Pre-Tax Filing Checklist for Ontario Small Businesses

Part 2: Tax Credits, Deadlines & Last-Minute Strategies

Tax season is in full swing, and Ontario small business owners are finalizing their returns. While Part 1 covered essential financial reviews, this installment dives deeper into often-missed tax credits, payment strategies, and last-minute opportunities to reduce your tax bill and avoid penalties.

At KKCPA, we’ve helped countless Ontario businesses optimize their filings. Here’s your actionable guide to wrapping up tax season strong.

1. Claim Ontario-Specific Tax Credits (Don’t Leave Money on the Table!)

Many Ontario small businesses overlook valuable provincial and federal credits. Here are key opportunities:

A. Small Business Deduction (SBD)

• What It Is: Reduces the corporate tax rate to 12.2% (vs. 25%) on the first $500,000 of active business income.
• Common Miss: Businesses close to the $500K threshold may accidentally exceed it, losing the deduction.
• Action: Work with your accountant to optimize income allocation.

B. Ontario Innovation Tax Credit (OITC)

• What It Is: An 8% refundable credit for qualifying R&D expenses (e.g., software development, product prototyping).
• Common Miss: Assuming only tech startups qualify (many service-based businesses are eligible too).
• Action: Document all R&D activities and expenses (even indirect labor costs count).

C. Apprenticeship Training Tax Credit

• What It Is: Up to $10,000/year per eligible apprentice in skilled trades (e.g., construction, manufacturing).
• Common Miss: Not registering apprentices with the Ministry of Labour, Training, and Skills Development.
• Action: Submit Form T1194 with your return.

D. Digital Adoption Tax Credit (New for 2024!)

• What It Is: A 30% refundable credit (up to $30,000) for Ontario businesses investing in e-commerce, cybersecurity, or cloud-based tools.
• Example: A retail business upgrading its POS system could claim this.
• Action: Keep receipts for all eligible tech purchases.

2. Installment Payments: Avoid Costly Penalties

If your business owes over $3,000 in taxes (federal + provincial), the CRA requires quarterly installments. Many Ontario businesses get caught off guard.

Key Strategies:

• Option 1: Use the CRA’s installment reminder calculator to determine payments.
• Option 2: Pay 100% of your prior year’s tax owed (split into 4 equal payments).
• Deadlines: March 15, June 15, September 15, and December 15.
• Penalty Alert: Missing a payment triggers 5% interest + 1%/month until paid.

3. Last-Minute Deductions (Still Time to Act for 2024!)

If you haven’t filed your 2024 taxes yet, consider these moves to reduce your taxable income:

A. Accelerate 2025 Expenses (Prepay Strategy)

• How It Works: Pay for early 2025 expenses now (e.g., Q1 rent, insurance, or bulk supplies) to claim them on your 2024 return.
• Example: A retail shop prepaying its April 2025 rent or a contractor buying materials for spring 2025 jobs.
• Key Rule: The expense must relate to services/goods received within 12 months of payment.

B. Bonuses & Salaries

• Deadline: Bonuses declared in 2024 can be deducted if paid within 179 days of your fiscal year-end (e.g., by June 30, 2025, for a Dec. 31, 2024, year-end).
• Tip: Ensure bonuses are reasonable for work performed (especially for family members on payroll).

C. Equipment Purchases

• Strategy: Buy needed equipment before filing to claim CCA for 2024 (e.g., a café purchasing a new espresso machine in March 2025).
• Watch For: The $1.5 million limit for the Accelerated Investment Incentive (Class 53/43 assets).

Why This Matters Now

• For 2024 Filers: If you’re filing in March 2025, these strategies can still reduce your 2024 tax bill.
• For 2025 Planning: Start tracking prepaid expenses now to maximize next year’s deductions.

4. Deadlines You Can’t Afford to Miss

For Sole Proprietors/Partnerships:

• Filing Deadline: June 15, 2024
• Payment Deadline: April 30, 2024 (interest starts May 1 on unpaid amounts).

For Corporations:

• Filing Deadline: 6 months after fiscal year-end (e.g., June 30 for Dec. 31 year-end).
• Payment Deadline: 2 months after year-end (March 1 for Dec. 31 year-end).

Pro Tip: File early to:

• Avoid last-minute errors.
• Plan payment options if you owe.

5. Audit-Proof Your Return

The CRA is increasing small business audits. Protect yourself:

A. Document Everything

• Keep receipts for 6 years (even digital ones).
• Log business-use percentages for home office, vehicles, and meals.

B. Be Cautious with High-Risk Claims

• Meals & Entertainment: Only 50% deductible (except for staff parties).
• Automobile Expenses: Track personal vs. business use meticulously.

How KKCPA Can Help

Tax season doesn’t have to be stressful. KKCPA’s Ontario-based experts can:

✔️ Maximize tax credits like the SBD, OITC, and Digital Adoption Credit.
✔️ Plan installments to avoid penalties.
✔️ Identify last-minute deductions before filing.
✔️ Ensure audit-ready documentation.

Contact us today for a personalized tax review!