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Gondaliya CPA

Corporate Tax Filing Experts

Tax Accountant for Venture Capital Firms in Ontario and Across Canada

We run the fund, not just the return. We keep a capital account for every limited partner, post every capital call, allocation and distribution against it, and build the adjusted cost base that ITA paragraphs 53(1)(e) and 53(2)(c) require, so a negative balance and its deemed gain under ITA subsection 40(3.1) is caught before CRA finds it. We prepare the T5013 partnership information return and every partner slip, compute the at-risk amount that caps a limited partner’s loss under ITA subsection 96(2.1), mark illiquid positions at a fair value an auditor can actually test, and read your distribution waterfall against the agreement that created it. Whether you run a seed fund, a micro fund, a sector fund or a first-time vehicle, we handle the fund, the general partner corporation and the management company — with AFFORDABLE flat fees.

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AFFORDABLE Venture Capital Firm Tax Accountant

A venture capital firm is not an investor with a bigger cheque book. It is a limited partnership holding other people’s committed capital, and the fund itself is the accounting problem. The money does not arrive once; it arrives by capital call over several years against commitments that sit uncalled on a schedule nobody puts on the balance sheet. The management fee is charged from the first close, years before a single gain exists, which is why the early years of a fund report a loss by design. Every dollar of income and every dollar of loss has to be computed at the partnership level and allocated out to each limited partner on a T5013 slip, and that allocation only works if somebody has kept a capital account per partner since the first close. Most have not. When contributions, allocated income, allocated losses and distributions are never posted, adjusted cost base cannot be computed, the at-risk cap in ITA subsection 96(2.1) cannot be tested, and a negative balance quietly becomes a deemed capital gain under ITA subsection 40(3.1) that nobody reports. At Gondaliya CPA, we specialize in fund accounting, partner allocations and portfolio valuation for venture capital firms, providing AFFORDABLE flat-fee support that keeps you CRA-compliant and stops you paying more tax than you owe.

As a venture capital firms accountant, we work with seed stage funds, micro venture funds, sector-focused funds and corporate venture arms across Ontario, with year-round support rather than a once-a-year scramble. We handle the fund, the general partner corporation and the management company as the three entities they actually are, and we give your limited partners reporting that agrees with your financial statements.

Let us handle the fund so you can focus on the deals and the founders.

Gondaliya CPA team - accounting and tax services for venture capital firms

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Accounting That Understands How a Venture Capital Firm Actually Works

A fund carries financial pressures an individual investor never faces. Capital arrives in drawdowns instead of one subscription, the management fee runs years ahead of any gain, every dollar of income has to be allocated out to named limited partners on a slip, and the assets you hold have no market price at all. At Gondaliya CPA, we understand that reality and provide practical, fund-focused solutions across Ontario.

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Commitments, Calls and the J-Curve

Capital is committed once and drawn over years. The fee runs from the first close, so the early years show a loss by design rather than by mistake.

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T5013 and Partner Allocations

Income is computed at the partnership level under ITA subsection 96(1) and allocated to each limited partner on a slip that partner cannot file without.

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Valuing What Has No Price

Private positions have no market. The fair value in your limited partner report is an estimate, and under CAS 540 an auditor tests the estimate, not the number.

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Negative Cost Base

Distributions and allocated losses drive adjusted cost base down. Below zero, ITA subsection 40(3.1) deems a capital gain whether anyone noticed or not.

Stay Compliant and Minimize Your Venture Capital Firm Tax

For a venture capital firm, keeping the partnership onside with CRA and paying the least legal tax across the fund, the general partner corporation and the management company are the same job. We keep every filing on schedule while claiming every dollar the T5013 and the T2 allow, so nothing is missed and nothing invites a reassessment.

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Declarations, Registration and Counsel’s Domain

There is no professional college for running a fund and no licence called a VC licence. The fund exists because a Declaration of Limited Partnership was filed under the Ontario Limited Partnerships Act, and that declaration lapses and has to be renewed every five years. The Ontario Securities Commission and the other CSA members set the registration categories in National Instrument 31-103 and the prospectus exemptions in National Instrument 45-106 that govern how your units may be sold and whether your manager must register. That is your counsel’s domain and we never advise on it. What we do is make sure the declaration, the limited partnership agreement, the subscription agreements and the commitment schedule are reflected in the books, and that CVCA and ILPA dues land in the right entity.

