CPA Canada PEP Taxation Elective Quick Reference

Last revised: June 25, 2026

Compact independent review support for the CPA Canada PEP Taxation Elective, covering Canadian tax issue spotting, computations, planning, and case-writing traps.

Exam-use focus

This Quick Reference supports candidates preparing for the CPA Canada PEP Taxation Elective under exam code CPA Tax. It is independent review support, not CPA Canada material.

Use it to quickly organize tax issues in case responses: identify the taxpayer, classify income or transaction type, compute taxable income or tax attributes, analyze planning options, and communicate practical recommendations.

Case triage framework

First 5 minutes: map the tax file

Step	Question to answer	Why it matters
1. Taxpayer	Individual, corporation, trust, partnership, estate, non-resident, related group?	Determines rates, filing logic, attribution, losses, GST/HST, and planning options.
2. Residency	Resident, deemed resident, non-resident, part-year?	Drives worldwide income vs Canadian-source income.
3. Transaction	Employment, business, property, capital, shareholder, estate, GST/HST, reorganization?	Prevents mixing tax treatments.
4. Timing	When earned, received, paid, disposed, accrued, or legally obligated?	Affects income recognition, deductions, instalments, losses, CCA, and elections.
5. Relationship	Arm’s length, related, associated, affiliated, connected?	Affects transfers, dividends, loss restrictions, shareholder benefits, SBD, and anti-avoidance.
6. Objective	Minimize tax, defer tax, preserve cash, extract corporate funds, succession, compliance?	Helps choose recommendations, not just calculations.
7. Risk	CRA challenge, penalties, documentation, GAAR, ethics, uncertainty?	Required in strong CPA-style advice.

Case-writing pattern

Requirement type	Recommended structure
Compute taxable income	Start with accounting income or legal proceeds, adjust item by item, subtotal, apply deductions/losses/credits, conclude.
Advise client	State conclusion first, give tax impact, discuss qualitative risks, recommend action.
Compare options	Use a table: tax cost, cash flow, compliance, risk, timing, non-tax goals.
Identify issues	Use headings by taxpayer and year; do not bury issues in narrative.
Planning	Distinguish tax deferral, permanent savings, income splitting, capital gains treatment, and cash-flow management.
Ethics/compliance	Address disclosure, documentation, due dates, reasonableness, and aggressive planning risk.

Core income tax architecture

Individual income computation

Layer	Common components	Exam traps
Net income for tax purposes	Employment income, business income, property income, taxable capital gains, other income minus permitted deductions	Do not deduct personal expenses unless specifically permitted.
Taxable income	Net income minus Division C deductions, such as permitted loss carryovers and specific deductions	Deductions reduce taxable income; credits reduce tax payable.
Tax before credits	Federal and provincial/territorial tax using current exam rates	Use provided exam reference data; do not memorize outdated brackets.
Non-refundable credits	Basic, spouse/common-law, age, disability, medical, donations, tuition, CPP/EI, etc. where applicable	Credits may have base amounts, phaseouts, or transfer rules.
Refundable credits / payments	Tax withheld, instalments, refundable credits	Important for cash-flow recommendations.

Corporate income computation

Layer	Common components	Exam traps
Accounting income	Starting point from financial statements	Accounting income is not taxable income.
Taxable income	Add back non-deductible items; deduct allowed tax items; replace amortization with CCA	CCA is discretionary; book depreciation is not deductible.
Active business income	Business income earned in Canada, subject to specific inclusions/exclusions	Property income may not be active business income unless an exception applies.
Aggregate investment income	Passive investment income relevant to CCPC planning	Can affect small business deduction planning and refundable tax mechanics.
Tax payable	Apply current federal/provincial rates, SBD, refundable taxes, credits	Avoid using stale rates; use current CPA Canada exam references.
After-tax funds	Retain, pay salary, pay dividends, repay shareholder loan, capital dividend, bonus accrual	Recommendation depends on shareholder tax, cash needs, payroll, RRSP room, and corporate tax pools.

