Introduction
Year end is when the most consequential tax decisions of the year are made — or missed. The mistakes below are not exotic errors. They are the decisions that were not made, the conversations that were not had, and the documents that were not prepared — all within a two to three week window before the fiscal year closed. Each one costs money. None of them are hard to avoid.
Mistake 1: Waiting Until After Year End to Think About Compensation
The decision about how much salary to draw, whether to accrue a bonus, and how much to pay in dividends must be made before the fiscal year ends. Once the fiscal year has closed, the compensation structure for that year is fixed.
Many incorporated professionals have this conversation with their CPA in April or June — when the T2 is being prepared, months after the year ended. The CPA is now working with income that is already determined. The planning window has closed.
The fix: Schedule a year-end planning meeting with your CPA in October or November — six to eight weeks before the fiscal year closes. With a full-year income estimate, the salary, bonus, and dividend decision can be made with complete information.
Mistake 2: Not Reviewing the Shareholder Loan Balance Before Year End
As discussed in Article 95, a shareholder loan that is outstanding one year after the corporation's fiscal year end is included in personal income. Many business owners discover this rule after the fact — when the CPA identifies a loan balance that has been outstanding for 14 months and the T1 must now reflect an unexpected income inclusion.
The fix: Review the shareholder loan balance at least 60 days before fiscal year end. If a balance exists that will breach the one-year window, decide before year end: repay it from corporate salary or dividends, formally extend it with documented terms, or convert it to declared salary and report accordingly.
Mistake 3: Missing Large Deductible Expenses That Must Be Incurred Before Year End
Some deductions must be incurred before the year end — not merely planned for. Equipment purchases that qualify for CCA (including immediate expensing) must be acquired and available for use. Charitable donations are deductible in the year made. Prepaid expenses may or may not be deductible depending on their nature.
A physician who plans to purchase $80,000 of clinic equipment in January but would have generated better after-tax outcomes by purchasing it in December (before the fiscal year end) has missed a timing opportunity that cannot be recovered.
The fix: Review planned major expenditures in November. Where the timing of a purchase can be moved to before the fiscal year end — and where the CCA or immediate expensing benefit is meaningful — move it.
Mistake 4: Not Making the RRSP Contribution to Fund the Room Generated This Year
RRSP room is generated in the current year based on prior-year earned income. Many business owners generate RRSP room through salary but then neglect to make the contribution — either because they are uncertain how much to contribute or because the February 28 deadline does not feel urgent in November.
The contribution is not automatically made. If the physician or dentist or lawyer generates $27,000 of RRSP room in 2026 and does not contribute by March 1, 2027, that room is not lost — it carries forward. But the compounding on the contribution is lost for every year the contribution is delayed.
The fix: As part of the year-end planning meeting, confirm the RRSP room available for the coming filing year and arrange the contribution before the deadline.
Mistake 5: Not Checking the Passive Income Threshold Position
As discussed throughout this content library, a CCPC with more than $50,000 of adjusted aggregate investment income begins to lose the small business deduction in the following year. Many incorporated professionals do not track their AAII during the year — and discover at T2 preparation time that the SBD has been clawed back, generating an unexpected increase in corporate tax.
The fix: Review the investment portfolio inside the corporation in October or November. Calculate the estimated AAII for the year. If the figure is approaching or exceeding $50,000, consider whether there are planning actions available before year end — distributing excess passive assets as inter-corporate dividends to a holdco, or paying additional dividends to the shareholder to reduce the invested balance.
When to Speak With a CPA
All five of these mistakes share a common cause: the year-end planning conversation happened too late — after the fiscal year closed, when the options were already gone. Scheduling a proactive planning meeting in October or November converts year-end tax planning from a retrospective exercise into a forward-looking decision.