✅

CRA Obligations for Venture Capital Firms

Staying compliant with CRA means more than one return a year. We manage the T5013 partnership information return with the T5013 FIN financial return, T5013 SCH 1 reconciling book income to net income for tax purposes, T5013 SCH 50 showing each partner’s ownership and account activity, and a slip for every limited partner. Alongside it run the general partner corporation’s T2, the management company’s T2 and payroll, GST34 where the management fee is a taxable supply, Form T1135 on foreign portfolio holdings, and the at-risk computation behind every allocated loss. These are the areas CRA looks at first on a fund file.

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Year-End Deliverables for Venture Capital Firms

At year-end a venture fund needs a trial balance and financial statements that carry each portfolio position at a documented fair value rather than at original cost, with uncalled commitments and any subscription facility disclosed in the notes, a capital account statement for every limited partner, and an allocation schedule that ties the waterfall in the agreement to the slips filed. The general partner corporation and the management company each need their own statements and T2 with GIFI. Your institutional limited partners read the capital account and the fair value note before they read anything else. Our team prepares every deliverable on time.

Accounting & Tax Experts for Venture Capital Firms

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Why Choose Our Accounting Services for Venture Capital Firms?

1
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Tax Planning — ACB, At-Risk & the CDA

We track adjusted cost base under ITA paragraphs 53(1)(e) and 53(2)(c), compute the at-risk amount under ITA subsection 96(2.2), and move gains out of a corporate partner through the capital dividend account on Form T2054.

2
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Consulting — Waterfall, Carry & Capital Calls

We map your return of capital, preferred return, general partner catch-up and carry split onto real allocations, model the drawdown schedule against uncalled commitments, and read the agreement rather than assume it.

3
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CRA Representation — Partnership Audits

When CRA challenges a partner allocation, an at-risk claim or a negative cost base, we produce the working papers and pursue relief on Form RC4288 where a prior adviser’s omission caused the penalties.

4
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Bookkeeping — Fund Reporting & Fundraising

We produce the capital account statements and fair value notes your limited partners read, the compiled statements your bank reads, and the clean track record the next fund’s data room needs.

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★
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ACTIVELY ACCEPTING
Venture Capital Clients
Includes personal T1 filing for you and your family
Convenient Availability
Weekend and evening support until 9 PM
Always Within Reach
Just a call away when you need us

Venture Capital Firm Tax and Accounting Services in Ontario

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Partnership and Corporate Tax Filing (T5013 and T2) for Venture Capital Firms

T5013 preparation with a slip for every limited partner, plus the general partner corporation and management company T2 returns, filed on time.

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Fund Accounting & Bookkeeping for Venture Capital Firms

A capital account per limited partner, every call and distribution posted, adjusted cost base by round, and financial statements from clean records.

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Capital Account & Cost Base Cleanup for Venture Capital Firms

Rebuilt partner capital accounts, adjusted cost base restated from the first close, at-risk computations prepared, and negative balances found before CRA does.

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GST/HST Filing for Venture Capital Firms

AFFORDABLE HST filing with the management fee analysed against what is actually supplied, and input tax credits claimed only where they belong.

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Tax Planning for Venture Capital Firms

Waterfall and carried interest mapped to real allocations, the capital dividend account computed, and the exit planned years before the term sheet.

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Partnership Catch-Up Filing for Venture Capital Firms

File overdue T5013 and T2 years, rebuild the missing capital accounts and allocations, and get back into CRA compliance with accurate catch-up support.

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CRA Audit Resolution for Venture Capital Firms

Expert support on at-risk challenges, allocation reviews, negative cost base and fair value queries, handled with confidence from the first letter.

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CPA Financial Statements (Notice to Reader) for Venture Capital Firms

CSRS 4200 compiled statements your bank accepts, with fair value support that stands up when an auditor or a reviewer tests the estimate.

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Incorporation & Fund Structure Setup for Venture Capital Firms

General partner corporation and management company incorporated, chart of accounts and waterfall model built, and CRA program accounts opened before the first close.

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Catch-Up Bookkeeping Services for Venture Capital Firms

Years of capital calls, distributions, follow-on rounds and expense allocations reconstructed and reconciled, so your partner capital accounts are finally accurate.

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US Corporation & LLC Tax Filing for Venture Capital Firms

Cross-border filing on US portfolio holdings and non-resident partners, covering Form T1135, withholding questions and the coordination US principals need.

