Corporate Tax Planning in Scarborough
Scarborough corporate tax planning by a licensed CPA. We structure your corporation to pay the lowest legal tax: Small Business Deduction optimization, salary vs. dividend mix, holding company strategies, passive income planning, GRIP and LRIP management, associated corporation rules and year-round tax structure reviews. Office at 24 Clementine Square. 900+ five-star reviews.
AFFORDABLE Corporate Tax Planning for Scarborough Businesses
Scarborough business owners along the Golden Mile, Lawrence Avenue, Kingston Road and the 401 industrial corridor share a common problem: corporate tax bills that are higher than they need to be. Auto repair shops running 2 to 3 related entities, restaurant owners on Markham Road with retained earnings sitting inside the operating company, medical professionals on Birchmount without a holdco structure and import/export operators near the 401 paying the general rate on income that should qualify for the SBD.
We build written tax structures for owner-managed corporations. Salary/dividend split, passive income thresholds, holdco timing and associated corporation allocation. Every number calculated. Two reviews per year. No hourly billing.
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Why Corporate Tax Planning Matters for Scarborough Businesses
| Without Tax Planning | With Tax Planning |
|---|---|
| You pay the general corporate rate (26.5% combined federal + Ontario) on all taxable income. | The first $500,000 of active business income is taxed at 12.2% (Small Business Deduction rate). Proper planning keeps your income within this threshold. |
| Salary and dividends are paid without calculating the optimal mix. You overpay personal tax or miss CPP/RRSP contribution room. | Salary and dividends are split to minimize the combined corporate + personal tax. RRSP room is preserved. CPP contributions are optimized. |
| Passive investment income inside the corporation erodes the SBD. Every $1 of passive income above $50,000 reduces the SBD by $5. | Passive income is managed through a holding company. The operating company retains the full $500,000 SBD. |
| Multiple related corporations share the $500,000 SBD limit. Income is spread inefficiently across entities. | Associated corporation rules are reviewed. The SBD is allocated to the highest-income corporation. Unnecessary entities are wound up or amalgamated. |
| Retained earnings accumulate with no extraction plan. Shareholder loans create section 15(2) benefit risks. | Retained earnings are extracted through a planned combination of salary, dividends, capital dividends (CDA) and inter-company dividends. |
The Difference Between 12.2% and 26.5% on $500,000: A Scarborough corporation earning $500,000 in active business income pays $61,000 at the SBD rate or $132,500 at the general rate. The difference is $71,500 in tax on the same income. Tax planning is the process of legally ensuring your corporation qualifies for the lower rate and stays within the thresholds that protect it. For a full overview of our tax planning services, visit our tax planning page.
What Corporate Tax Planning Includes
| Tax Planning Strategy | What We Do | Who It Benefits |
|---|---|---|
| Small Business Deduction (SBD) optimization | We ensure your CCPC qualifies for the SBD on the first $500,000 of active business income (12.2% vs. 26.5%). We monitor passive income, associated corporation rules and taxable capital thresholds. | Every CCPC in Scarborough. |
| Salary vs. dividend optimization | We calculate the optimal salary/dividend split each year based on your personal tax bracket, RRSP room, CPP goals, childcare deductions and spousal income. | Every incorporated Scarborough business owner who pays themselves from the corporation. |
| Holding company structure | We set up a holdco to receive inter-company dividends tax-free. The holdco invests separately, protecting investments from creditors and isolating passive income from the SBD calculation. | Scarborough business owners with retained earnings exceeding $200,000 or passive income approaching $50,000/year. |
| Passive income management | Passive income above $50,000 reduces the SBD by $5 for every $1 of excess. At $150,000, the SBD is eliminated. We implement holdco dividend flows and the annual sell-and-rebuy strategy. | Corporations with investment portfolios, rental properties or interest income. |
| GRIP and LRIP management | We track the General Rate Income Pool and Low Rate Income Pool to determine eligible vs. non-eligible dividend designation. Incorrect designation triggers Part III.1 tax (20%). | Corporations that pay eligible dividends. |
| Lifetime Capital Gains Exemption (LCGE) planning | We structure qualifying small business corporation shares so each shareholder can claim the LCGE ($1,281,866 in 2025, indexed). Family members holding separate share classes multiply the exemption. | Scarborough business owners planning to sell within the next 1 to 10 years. |