Classification decision table

Item	Usually taxed as	Key tests	Common traps
Salary, wages, bonus	Employment income	Employee-employer relationship; amounts received or enjoyed	Limited deductions; benefits often taxable.
Independent contractor fees	Business income	Control, ownership of tools, chance of profit, risk of loss, integration	GST/HST, CPP, instalments, expense deductibility.
Interest	Property income	Accrual or receipt depending on instrument and taxpayer	Interest deductibility requires income-earning purpose and legal obligation.
Dividends	Property income	Eligible vs non-eligible; Canadian vs foreign	Dividend gross-up/credit applies to taxable Canadian dividends, not foreign dividends.
Rental income	Property or business income	Level of services and commercial activity	CCA cannot create or increase a rental loss in many exam fact patterns.
Capital gain	Capital income	Disposition of capital property; intention, frequency, financing, expertise	Real estate or securities trading may be business income.
Inventory sale	Business income	Property acquired for resale or adventure in the nature of trade	No capital gains treatment if inventory.
Shareholder benefit	Income inclusion to shareholder	Benefit conferred by corporation because of shareholding	Corporation may be denied deduction; double-tax risk.
Loan from corporation	Possible shareholder loan inclusion	Repayment timing, series of loans, employment exceptions	Interest benefit may still apply even if principal not included.
Life insurance proceeds to corporation	Usually not taxable as proceeds	Impacts capital dividend account based on policy attributes	CDA is an account, not cash. Election matters.
Foreign income	Income from relevant source	Residency, treaty, withholding, foreign tax	Foreign tax credit mechanics and currency conversion.

High-yield formulas

Use current CPA Canada exam reference materials for rates, limits, brackets, prescribed rates, and inclusion percentages.

Taxable income structure

\[ \text{Taxable income} = \text{Net income for tax purposes} - \text{Division C deductions} \]

[ \text{Net income} = \text{employment income}

\text{business income}
\text{property income}
\text{taxable capital gains}
\text{other income}

\text{permitted deductions} ]

Net capital gain / loss

\[ \text{Taxable capital gain} = \text{capital gain} \times \text{current inclusion rate} \]\[ \text{Allowable capital loss} = \text{capital loss} \times \text{current inclusion rate} \]

Capital losses generally offset taxable capital gains, subject to the current carryover and special-use rules.

CCA / UCC continuity

[ \text{Ending UCC} = \text{Opening UCC}

\text{additions}

\text{dispositions, limited to original cost}
\text{CCA claimed} ]

Situation	Result	Exam handling
Positive UCC and no assets remain in class	Terminal loss may arise	Deduct if allowed.
Negative UCC	Recapture	Include in income.
Positive UCC and assets remain	No terminal loss	Carry forward UCC.
Additions in year	Half-year rule may restrict CCA	Apply current class and half-year rules.
CCA discretionary	Taxpayer may claim less than maximum	Use to manage losses, SBD, and planning.

Principal residence exemption concept

\[ \text{Exempt gain} = \text{capital gain} \times \frac{\text{eligible designated years under current rules}} {\text{years owned}} \]

Key exam points: only one property can generally be designated per family unit for a year; land size, change in use, rental use, and documentation matter.

After-tax comparison

[ \text{After-tax cash} = \text{cash received}

\text{tax payable}
\text{payroll/remittance costs}
\text{transaction costs} ]

Use this when comparing salary, dividends, asset sale, share sale, bonus, and capital dividend options.