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Voluntary Disclosure Program for Venture Capital Firms

Come forward on unfiled T5013 returns, unreported deemed gains or HST on the wrong side of the line, cancelling penalties through a Voluntary Disclosures Program application.

Accounting & Tax Services Tailored for Venture Capital Firms

Real, practitioner-level CPA expertise for seed stage funds, micro venture funds, sector-focused funds and corporate venture arms across Ontario — built for a limited partnership that holds other people’s committed capital in assets with no market price.

  • We prepare the fund’s T5013 partnership information return with the T5013 FIN financial return and GIFI on Schedule 100 and Schedule 125, so management fees, realized gains and portfolio write-offs reach CRA on the lines its matching reads.
  • We complete T5013 SCH 1 to reconcile accounting income to net income for tax purposes, backing out the unrealized fair value movement that drives your limited partner report but is not a taxable amount in any year.
  • We file a T5013 slip for every limited partner showing that partner’s share of income, loss, capital gains and carrying charges, because a partner cannot file a correct T1 or T2 until your slip is right.
  • We file the partnership return on time, because the late-filing penalty runs at $25 per day to a maximum of $2,500 and every limited partner is left waiting on a slip their own return cannot be completed without.
  • We prepare the general partner corporation’s and the management company’s T2 returns, keeping management fee revenue on active business lines so the $500,000 small business deduction under ITA section 125 is not quietly lost.
  • We maintain a capital account for every limited partner in Juniper Square or Allvue, posting each capital call, allocated income, allocated loss and distribution, because that ledger is the only place adjusted cost base can come from.
  • We track each capital commitment against cumulative drawdowns so you know exactly what remains uncalled, which is the number a subscription lender underwrites and the number an institutional limited partner asks for every quarter.
  • We carry each portfolio position at adjusted cost base by round in Carta, separating the seed cheque from the follow-on so a partial exit or a secondary is measured against the right cost rather than a blended average.
  • We record the management fee, fund administration charges and diligence costs against the fund or the management company exactly as the limited partnership agreement allocates them, so the J-curve your limited partners see matches the ledger.
  • We capture legal, diligence, travel and software invoices through Dext and reconcile monthly, keeping the six years of records ITA section 230 requires and handing your auditor a file that does not have to be rebuilt in March.
  • We rebuild each limited partner’s adjusted cost base from the first close under ITA paragraph 53(1)(e) for contributions and allocated income and ITA paragraph 53(2)(c) for allocated losses and distributions taken out of the fund.
  • We test every limited partner interest for a negative adjusted cost base at each fiscal period end, because ITA subsection 40(3.1) deems a capital gain the moment it falls below zero and a distribution-heavy fund gets there quietly.
  • We prepare the at-risk computation for each limited partner under ITA subsection 96(2.2), because ITA subsection 96(2.1) caps the loss a limited partner may deduct and that working paper is the first thing a CRA auditor asks to see.
  • We carry the disallowed excess forward as a limited partnership loss under ITA paragraph 111(1)(e), so a loss capped this year stays available against future income from the same fund rather than being lost outright and forgotten.
  • We restate positions carried at original cost onto a documented fair value basis with every input recorded, so the number in the financial statements and the number in the limited partner report finally agree with each other.
  • Acquiring, holding and disposing of shares and notes is a financial service under ETA subsection 123(1) and exempt, so the fund recovers no input tax credits and the 13% on legal and diligence is a permanent cost.
  • We review the management fee against the management agreement and against what is actually being supplied, because a management or administrative service is not automatically the exempt financial service everyone in the fund assumes it is.
  • We test transaction, monitoring and board fees charged to portfolio companies separately from the fund’s own activity, and register the management company once taxable revenue passes $30,000 over four consecutive calendar quarters.
  • We file GST34 returns on time for whichever entity is registered and claim input tax credits only where they genuinely belong, because credits claimed by a vehicle making exempt supplies come straight back on a CRA review.
  • We quantify the unrecoverable HST on fund formation, administration, audit and dead-deal diligence so the management fee budget carries it as a real cost rather than discovering the gap three years into the fund.
  • We read the distribution waterfall in your limited partnership agreement line by line, mapping return of capital, the preferred return, the general partner catch-up and the carry split onto the allocations the T5013 will actually report.
  • We review the carried interest allocation against ITA subsection 103(1), because an allocation among partners that the agreement does not support is exactly what CRA recasts, and the agreement is the only evidence that answers it.
  • We plan the exit at least two years ahead so portfolio shares can meet the qualified small business corporation tests behind the $1.25M Lifetime Capital Gains Exemption under ITA section 110.6 where those shares qualify at all.
  • We compute the capital dividend account under ITA subsection 89(1) for every corporate partner and file the Form T2054 election before the dividend becomes payable, moving the non-taxable half of a realized gain out tax-free.
  • We watch ITA subsection 125(5.1) where a management company also holds a portfolio, because adjusted aggregate investment income above $50,000 grinds the business limit down and $150,000 eliminates it entirely.
  • We file your oldest unfiled T5013 first, because the $25 per day penalty compounds to its $2,500 maximum on every outstanding year while each limited partner sits without the slip their own return depends on.
  • We rebuild the missing capital accounts, allocations and distributions across the unfiled years from bank records, capital call notices and the Juniper Square ledger, so every partner’s adjusted cost base is finally supportable on paper.
  • We recompute at-risk amounts across the backlog, because a limited partner who deducted a full share of losses in a year ITA subsection 96(2.1) capped them is carrying a reassessment nobody has warned him about.