| Associated corporation rules | We review all related corporations and allocate the $500,000 SBD to the highest-income entity. We evaluate whether structures should be simplified or amalgamated. | Scarborough owners with multiple corporations. Common with auto service, restaurant and medical practice groups. |
| Year-end tax structure review | Two mandatory sessions per year: mid-year (6 months before year-end) and pre-year-end (60 days before). We review projections, adjust payments and confirm all strategies are implemented. | Every Scarborough corporate tax planning client. |
Scarborough Corporate Tax Planning: Real Client Results
Auto Service Group, Golden Mile
A Scarborough auto repair operator running 3 associated corporations (two service locations and a parts supply entity) was splitting the $500,000 SBD across all three. The parts supply entity had minimal income. We amalgamated the two service corporations, wound up the parts supply entity and allocated the full SBD to the single operating company. The owner also held $110,000 in GICs inside the main corporation. We transferred the portfolio to a new holdco via tax-free dividends and restored the full SBD.
Restaurant Group, Markham Road
A Scarborough restaurant owner operating two locations with $680,000 in combined active income was paying the general rate on $180,000. We restructured the compensation: the owner took $180,000 as an optimized salary/dividend split to reduce corporate taxable income to $500,000. The salary component created $32,400 in RRSP room. A holdco was established to receive future retained earnings and begin passive income isolation before the threshold was reached.
Medical Practice, Birchmount Road
A Scarborough physician earning $520,000 through a professional corporation was paying herself 100% in dividends with no RRSP room being created. The corporation had accumulated $380,000 in retained earnings with $62,000 in annual passive income eroding the SBD. We established a holdco, transferred the investment portfolio, introduced a 50/50 salary-dividend split that created $46,800 in annual RRSP room and restored the full SBD by eliminating passive income from the operating corporation.
Import/Export Business, 401 Corridor
A Scarborough import/export company planning retirement in 4 years had not structured shares for LCGE eligibility. The corporation held $290,000 in non-qualifying investments (failing the 90% active asset test). We purified the balance sheet by transferring investments to a new holdco, issued non-voting shares to the spouse and filed an estate freeze to cap the owner's share value. On a projected $2.1 million sale, two LCGE claims shelter the full gain.
How Corporate Tax Planning Works
Assess
We review your corporate structure, income, expenses, shareholder loans, passive investments, associated corporations and current salary/dividend strategy.
Plan
We build a written tax plan with dollar amounts: salary/dividend split, SBD optimization, holdco strategy, GRIP/LRIP, LCGE timeline and passive income management.
Implement
We execute everything: declare dividends, adjust salary, set up the holdco, transfer investments, file elections and update the corporate minute book.
Review
Two mandatory reviews per year: mid-year and pre-year-end. We adjust based on actual results and new opportunities. Tax planning is continuous.
Scarborough Corporate Tax Planning. Written Tax Structure for Every Client.
SBD optimization, salary/dividend, holdco, LCGE, passive income. Two reviews per year. CRA audit support FREE.
2026 Corporate Tax Rates Every Scarborough Business Owner Should Know
| Income Type | Combined Federal + Ontario Rate | What It Means |
|---|---|---|
| Active business income (first $500,000, CCPC with SBD) | 12.2% | The most AFFORDABLE corporate tax rate in Canada. Tax planning keeps you here. |
| Active business income (above $500,000) | 26.5% | Income above the SBD threshold. The goal is to minimize income taxed at this rate. |
| Passive investment income (inside corporation) | 50.17% (with refundable portion) | Investment income taxed at 50.17%. Portion refundable via RDTOH when dividends paid out. |
| Inter-company dividends (connected corporations) | 0% (tax-free under Part IV) | Dividends from operating company to holding company received tax-free (section 112). |
| Capital dividends (from CDA) | 0% (tax-free to shareholders) | Non-taxable portion of capital gains (50%) distributed tax-free via Form T2054. |
Our Scarborough Office
Serving Scarborough, Agincourt, Malvern, Rouge, West Hill, Birch Cliff, Cliffside, Wexford, Dorset Park, Woburn and all of east Toronto. In-person and virtual appointments available.
