Smart Year-End Tax Moves for Canadian Small Businesses (2025 Edition)

As 2025 draws to a close, Canadian small business owners are entering one of the most critical times of the financial year: year-end tax preparation.

Per Stratos Consultants, “For Canadian small business owners, the end of the fiscal year can feel like tax season’s less glamorous cousin; essential, but often a bit of a headache. Closing the books is not just crunching numbers and ticking boxes to finish the fiscal year; it’s also your setup for a new and successful new year.” 

Here are a few timely strategies to consider before December 31:

1. Accelerate Expenses and Defer Income

If your business uses the accrual accounting method, you can manage taxable income by accelerating certain expenses into 2025 or deferring income into 2026. For example, consider prepaying recurring expenses such as insurance premiums, rent, or supplier invoices before year-end. Likewise, deferring invoice issuance for late December work until early January can push income into the next fiscal year.

2. Maximize Capital Cost Allowance (CCA) Deductions

If you’ve purchased new business assets such as computers, equipment, or vehicles, ensure they’re in use by December 31 to qualify for the 2025 CCA deduction. The Accelerated Investment Incentive still allows for an enhanced first-year deduction on eligible property, offering significant savings.

3. Review Owner Compensation

Now’s the time to decide whether to pay yourself a salary, dividend, or a mix of both before year-end. Each option carries different implications for CPP contributions, RRSP contribution room, and personal tax rates. A quick consultation with Shaw & Associates can ensure the most tax-efficient outcome.

4. Use Up Your CEBA Repayment Window

For businesses that received a Canada Emergency Business Account (CEBA) loan, note that the partial forgiveness benefit depends on repayment timelines. Although the initial deadlines have shifted in recent years, it’s crucial to confirm your repayment schedule and act before losing eligibility for loan forgiveness.

5. Update Your Payroll and Benefits Records

Ensure T4 and T5 slips, Records Of Employment (ROEs), and benefit adjustments are current. This avoids errors when submitting to the CRA in early 2026 and prevents last-minute administrative stress.

Here’s a video on getting your books ready for your accountant.

Looking Ahead

Tax planning shouldn’t be a once-a-year task. By reviewing your financials now, you’ll might reduce 2025’s tax bill and gain valuable insights for next year’s budgeting, investment, and growth decisions. Shaw & Associates would love to assist you with year-round financial planning as well as your annual taxes.

Contact Shaw & Associates Chartered Accountants for accounting help you can count on. One complimentary meeting with us will put you and your business on a more profitable and positive path.