Business Tax Advisory for Ontario Owner-Managers and Corporations

Accountants are essential for bookkeeping, financial statements and return preparation. A tax lawyer adds something different: legal analysis of how the Income Tax Act, the Excise Tax Act and corporate law apply to your plans, documentation that supports your position, and advice protected by solicitor-client privilege. We work alongside your accountant rather than replacing them.

Our advisory work is shaped by what we see in CRA audits and Tax Court appeals. We know which arrangements attract scrutiny, which records auditors ask for first, and which documentation gaps turn a defensible position into a reassessment with penalties.

Owner-managed corporations face a specific set of tax rules that are easy to trip over. Shareholder loans that are not repaid within one year after the end of the corporation's taxation year in which they were made can be included in the shareholder's income under subsection 15(2). Personal expenses paid by the company can be taxed as shareholder benefits under subsection 15(1). Paying family members dividends can trigger the tax on split income (TOSI) rules unless an exclusion applies.

Other frequent issues include choosing between salary and dividends, accessing the small business deduction on the first $500,000 of active business income, protecting eligibility for the lifetime capital gains exemption on qualified small business corporation shares (increased to $1.25 million for dispositions after June 24, 2024), passive investment income limits, and reasonable compensation for related employees.

Businesses must generally register for GST/HST once taxable revenues exceed $30,000 over four consecutive calendar quarters. Missing registration means the CRA can assess the HST that should have been collected, even though you never charged it to customers. Input tax credits can be denied when invoices do not contain the information required by the Input Tax Credit Information Regulations.

Unremitted payroll deductions and GST/HST are treated as funds held in trust for the Crown. When a corporation cannot pay, the CRA can assess its directors personally. Getting the compliance framework right is far cheaper than defending a director's liability assessment later.

Canada strengthened the general anti-avoidance rule in 2024, adding an economic substance test and a penalty of 25% of the tax benefit in many cases where GAAR applies, unless the transaction was disclosed to the CRA. Mandatory disclosure rules also require reporting of certain transactions. Planning promoted as a way to eliminate tax with little commercial purpose carries real risk.

We give candid advice about where the line is, help you document the commercial reasons behind transactions, and advise whether disclosure is appropriate to protect you from penalties.

The best time to involve a tax lawyer is before the transaction closes: when incorporating, adding a partner or family member, buying or selling real estate through a company, preparing to sell the business, moving to or from Canada, or changing how you pay yourself. Advice after the fact is still useful, but some options, such as certain elections and rollovers, have strict deadlines that cannot be extended.

We regularly collaborate with clients' accountants, combining their knowledge of your records with our legal analysis.