  • Late corporate filing costs 5% of the balance owing plus 1% per month up to twelve months, so we bring the general partner corporation and the management company current before the arrears interest compounds any further.
  • We file a Voluntary Disclosures Program application on Form RC199 before CRA contacts you, because a disclosure accepted under the general program cancels penalties in full and gives roughly 50% interest relief on the older years.
  • When CRA challenges a limited partner’s loss, we produce the at-risk computation under ITA subsection 96(2.2) with the capital call records and the agreement behind it, because that working paper is where a partnership audit always begins.
  • When CRA tests a negative adjusted cost base, we show the complete ITA paragraph 53(1)(e) and 53(2)(c) history for that partner rather than leaving a reviewer to assume the ITA subsection 40(3.1) gain was simply never reported.
  • When an allocation is questioned under ITA subsection 103(1), we produce the limited partnership agreement, the waterfall calculation and the capital accounts showing the allocation follows the deal rather than the tax result it happens to produce.
  • We defend fair value on your unquoted positions with the round documents, the inputs and working papers referenced to the IPEV guidelines, because an unsupported valuation is where a CRA reviewer starts and where an auditor stops.
  • We file the Notice of Objection within 90 days of a reassessment and pursue taxpayer relief on Form RC4288, protecting your Tax Court rights and cancelling penalties and interest a prior adviser’s omission caused across several years.
  • We prepare CSRS 4200 compilation engagement financial statements for the management company and the general partner corporation, which is what a bank reads before advancing the operating facility that funds payroll between capital calls.
  • Where the limited partnership agreement requires more, we scope a CSRE 2400 review engagement or support the audit, because an institutional limited partner’s side letter usually decides the engagement level long before the manager does.
  • We measure each portfolio position at fair value with the inputs, the round evidence and the methodology recorded, because under CAS 540 an auditor tests the estimate and its inputs, not the number written in a spreadsheet.
  • We disclose uncalled commitments, the capital call schedule and any subscription facility in the notes, because a balance sheet showing only drawn capital understates what your limited partners are actually committed to fund.
  • We deliver the statements and the limited partner reporting package on the ILPA template within 30 days of the year-end close, because a fundraise for the next fund does not wait on a slow accountant.
  • We incorporate the general partner corporation under the Ontario Business Corporations Act and set up the management company alongside it, so liability, the management fee and the carried interest each sit where the agreement actually puts them.
  • We work alongside your counsel as the Declaration of Limited Partnership is filed under the Ontario Limited Partnerships Act and diarize the five-year renewal, because a lapsed declaration is discovered at the worst possible moment in a financing.
  • We test fund formation and unit issue costs against the five-year write-off in ITA paragraph 20(1)(e) rather than expensing a six-figure legal bill in year one and hoping no reviewer ever opens the file.
  • We build the chart of accounts, the partner capital account structure and the waterfall model in Allvue or Juniper Square before the first close, so the records accumulate correctly from the very first capital call.
  • We open CRA program accounts for the partnership, the general partner corporation and the management company within the first 30 days, including payroll for the investment team and HST where the management fee is taxable.
  • We rebuild months or years of fund books from bank records, capital call notices, subscription agreements and closing binders, so a fund that raised and deployed before it hired an accountant finally has a clean ledger.
  • We reconstruct the adjusted cost base of every position round by round from term sheets and share certificates, which is almost always missing when we inherit a venture fund that has already done two or three follow-ons.
  • We rebuild the limited partner capital accounts from the first close forward, because a fund cannot issue a defensible T5013 slip or compute a single partner’s adjusted cost base without them existing first.
  • We reconstruct the fair value history year by year with the round evidence behind each mark, so the restated statements show a defensible J-curve rather than a straight line somebody drew backwards from today.
  • We reconcile management fees, fund administration charges and expense allocations between the fund and the management company across the caught-up periods, so each entity’s T5013 or T2 reports the costs it actually bore.
  • We file Form T1135 where foreign portfolio holdings pass the $100,000 cost threshold, a penalty regime CRA applies whether or not any tax was actually owing on the US positions being reported.
  • Where the fund or a partner holds an interest in a foreign affiliate, we identify the T1134 obligation and the T106 reporting on non-arm’s-length non-resident transactions rather than discovering both inside a CRA audit letter.
  • Where a limited partner is a non-resident, we raise the Part XIII withholding, NR4 reporting and section 116 clearance questions with the fund’s counsel before a distribution or a disposition is made, not afterwards.
  • Where a US citizen is a partner or a principal of the firm, we coordinate the Canadian and US filings, because US reporting reaches into a Canadian limited partnership in ways most managers discover far too late.
  • We reconcile the Canadian and US positions so foreign tax credits actually land, ensuring tax paid on the same realized gain in one country offsets tax in the other rather than becoming an unrecovered cost.
  • We bring the fund forward on T5013 returns that were never filed at all, because the $25 per day penalty and the partner-level exposure both sit behind a partnership return nobody believed was required.
  • We disclose deemed gains under ITA subsection 40(3.1) that went unreported when limited partner cost base ran negative, because the gain does not disappear and the penalty for catching it late is exactly what a disclosure removes.
  • We correct HST charged or recovered on the wrong side of the ETA subsection 123(1) line across several years, a quiet cumulative error and one of the first things a GST reviewer tests on a fund file.
  • We file the RC199 submission with a full reconstruction from capital call notices, the fund administrator’s records and bank statements, so a manager who outgrew his bookkeeping is not left facing an arbitrary CRA assessment.
  • We confirm the disclosure is genuinely voluntary before CRA contacts you, the single condition that makes it valid, and secure roughly 50% interest relief on the older years, turning real exposure into a managed correction.

