2026 Year-End Tax Planning Checklist for Ontario Small Business Owners

December is approaching, and with it the deadline for several tax moves that must happen before the 2026 year closes. Here is what Ontario small business owners should act on now.

1. Know your new small-business tax rate

As of July 1, 2026, Ontario cut its small-business corporate rate from 3.2% to 2.2%. Combined with the 9% federal rate, qualifying CCPCs now pay **11.2%** on the first $500,000 of active business income. For a December 31 year-end, 2026 is a straddle year, so your blended rate works out to roughly **11.7%** — the full 11.2% kicks in for 2027. Factor this into any decision to accelerate income into 2026 or defer it.

2. Time your dividends

The flip side of that cut: Ontario is reducing its non-eligible dividend tax credit on **January 1, 2027**, pushing the top personal rate on non-eligible dividends to about **48.89%** (from 47.74%). If you planned to pay yourself dividends anyway, declaring them in 2026 may save tax — model both years first.

3. Top up your RRSP by March 1, 2027

Contributions made by **March 1, 2027** are deductible on your 2026 return. The 2026 limit is **$33,810** (or 18% of 2025 earned income, whichever is lower), plus unused room — check your CRA Notice of Assessment. Note: only salary creates RRSP room, not dividends, so all-dividend owners may have little new room.

4. Harvest capital losses

The capital gains inclusion rate **stays at 50%** — the proposed 66.67% increase was cancelled and never became law. Selling loss positions in non-registered accounts before year-end offsets 2026 gains (losses can also carry back 3 years or forward indefinitely). Just ensure trades settle in 2026.

5. Get payroll and slips in order

- **Bonuses** must be paid within 179 days of your corporation's year-end to be deductible in 2026.

- **T4/T4A/T5 slips** are due by the **last day of February 2027** — late filing penalties scale with slip count.

- **December 15** is the final personal tax instalment date for 2026.

6. Clear shareholder loans

Amounts borrowed from your corporation generally must be repaid within one year after its year-end, or CRA treats them as income to you. Review loan balances now.

7. Donations and medical expenses by December 31

Charitable gifts must be **made by December 31** to count for 2026. Medical expenses can be claimed for any 12-month period ending in 2026, so combine early-year receipts with December ones to clear the threshold.

The bottom line

Same dollar, different tax result depending on which side of December 31 it falls — and with Ontario's rate changes fully biting in 2027, this year-end deserves extra attention.

Want help modelling these decisions? [Contact C&L Chartered Professional Accountants](https://www.candlcpa.ca/contact-us) — we serve small businesses across Markham and the GTA in English, Cantonese, and Mandarin.

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*General information only — not tax advice. Consult a licensed CPA about your specific situation.*