Employment income quick reference

Item	General treatment	Exam traps
Salary and wages	Taxable when received or enjoyed	Accrued but unpaid salary may be corporate deduction issue, not individual income until received.
Bonus	Taxable to employee when received; deductible to employer when reasonable and properly accrued/paid under current rules	Match corporate deduction timing with employee inclusion.
Employer-paid personal expenses	Usually taxable benefit	Identify who primarily benefits.
Automobile benefit	Standby charge and operating cost benefit may apply	Personal vs business kilometres and availability matter.
Allowance	Taxable unless specifically reasonable and permitted	Reimbursement with receipts is usually cleaner than allowance.
Stock options	Employment benefit; special deduction may apply if conditions met	Timing differs for public company vs certain private company shares.
Home office / employment expenses	Limited and documentation-heavy	Need employment contract requirement and prescribed employer certification where applicable.
Moving expenses	Deductible only if statutory conditions met	Distance, eligible move, and income-source limits matter.

Business income and deductibility

General deductibility checklist

A business expense is stronger if it is:

incurred to earn income from business or property;
reasonable in amount;
not personal or capital in nature;
not specifically prohibited or restricted;
supported by documentation;
matched to the correct taxpayer and period.

Expense	Treatment focus	Common trap
Meals and entertainment	Partially deductible under current restrictions	Use current exam percentage; document business purpose.
Golf, clubs, social dues	Often restricted or non-deductible	Client development purpose does not automatically make it deductible.
Interest	Deductible if borrowed money is used to earn income and obligation is legal	Trace use of borrowed funds.
Repairs vs capital	Repairs maintain; capital improves, expands, or creates enduring benefit	Misclassification affects CCA vs immediate deduction.
Reserves	Deductible only if specifically permitted	Accounting reserve is not automatically deductible.
Bad debts	Deductibility depends on income inclusion and collectability	Need evidence debt became bad in the year.
Home office	Limited; must meet statutory/business-use tests	Cannot freely create losses in many cases.
Automobile	Business-use allocation; passenger vehicle restrictions may apply	Logbook and personal-use allocation matter.
Salaries to family	Deductible only if reasonable for actual work	Income splitting risk if excessive.
Fines and penalties	Often restricted	Do not assume deductible because paid by business.

Capital vs income indicators

Indicator	Points toward capital gain	Points toward business income
Intention	Long-term investment	Resale profit or speculative intent
Frequency	Infrequent transactions	Repeated transactions
Holding period	Longer	Shorter
Expertise	Limited	Specialized knowledge
Financing	Conservative, long-term	High leverage, short-term
Work done to property	Passive ownership	Development, marketing, subdivision
Similar business	Unrelated to taxpayer’s business	Related to taxpayer’s ordinary business

Capital property and losses

Topic	Quick rule	Exam traps
Adjusted cost base	Cost plus acquisition costs plus capital additions minus returns of capital and other adjustments	Track ACB by property; identical property averaging may apply.
Proceeds of disposition	Sale price or deemed proceeds	Non-arm’s-length transfers may use deemed FMV.
Outlays and expenses	Selling costs reduce capital gain	Do not deduct twice as business expense.
Personal-use property	Special rules may limit losses and adjust cost/proceeds	Check current reference for thresholds.
Listed personal property	Losses generally restricted to LPP gains	Separate from ordinary capital losses.
Superficial loss	Loss denied when property reacquired by taxpayer or affiliated person within rule period	Add denied loss to ACB where applicable.
ABIL	Special treatment for certain small business corporation shares/debts	Need qualifying corporation, arm’s-length debt/share facts, and loss realization.
Net capital losses	Generally offset taxable capital gains	Apply current carryover rules and ordering.

CCA quick reference

Step	Action	Watch for
1	Identify asset and CCA class	Buildings, vehicles, computer equipment, leaseholds, intangibles may differ.
2	Add current-year acquisitions	Include acquisition costs; consider available-for-use rules.
3	Apply half-year or other acquisition restriction	Do not apply blindly if exception applies.
4	Deduct dispositions	Deduct lesser of proceeds and original capital cost.
5	Compute maximum CCA	Use current class rate and base.
6	Decide claim amount	Claim can be less than maximum.
7	Test recapture / terminal loss	Only terminal loss if no assets remain in class.