Venture Capital Fund Structure & Tax Check

Six quick questions on your partner capital accounts, your cost base, your at-risk computations, your portfolio valuation, your management fee HST and your general partner corporation. No fee shown.

1. Do you maintain a capital account for every limited partner in the fund?

2. Has each partner’s adjusted cost base been tested for a negative balance?

3. Is an at-risk computation prepared for every limited partner each year?

4. Are portfolio positions carried at a documented fair value rather than at cost?

5. Has the HST treatment of your management fee been analysed?

6. Is your general partner corporation incorporated and filing its own T2?

Free CPA Consultation for Venture Capital Firms

Case Studies: Venture Capital Accounting & Tax

Toronto Seed Fund — The Capital Accounts Nobody Kept

The problem: A Toronto seed fund had closed on eleven limited partners, called capital four times, taken two early exits and distributed the proceeds. In five years nobody had ever posted a capital account. Contributions, allocated income, allocated losses and distributions existed only as bank entries, so no partner’s adjusted cost base could be computed. Three limited partners had received distributions exceeding everything allocated to them, which meant their interests had gone below zero and ITA subsection 40(3.1) had deemed a capital gain in a year none of them reported one.

What we did: We rebuilt every capital account from the first close using ITA paragraph 53(1)(e) and ITA paragraph 53(2)(c), identified the exact period each interest went negative, and filed a Voluntary Disclosures Program application on Form RC199 reporting the deemed gains in the correct years before CRA raised them.

The result:

  • $14,200 in penalties cancelled through the disclosure
  • Eleven capital accounts rebuilt from the first close
  • Cost base now tested at every fiscal period end

Vaughan Management Company — The Fee Nobody Analysed

The problem: A Vaughan firm ran a management company that billed a management fee to its fund under a written management agreement, employed four people and leased an office. It had never registered for HST and had never looked at what it was actually supplying. Every dollar of HST it paid on rent, legal work, fund administration, software and professional fees was absorbed as a cost, on the assumption that anything touching a fund must be an exempt financial service and therefore nothing could ever be recovered.

