Corporate Accounting for Private Enterprises Comptabilité d'Entreprise Privée

Accounting Integrated With Your Wealth Plan

Corporate accounting for high-net-worth business owners is not simply a compliance function. The decisions made in preparing your corporate financial statements — how income is categorized, how assets are valued, how reserves are calculated, and how intercompany transactions are priced — all have direct implications for your personal tax position, your estate plan, and your succession strategy.

The Small Business Deduction

The federal small business deduction reduces the corporate tax rate on the first $500,000 of active business income in a Canadian-controlled private corporation to approximately 9%, compared to the general corporate rate of approximately 15%. Maintaining eligibility for the small business deduction — including the associated corporation rules that can reduce the deduction limit for groups of related companies — is a significant planning consideration for growing businesses.

Passive Investment Income and the Business Limit

Federal legislation enacted in 2019 reduces the small business deduction limit for CCPCs with passive investment income above $50,000 per year. For corporations with significant investment portfolios held inside the operating or holding company, managing the passive income level to preserve the maximum small business deduction is an ongoing planning exercise.