CCA planning points

Planning objective	CCA response
Reduce current taxable income	Claim more CCA, subject to limits.
Preserve losses	Claim less or no CCA.
Keep access to small business deduction	Model ABI, taxable income, and associated corporations.
Avoid wasting deductions	Do not claim CCA that creates unusable losses without benefit.
Anticipate sale	Consider future recapture and terminal loss.

Corporate tax and owner-manager issues

CCPC and small business deduction issue map

Issue	Why it matters	Exam response
CCPC status	Affects SBD, refundable taxes, integration, certain deferrals	Identify control, residency, and public corporation facts.
Active business income	SBD applies to qualifying ABI, subject to restrictions	Separate ABI from investment income and specified income issues.
Associated corporations	Business limit may need sharing	Identify common control and related-party ownership.
Passive investment income	May affect access to SBD under current rules	Mention grind/planning where facts show significant investments.
Taxable capital	May restrict SBD under current rules	Use exam reference if figures provided.
Specified corporate income	Income from related private corporations may be restricted	Watch service/rental income between related corps.

Salary vs dividend quick comparison

Factor	Salary / bonus	Dividend
Corporate deduction	Deductible if reasonable and properly accrued/paid	Not deductible
Individual tax	Employment income	Dividend gross-up and credit system
CPP / payroll	Payroll obligations may apply	No employment CPP on dividends
RRSP room	Creates earned income	Does not create earned income
Cash flow	Requires remittances	Paid from after-tax corporate income
Integration	Can be comparable, but not perfect	Depends on eligible/non-eligible status and province
Loss planning	Salary can reduce corporate income	Dividend cannot create corporate deduction
Reasonableness	Must be reasonable for services	Dividend paid by share rights, not services
Best when	Owner needs earned income, corp wants deduction, bonus planning useful	Corp has after-tax cash, owner wants flexible extraction, payroll avoidance matters

Corporate surplus extraction tools

Tool	Typical use	Key traps
Salary / bonus	Deduct corporate income; compensate owner-manager	Reasonableness, source deductions, timing.
Taxable dividend	Distribute after-tax corporate earnings	Eligible vs non-eligible; RDTOH impact.
Capital dividend	Distribute CDA tax-free	CDA balance must be accurate; election required; excess election risk.
Shareholder loan repayment	Return previously loaned funds	Must be true loan balance, not disguised benefit.
Paid-up capital return	Return capital without dividend to extent available	PUC may differ from legal capital and ACB.
Share redemption	Extract value through deemed dividend and possible capital gain/loss	Deemed dividend, ACB, PUC, stop-loss rules.
Asset sale then dividend	Sell assets, pay tax, distribute cash	Recapture, capital gains, GST/HST, RDTOH, CDA.
Share sale	Vendor may access capital gain treatment	Purchaser may prefer asset purchase; QSBC and LCGE analysis may arise.

Corporate tax pools

Pool	What it tracks	Why examiners care
CDA	Tax-free surplus items, such as non-taxable portion of capital gains and certain insurance proceeds	Supports capital dividend planning.
GRIP	Ability of CCPC to pay eligible dividends from income taxed at higher corporate rates	Needed for eligible dividend recommendation.
RDTOH	Refundable tax on investment income and certain dividends	Refund may arise when taxable dividends are paid.
LRIP	Limits eligible dividends for certain non-CCPC corporations	Less common but relevant in corporate status changes.
UCC	Undepreciated capital cost by class	Drives CCA, recapture, terminal loss.
ACB	Tax cost of shares/property	Drives capital gains and loss planning.
PUC	Corporate law/tax paid-up capital	Drives deemed dividend on share redemptions/returns of capital.