24 Clementine Square, Scarborough, ON M1G 2V7
Phone: (647) 212-9559
Industries We Serve for Corporate Tax Planning in Scarborough
Every Scarborough industry has specific tax planning opportunities. Here are the sectors we serve most frequently.
Corporate Tax Planning for Startups
Pre-revenue tax structure. Founder share classes for LCGE eligibility from day one. SR&ED claims for R&D-stage companies. Loss carry-forward management.
Corporate Tax Planning for Healthcare
Professional corporation structures for doctors, dentists and specialists. Salary vs dividend optimization. Family share allocation for LCGE multiplication. Common along Birchmount and Lawrence corridors.
Corporate Tax Planning for Consultants
Salary/dividend optimization. International zero-rating for US clients. Holdco structures for consultants with high passive investment income. LCGE planning for exits.
Corporate Tax Planning for Small Businesses
SBD optimization on the first $500,000. Year-round salary/dividend strategy. Passive income management below $50,000. Two mandatory tax reviews per year.
Corporate Tax Planning for Restaurants
Multi-location structures across Scarborough. Tip income compliance. Equipment CCA. SBD allocation for restaurant groups along Markham Road, Lawrence and Kingston Road.
Corporate Tax Planning for Franchises
Franchise fee amortization. Multi-unit SBD allocation across associated franchise corporations. Holdco structure for royalty income. LCGE planning for franchise resale.
Corporate Tax Planning for Self-Employed
Incorporation timing analysis. Salary vs dividend from day one. RRSP room creation. CPP optimization. Section 85 rollover from sole proprietorship to corporation.
Corporate Tax Planning for Manufacturing
Accelerated CCA and Immediate Expensing on equipment. SR&ED claims for process improvement. Holdco structures for manufacturers with excess retained earnings.
Corporate Tax Planning for Grocery Stores
Zero-rated basic grocery vs taxable prepared food. Inventory valuation methods. Equipment CCA on refrigeration and POS. Multi-location SBD allocation for Scarborough grocery chains.
Corporate Tax Planning for Import & Export
Multi-currency income planning. Import duty and HST recovery coordination. Transfer pricing compliance. Cross-border entity structuring for Scarborough importers along the 401 corridor.
Frequently Asked Questions: Corporate Tax Planning in Scarborough
Meet Your Scarborough Tax Planning Experts
Your Scarborough corporate tax plan is built and reviewed by licensed CPAs with direct experience across every industry we serve.
Sharad Gondaliya, CPA
Founder and Principal CPA. Leads corporate tax planning for Scarborough clients. Specializes in SBD optimization, holdco structuring, LCGE planning, passive income management and salary/dividend strategies for auto service, restaurant and medical practice corporations.
Vandana Goel, CPA
Senior CPA. Manages tax planning for Scarborough multi-entity corporate groups, import/export businesses and healthcare professional corporations. Experienced in associated corporation analysis, GRIP/LRIP calculations and estate freeze structuring.
What Scarborough Clients Say About Us
900+ five-star reviews from business owners across Scarborough, east Toronto and Ontario.
10 Advanced Tax Planning Strategies for Scarborough Businesses
1. Optimize the Salary-Dividend Mix Annually
The optimal salary/dividend split changes every year based on your personal bracket, RRSP room, CPP goals and spousal income. A Scarborough medical professional who switched from 100% dividends to a 50/50 salary-dividend split created $46,800 in annual RRSP room, established CPP contribution history and reduced combined corporate and personal tax by $8,900 per year. We calculate both scenarios for every client annually.
