The Complete Guide To Canadian Small Business Tax Planning

Feb 13, 2017

Every year, Canada collects over $127 billion from its citizens in taxes, so you can imagine what it brings in from small businesses.

Small businesses, defined as having five to 100 employees, are the backbone of Canada.

They account for 98% of all Canadian employer businesses. 

With so many entrepreneurs taking their financial dreams in their hands, small businesses have a huge impact on the Canadian economy.

In fact, they make up and incredible 41% of private sector GDP!

Although there are tons of new small businesses cropping up every day, there are plenty that fail. In 2006 alone, 100,000 small businesses vanished.

If you’re one of the many small business owners making your dreams a reality, you know that business tax planning is crucial to your success.

Although you’re going to pay the piper, of course you want to keep as much of your income as possible to re-invest in your company.

There are TONS of deductions you might be missing. Check out this list and see what you can save!


Child Care Tax Credit

Even if you don’t run a child care center, you might be able to claim this credit on your taxes.

With 69% of Canadian couples both working outside the home, the need for childcare is greater than ever.

If you provide on-site child care, you can claim a non-refundable tax credit up to $10,000 for each licensed child care space you create.


Hire Your Family

This is an interesting business tax planning trick.

By hiring a spouse or child, you can drop your income into a lower tax bracket and qualify for an income tax deduction.


SR And ED Business Tax Planning

Small businesses can apply for a refundable tax credit for scientific research and experimental development.

You don’t have to be a big company or even incorporated to qualify!


Home Business Deductions

Many small businesses operate out of their residences.

You might be aware of a few of the deductions you can make when working from home, but there’s more than you think.

Things like:

  • Office supplies
  • Home insurance
  • Mortgage interest
  • Cleaning supplies
  • Heat
  • Lights
  • Water
  • Telephone
  • Internet

Even your car can be deducted from your taxes if you use it for business purposes!

Be smart when doing your business tax planning and do your homework for your home-based business tax deductions.



If you’re a small business that takes on apprentices, like a mechanic or a plumber, there’s a tax deduction for you.

When you hire an apprentice who is int he first two years of their apprentice program, your business is eligible for an Investment Tax Credit totally up to $2,000.


Region-Specific Tax Credits

There are lots of tax credits that only apply to certain regions.

You can get tax credits for publishing books in Quebec, hiring co-op student in Ontario, and for developing digital media in Nova Scotia.

It’s worth it to do a little legwork to get the most deductions.

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