What we did: We reviewed the management agreement against what the company actually supplied, concluded the arrangement supported registration for this client, registered the management company, and filed the open periods claiming the input tax credits on its own operating costs.

The result:

  • $27,850 of input tax credits recovered on open periods
  • Supply analysis documented against ETA subsection 123(1)
  • GST34 returns now filed on the correct entity

Ottawa Micro Fund — Nineteen Positions Marked at Cost

The problem: An Ottawa micro venture fund held nineteen positions and carried every one of them at the price it originally paid. The quarterly limited partner report was assembled by hand in spreadsheets and took roughly 40 hours each quarter, and it did not agree with the annual financial statements, because the statements used a different set of numbers again. Two companies had raised priced rounds at materially higher valuations and two had ceased operating entirely, and none of that appeared anywhere.

What we did: We moved the fund ledger into Juniper Square with Carta feeding the portfolio cap tables, documented a fair value input set for each of the nineteen positions with the round evidence attached, and rebuilt the capital accounts so partner statements and the financial statements come from one source.

The result:

  • Quarterly reporting cut from 40 hours to 6 hours
  • Nineteen positions marked with documented inputs
  • Partner statements and financial statements finally agree

Our Simple Process

How We Work With Venture Capital Firms

Know Exact Fees within 2 Minutes NOW

Our clear, efficient process ensures every step is transparent, building trust and long-term client relationships.

Here’s a simplified process approach:
Step 1

Kickoff (Document Request)

Collect the limited partnership agreement and side letters, the Declaration of Limited Partnership, subscription agreements and commitment schedule, capital call and distribution notices, closing binders and term sheets, prior T5013 and T2 returns, and bank statements.

Step 2

First 30 Days (Cleanup & Setup)

Set up Juniper Square or Allvue against QuickBooks Online or Xero, rebuild a capital account for every limited partner, restate adjusted cost base by round from Carta, and prepare the first at-risk computations.

Step 3

Monthly Close

Capital calls and distributions posted to partner accounts, management fee and fund administration charges allocated to the right entity, expenses captured through Dext, and GST34 filed where the management company is registered.

Step 4

Quarterly Planning Review

Fair value refresh on every position with inputs documented, negative cost base tested under ITA subsection 40(3.1), waterfall and carried interest modelled against the agreement, and the limited partner report issued on the ILPA template.

Step 5

Year-End Close & T5013 Filing

Trial balance, financial statements with uncalled commitments disclosed, at-risk computations finalised, allocations agreed to the waterfall, T5013 with a slip for every limited partner, and the general partner and management company T2 returns.

Get Your Venture Capital Firm Taxes Done Right Today

Transparent Pricing for Venture Capital Firms

Affordable Pricing for Venture Capital Firms

Know Exact Fees within 2 Minutes NOW

We believe in clear, upfront pricing so you know exactly what to expect. All fees include HST.

  • Tax Preparation (Corporation) — From $400
  • Tax Return Filing (Corporation) — From $400
  • Tax Compliance Audit — FREE CRA audit support for our clients
  • Tax Strategy — FREE for our clients
  • Accounting Base Plan — From $100 per month
  • Bookkeeping Management — Free for our Accounting clients
  • Financial Reporting — Free for our Accounting clients
  • Business Formation — Flat $35
  • Incorporation Process — Flat $35
  • Entity Setup Assistance — Flat $35
  • Full-Service Payroll — From $125 per month

Payment is by Interac e-Transfer to info@gondaliyacpa.ca only. Security question: Not Applicable, as auto-deposit is enabled.

Meet Your Lead Venture Capital Accountant

Meet your lead venture capital accountant. As your fund and corporate tax adviser, you deal with the same two people every year.

Sharad Gondaliya CPA

Sharad Gondaliya, CPA

Principal

Bio

647-212-9559
sharad@gondaliyacpa.ca

Vandana Goel CPA

Vandana Goel, CPA

Accounting Specialist

Bio

647-250-0242
vandana@gondaliyacpa.ca

What Our Clients Say

1300+ five-star reviews from fund managers, investors and business owners across Ontario and Canada.

Serving Venture Capital Firms Across Ontario

Our CPA team provides specialized accounting and tax solutions for venture capital firms, fund managers and general partner corporations throughout Ontario. We understand how a capital call moves through a partner’s capital account, why adjusted cost base can go below zero, how a fair value on a private position has to be evidenced, and what CRA looks at first when it opens a limited partnership file.