Shareholder benefits and loans

Scenario	Tax issue	Exam response
Corporate asset used personally	Shareholder benefit	Include value of benefit; consider corporate deductibility and GST/HST.
Personal expenses paid by corporation	Shareholder benefit or appropriation	Add back corporate deduction if personal; include to shareholder where appropriate.
Below-market loan	Interest benefit and possible loan inclusion	Apply current prescribed-rate concept and repayment rules.
Loan not repaid within permitted period	Possible income inclusion	Watch series of loans and repayments.
Company car for shareholder-manager	Employment or shareholder benefit	Classify capacity: employee vs shareholder.
Excessive salary to related person	Deduction may be denied in part	Reasonableness and actual services.
Rent paid to shareholder	Deductible to corporation if reasonable; income to shareholder	Consider GST/HST registration, property income, CCA limits.

Dividends and integration

Dividend type	Paid from	Individual treatment	Corporate planning point
Eligible dividend	Generally income taxed at higher corporate rate or GRIP-supported amounts	Enhanced gross-up/credit under current rules	Do not pay eligible dividends without sufficient GRIP if rules restrict it.
Non-eligible dividend	Generally income benefiting from SBD or non-eligible pools	Lower gross-up/credit under current rules	Common for CCPC active business income taxed at small business rate.
Capital dividend	CDA balance	Tax-free to shareholder if properly elected	CDA must be computed before election.
Deemed dividend	Share redemption, PUC reduction, certain reorganizations	Taxed as dividend, not capital gain, to extent deemed	Can create double-tax or stop-loss issues.

GST/HST quick reference

Supply type	Tax charged?	ITCs?	Examples / traps
Taxable supply	GST/HST charged at applicable rate	ITCs generally available if registrant and input used in commercial activity	Most commercial goods/services.
Zero-rated supply	Taxable at 0%	ITCs generally available	Certain exports, basic groceries, prescription drugs, etc. under current rules.
Exempt supply	No GST/HST charged	ITCs generally not available	Many financial services, residential rents, health/education services under current rules.
Out-of-scope	Not a supply or outside system	No ITCs unless tied to commercial activity	Wages, certain transfers, damages depending on facts.

GST/HST case checklist

Question	Why it matters
Is the person carrying on commercial activity?	Determines registration and ITC eligibility.
Is the person a registrant or required to register?	Affects collection obligations and ITCs.
Is the supply taxable, zero-rated, or exempt?	Determines tax charged and ITCs.
What province/place of supply applies?	Determines GST vs HST rate using current reference data.
Is consideration monetary, barter, related-party, or non-arm’s-length?	FMV and documentation may matter.
Are ITCs supported by invoices?	Missing documentation can deny ITCs.
Is the property real property, financial service, employee benefit, or passenger vehicle?	Special rules and restrictions often apply.

Personal tax planning

Planning area	Key tax issue	Strong exam recommendation
RRSP / pension	Deduction now vs tax on withdrawal; earned income requirement	Compare marginal rates and cash flow.
TFSA	Tax-free income and withdrawals	Good for after-tax savings; no deduction.
RESP	Education savings and grants	Consider beneficiary age, contribution plans, family goals.
Spousal planning	Attribution, pension splitting, income splitting restrictions	Avoid superficial advice that ignores attribution.
Charitable donations	Credit and carryforward rules	Donate appreciated public securities may be relevant if facts support.
Medical expenses	Credit based on eligible expenses and income threshold	Choose claimant strategically where allowed.
Moving expenses	Deduction limited by eligible income at new location	Check facts and documentation.
Home office	Deduction constrained	Keep records and employer/business-use support.
Principal residence	Exemption allocation	Model which property to designate if multiple homes.
Estate freeze	Shift future growth to next generation	Discuss valuation, control, attribution, and family law/business risks.