2. Protect the Full Small Business Deduction ($500,000 at 12.2%)
The SBD saves $71,500 on $500,000 of active business income. Passive investment income above $50,000, taxable capital above $10 million and associated corporation rules all erode the SBD. We monitor all three thresholds quarterly for every Scarborough client and implement corrective strategies before year-end to preserve the full deduction.
3. Establish a Holding Company for Asset Protection and SBD Preservation
A holdco receives inter-company dividends tax-free (section 112), invests them separately and isolates passive income from the operating company's SBD calculation. For Scarborough auto service and restaurant owners who have accumulated significant retained earnings over 10 to 20 years of operation, the holdco also protects those savings from operating company creditors, lawsuits and liability exposure.
4. Implement the Annual Sell-and-Rebuy Strategy for Passive Income
If the operating company holds investments generating more than $50,000 in annual passive income, sell the portfolio before year-end and repurchase immediately. Combined with a holdco dividend strategy, this reduces the operating company's passive income below the $50,000 threshold. We find this issue most frequently with long-established Scarborough businesses that have held GIC ladders or mutual fund portfolios inside the operating corporation for a decade or more without realizing the SBD impact.
5. Multiply the Lifetime Capital Gains Exemption Through Family Share Classes
Each family member holding qualifying shares can claim their own LCGE ($1,281,866 in 2025). A Scarborough auto service group owner who issues non-voting shares to a spouse and adult child creates three separate LCGE claims. On a $2.8 million sale, the combined exemption shelters the full gain from tax. We issue the shares and track the 24-month holding period and 90% active asset purity for every client planning a future exit.
6. Maximize SR&ED Tax Credits
Scarborough manufacturing and food processing companies that develop new production methods, improve existing processes or create custom equipment qualify for SR&ED credits. Eligible CCPCs recover up to 35% of qualified expenditures as a refundable credit. This also applies to Scarborough software companies and IT services firms developing proprietary tools. We identify eligible activities and prepare the T661 claim.
7. Utilize the Capital Dividend Account (CDA)
When the corporation realizes a capital gain, 50% is added to the CDA. Life insurance proceeds also increase the CDA. Capital dividends paid from the CDA to shareholders are received completely tax-free via Form T2054. We track the CDA for every Scarborough client and file T2054 before every capital dividend declaration. Many business owners are unaware the CDA exists and pay personal tax on distributions that could have been tax-free.
8. Time Bonus Accruals Across Two Tax Years
Declare a management bonus before fiscal year-end and pay within 179 days. The bonus is deductible in the current corporate year but included in personal income in the following calendar year. This is particularly effective for Scarborough seasonal businesses and contractors whose income varies between quarters and who want to smooth both corporate and personal tax obligations across years.
9. Evaluate an Individual Pension Plan (IPP) for Owners Over 40
An IPP is a defined benefit pension for a single employee (the business owner). Contributions exceed RRSP limits for owners over 40 with employment income history. A 52-year-old Scarborough business owner can contribute $12,000 to $16,000 more per year through an IPP than through an RRSP. Past service contributions create a significant one-time deduction. Creditor protection under pension legislation applies.
10. Review and Restructure Associated Corporations
Scarborough business owners frequently operate 2 to 4 related corporations, particularly in auto services (operating, property holding, parts supply) and restaurants (multiple locations, central kitchen, catering). Associated corporations share the $500,000 SBD. We review all relationships, allocate the SBD to the highest-income entity and evaluate whether corporations should be amalgamated, wound up or restructured to eliminate unnecessary association and maximize the total tax benefit across the group.
Scarborough Corporate Tax Planning. Written Tax Structure. Two Reviews Per Year.
Gondaliya CPA builds corporate tax plans for Scarborough businesses. SBD optimization, salary/dividend, holdco, LCGE, passive income. 900+ five-star reviews. Office at 24 Clementine Square.