and bookkeeping not only makes your life
easier, but it also ensures that all your business systems are aligned to save you money and build
your wealth.
How exactly does back-office support help your tax position? Professional bookkeeping shines
a light on your business so you can see where you’re making money and where you need to
trim the fat. A customized payroll solution prevents paperwork headaches and keeps you from
making errors that result big CRA penalties. These services contribute an accurate financial
picture that helps you make good busines decisions all while informing your tax-saving strategy.

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 34
 3 MOST COMMON TAX FILING ERRORS
AND HOW TO AVOID THEM
A good tax specialist will make sure you’re claiming everything you can and
point out deductions you may be missing. One of the first things we do for
new clients at FBC is to analyze tax returns from the last three years. We
frequently find opportunities for future tax savings.
Here are the three most common mistakes we see business owners (or other tax providers) make:

1 Missed Credit and Deduction Carry-forward Balances

Don’t forget to pick up credit and/or deduction carry-forward balances from previous years.
Among these items are optional inventory amounts (OIA); mandatory inventory amounts (MIA);
expenses related to home workspaces; business investment tax credits; and both capital and
non-capital losses.

2 Not optimizing Net Income for Discretionary Claims

These discretionary items include over-claimed capital cost allowance (CCA) that could have
been used in future years when marginal tax rates might be higher and missed OIA.

3 Capital Cost Allowance Errors

After applying the one-half year rule adjustment to the cost of capital additions in the year they
were acquired, we find some clients forget to add the remaining half balance of the cost to the
correct CCA pool in the subsequent year. Also, new capital additions are often classified in the
wrong rate classes resulting in a CCA under-claim or over-claim.

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 35
PREPARING FOR YOUR TAX
PREPARATION APPOINTMENT

Your tax return is only as good as the information you provide. To

create an optimized tax return that reduces your tax burden, you must
gather all necessary tax slips and documentation from accurate income
statements to tax receipts to GST/HST reconciliation and more.
Missing information punches holes in even the best tax strategy and can result in less tax savings.
The benefit of having an integrated tax specialist that also keeps accurate books and processes
error-free payroll is that they not only have access to all the necessary information to optimize
your tax return, but they can also verify the accuracy of the information being used.
This will translate into paying less tax and maximizing tax benefits. And, if the CRA ever should come
calling, they have all the back-up information to support the return they submitted on your behalf.

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 36
 TAX PREPARATION CHECKLIST
FOR SMALL BUSINESS OWNERS

We created this checklist and overview of tax deductions for our

Tax Members in order to help optimize their taxes.
Feel free to use it to help you file your business income tax return and lower your tax bill.
As always, we recommend connecting with a tax specialist if you need clarity or have questions
about your personal and business tax situation.
The following pages are a summary of the documents you’ll need to file your tax return if you’re self-employed
or a small business owner, along with a list of business deductions you can use to lower your tax bill.

BUSINESS RECORDS
Deposit slips

Bank statements

Business credit card statements

Income records

Sales invoices

Receipts

Bank deposit slips

Fee statements

Contracts

Loan Agreements and year-end balances statements

Detailed year-end inventory listing

Receipts on capital purchases or sales in 2023

IF YOU HAVE EMPLOYEES AND/OR SUBCONTRACTORS

T4SUM: Summary of Remuneration Paid

Worker’s compensation payments or benefits

Payroll, source deductions and taxable benefits for employees

If you make payments to subcontractors (construction only)

T5018: Statement of Contract Payments

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 37
 TAX PREPARATION CHECKLIST FOR SMALL BUSINESS OWNERS CONTINUED

TAX SLIPS, CORRESPONDENCE AND RECEIPTS

2022 Tax Return(s)

T1. T2125

2022 Notice(s) of Assessment

CRA correspondence received throughout the year

Instalment payments made for income tax, GST/HST/PST and payroll

T4: Statement of remuneration paid

T4A: Pension, retirement, annuity, and other income

If you’re in a partnership, also include:

T5013: Partnership information return

IF YOU’RE INCORPORATED, ALSO INCLUDE:

T2: Incorporation income tax return for 2021

Shareholder transactions and dividends

T2 Financial Statements

T5SUM: Return of Investment Income

Articles of Incorporation

Annual Registry Return

INVESTMENT INFORMATION:
RRSP contribution slips

T3 slips

T5 slips

TFSA Transactions

T5008 Statement of Security Transactions

Stock purchases and sales invoices

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 38
 TAX PREPARATION CHECKLIST FOR SMALL BUSINESS OWNERS CONTINUED

PERSONAL RECEIPTS (T1 ONLY)

Receipts for eligible medical expenses

Receipts for charitable donations

Tuition or educational expenses

Interest paid on student loans

Childcare expenses

Moving expenses

BUSINESS DEDUCTIONS
Advertising

Bad debts

Business taxes, licenses, and memberships

Business insurance premiums

Charitable donations

Delivery, freight and express costs

Depreciation expenses (Capital Cost Allowance)

Interest and bank charges

Legal and accounting fees

Meals and entertainment

Motor vehicle expenses

License and registration fees

Fuel and oil costs

Insurance

Interest on money borrowed to buy your vehicle

Maintenance and repairs

Leasing costs

Parking fees (business only)

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 39
 TAX PREPARATION CHECKLIST FOR SMALL BUSINESS OWNERS CONTINUED

Office expenses, stationery, and supplies

Payment Processing Fees

Property leasing costs and taxes

Repairs and maintenance

Salaries, wages, and benefits incurred by you as an employer

Gross salary amount paid to employees

Employer paid CPP and EI contributions

Employer paid premiums for sickness or disability insurance

Telephone and utilities

Travel expenses

Utilities

DO YOU WORK FROM HOME?

Business use of home expenses

Cleaning materials

Electricity

Heating

Home insurance

Mortgage interest

Property taxes

Portion of rent paid

For more free tax and business resources, please visit www.fbc.ca/learn
Click here to book a consultation

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 40
EVERY YEAR, WE HELP OUR MEMBERS
SAVE OVER $42 MILLION.
Every day, your FBC Membership brings your business value—including tax preparation, tax
planning, financial consulting, audit representation, bookkeeping, payroll and much more.
We’ve been doing this for more than 70 years. We understand the needs of Canadian small
business owners.
We know taxes. We can help.

Click here to book your free consultation

FBC SMALL BUSINESS TAX STRATEGIES: A COMPLETE OWNER’S MANUAL | 2023 TAX YEAR 41
For more free tax and business resources, please visit www.fbc.ca/learn
Click here to book a consultation

www.fbc.ca