Corporate reorganizations and succession

Transaction	Tax objective	High-yield issues
Section 85-style rollover	Defer gain on transfer of eligible property to corporation	Elected amount, consideration, boot, PUC, ACB, filing.
Estate freeze	Freeze current value; transfer future growth	Preferred shares, common shares to successors/trust, valuation, control.
Purification	Help shares meet QSBC-style tests	Remove excess investments or non-business assets; watch timing.
Share sale	Vendor capital gain treatment	LCGE eligibility, purchaser preferences, indemnities, due diligence.
Asset sale	Purchaser gets asset cost base	Vendor recapture/capital gains, GST/HST, liabilities, contracts.
Amalgamation / wind-up	Simplify group, use losses or assets	Continuity rules, loss restrictions, PUC/ACB, tax pools.
Pipeline planning	Post-mortem surplus extraction	Anti-avoidance and timing risk; advanced analysis required.

Factor	Asset sale	Share sale
Vendor tax	Recapture, capital gains, income allocations by asset	Capital gain on shares; possible LCGE if conditions met
Purchaser tax	Step-up in asset cost base; choose assets/liabilities	Inherits corporation, tax history, low asset basis
GST/HST	May apply unless rollover/election/exemption available	Usually no GST/HST on share sale
Liabilities	Purchaser can select assumed liabilities	Purchaser inherits known and unknown corporate liabilities
Contracts/employees	May need assignments/consents	Corporation continues contracts, subject to change-of-control clauses
Due diligence	Asset valuation and allocation critical	Tax liabilities, payroll, GST/HST, litigation, minute books critical
Vendor preference	Often share sale	Often asset sale for purchaser

Losses

Loss type	Offsets	Key constraints
Business loss	Other income, subject to current carry rules	Source of income must exist; reasonable expectation/commerciality matters.
Property loss	Other income, subject to restrictions	CCA restrictions can limit rental loss creation.
Capital loss	Taxable capital gains	Special rules for superficial losses, LPP, ABIL.
Net capital loss	Taxable capital gains in other years under current rules	Track inclusion rate and carryover mechanics.
Non-capital loss	Broader income under current carry rules	Ordering and expiry matter.
ABIL	Preferential treatment compared with ordinary capital loss	Strict qualification and documentation required.
Farm/fishing losses	Special limits may apply	Determine whether activity is chief source, part-time, or hobby-like.
Corporate losses after acquisition of control	Restricted	Loss streaming and business continuity tests.

Non-resident and cross-border basics

Issue	Canadian tax concept	Exam traps
Residency	Factual ties, deemed rules, treaty tie-breaker	Do not decide only by days present.
Part-year resident	Worldwide income during resident period; Canadian-source issues outside period	Allocate income and credits.
Non-resident employment in Canada	Canadian-source employment income may be taxable	Payroll withholding and treaty relief may matter.
Canadian rental property	Withholding, elective filings, net rental income option	Gross withholding vs net filing implications.
Disposition of taxable Canadian property	Clearance/compliance rules may apply	Purchaser withholding risk.
Foreign income for residents	Report worldwide income	Foreign tax credit prevents double tax only to allowed extent.
Foreign affiliates / controlled foreign affiliates	Advanced corporate rules	Identify issue and recommend specialist analysis if case facts are limited.
Treaty	May override or reduce domestic taxation	Always apply domestic law first, then treaty relief.

Tax administration and compliance

Area	What to address in cases
Filing obligation	Who files, what return, for which year, and whether elections/forms are needed.
Instalments	Cash-flow impact if prior/current tax payable requires instalments under current rules.
Source deductions	Payroll withholding, CPP/EI, taxable benefits, remittance risk.
Records	Receipts, logbooks, invoices, agreements, valuation reports, mileage, minutes.
Elections	Identify deadline sensitivity and consequences of late/incorrect election.
Objections/appeals	Preserve rights if reassessed; meet current deadlines.
Penalties/interest	Mention risk where late filing, gross negligence, repeated failure, or missed remittances exist.
Voluntary disclosure	Consider if past non-compliance is discovered; eligibility depends on current program rules.
Ethics	Do not recommend false characterization, backdating, missing disclosure, or unsupported values.

Rule area	What to watch
Non-arm’s-length transfers	FMV deemed proceeds/cost rules may apply; double-tax risk if transferred below FMV.
Attribution	Income or gains may attribute back to transferor in spouse/minor/family situations.
TOSI	Dividends or split income to related individuals may be taxed unfavourably unless an exception applies.
Reasonableness	Salary, management fees, interest, rent, and bonuses must be supportable.
GAAR	Transactions with tax benefit, avoidance transaction, and misuse/abuse risk require caution.
Superficial losses	Loss denied on reacquisition by taxpayer or affiliated person within rule period.
Associated corporations	SBD sharing and limits; control can be direct, indirect, or de facto.
Affiliated persons	Affects losses, transfers, and corporate/shareholder planning.
Thin capitalization / transfer pricing	Cross-border related-party debt or charges may require advanced analysis.

Common exam traps

Trap	Better approach
Using book depreciation in taxable income	Add back amortization; calculate CCA.
Treating every sale as capital	Apply income-vs-capital indicators.
Ignoring GST/HST	Analyze supply type and ITCs separately from income tax.
Recommending dividends only because “lower tax”	Compare salary, RRSP room, CPP, corporate deduction, cash flow, and dividend type.
Forgetting shareholder benefit inclusion	Identify personal use of corporate assets and personal expenses paid by corporation.
Creating CCA loss without considering restrictions	Check rental/property restrictions and whether claiming CCA is optimal.
Missing associated corporations	Common control can restrict SBD across a group.
Treating CDA as cash	CDA is a tax account; corporation still needs cash and valid election.
Ignoring documentation	Tax result often depends on invoices, agreements, valuations, mileage logs, and minutes.
Giving only calculations	CPA cases reward conclusion, recommendation, risk, and client-specific communication.
Overstating certainty	Flag assumptions and recommend specialist/legal advice for complex reorganizations or uncertain facts.

Compact case answer templates

Taxable income reconciliation

Line	Treatment
Accounting net income	Start with given income statement figure.
Add back	Accounting amortization, non-deductible meals portion, personal expenses, accounting reserves, fines/penalties if restricted, income tax expense.
Deduct	CCA claimed, permitted reserves, non-taxable accounting income, eligible deductions not recorded.
Separate	Capital gains, dividends, foreign income, GST/HST, shareholder benefits.
Apply	Loss carryovers, SBD, credits, refundable taxes, instalments.
Conclude	Taxable income, tax payable/refundable, planning action.

Recommendation paragraph

Use this structure:

Conclusion: “I recommend Option A because it provides the best after-tax cash flow while managing compliance risk.”
Quantification: “Option A saves/defers tax of approximately X compared with Option B, before transaction costs.”
Qualitative factors: “It also preserves RRSP room / reduces CRA risk / improves purchaser due diligence.”
Conditions: “This assumes current rates, valid documentation, and that the corporation remains a CCPC.”
Action: “Prepare election, update minutes, document FMV, and confirm GST/HST treatment before closing.”

Final review checklist before submitting

Identified each taxpayer and tax year.
Separated income tax from GST/HST.
Used current exam-provided rates, limits, and prescribed amounts.
Classified income correctly: employment, business, property, capital, shareholder.
Reconciled accounting income to taxable income.
Checked CCA, recapture, terminal loss, and discretionary claim.
Considered related-party, attribution, TOSI, and shareholder benefit issues.
Addressed salary vs dividend and corporate tax pools where owner-manager facts exist.
Mentioned documentation, elections, deadlines, and CRA risk.
Gave a clear recommendation, not just a technical discussion.

Practical next step

Work timed CPA Canada PEP Taxation Elective-style cases and build your own one-page tax issue log after each attempt: missed classification, missed formula, missed planning point, and missed communication point. Then drill those weak areas with targeted calculation and advisory practice.

Scenario Guide

Corporate Tax