Toronto (ON)

55 Queen St E Ste 1205, Toronto, ON M5C 1R6, Canada

+1 (647) 212-9559

9:00 AM – 8:30 PM (Mon – Sun)

Mississauga (ON)

2100 Camilla Rd #716, Mississauga, ON L5A 2J8

+1 (647) 212-9559

9:00 AM – 8:30 PM (Mon – Sun)

Brampton (ON)

4 Starhill Crescent, Brampton, ON L6R 2P9, Canada

+1 (647) 212-9559

9:00 AM – 8:30 PM (Mon – Sun)

Scarborough (ON)

24 Clementine Square, Scarborough, ON M1G 2V7, Canada

+1 (647) 212-9559

9:00 AM – 8:30 PM (Mon – Sun)

Vaughan (ON)

19 Cabinet Crescent, Woodbridge, ON L4L 6H9, Canada

+1 (647) 212-9559

9:00 AM – 8:30 PM (Mon – Sun)

Oshawa (ON)

210 Durham St, Oshawa, ON L1J 5R3, Canada

+1 (647) 212-9559

9:00 AM – 8:30 PM (Mon – Sun)

Ottawa (ON)

2090 Neepawa Ave a314, Ottawa, ON K2A 3L6, Canada

+1 (647) 212-9559

9:00 AM – 8:30 PM (Mon – Sun)

Etobicoke (ON)

60 Stevenson Rd #1601, Etobicoke, ON M9V 2B4, Canada

+1 (647) 212-9559

9:00 AM – 8:30 PM (Mon – Sun)

Hamilton (ON)

70 Starling Dr, Hamilton, ON L9A 0C5, Canada

+1 (647) 212-9559

9:00 AM – 8:30 PM (Mon – Sun)

Guelph (ON)

1155 Gordon St, Guelph, ON N1L 1S8, Canada

+1 (647) 212-9559

9:00 AM – 8:30 PM (Mon – Sun)

Windsor (ON)

4387 Guppy Ct, Windsor, ON N9G 2N8, Canada

+1 (647) 212-9559

9:00 AM – 8:30 PM (Mon – Sun)

North York (ON)

150 Graydon Hall Dr #912, North York, ON M3A 3B2, Canada

+1 (647) 212-9559

9:00 AM – 8:30 PM (Mon – Sun)

Venture Capital Accounting & Tax FAQs

Should I incorporate a general partner corporation for my venture capital fund?
Almost every Canadian venture fund is structured with one, and for good reason. A general partner has unlimited liability for the obligations of the limited partnership, so putting an Ontario Business Corporations Act corporation in that seat keeps the exposure away from the individuals running the firm. The corporation also gives the carried interest and the management fee somewhere defined to land, which matters because the characterization of carry depends on the agreement and on who holds it. A corporation earning active management fee income gets roughly the 12.2% Ontario combined rate on the first $500,000 under ITA section 125, against a personal rate reaching 53.53%. It has real obligations in return: its own T2, its own financial statements, a minute book and payroll for the investment team. It is also what a bank underwrites when it advances the operating facility that funds payroll between capital calls. We set up the general partner corporation and the management company together and keep both filing properly.
How is a venture capital fund taxed in Canada?
A limited partnership is not itself a taxpayer. Income and loss are computed at the partnership level under ITA subsection 96(1) as though the partnership were a separate person, then allocated out to each partner, who reports that share on their own return. Character flows through: a capital gain allocated by the fund stays a capital gain in the partner’s hands, and carrying charges stay carrying charges. That is why the T5013 slip matters so much, because it is the only document telling each limited partner what to report. It also means the fund’s fiscal period, not the partner’s, drives when an amount is included. Whether a particular fund’s gains are capital gains under ITA section 38 or business income under ITA section 9 is a question of fact on frequency, holding period, financing and conduct, and we review it rather than assume it.
When does my fund have to file a T5013, and what happens if it is late?
A limited partnership that meets CRA’s filing criteria has to file the T5013 partnership information return with the T5013 FIN financial return and the supporting schedules, including SCH 1 reconciling book income to net income for tax purposes and SCH 50 showing each partner’s ownership and account activity, plus a slip for every partner. The penalty for filing late runs at $25 per day, with a minimum of $100 and a maximum of $2,500. The larger cost is not the penalty. Every limited partner is waiting on a slip they cannot file their own T1 or T2 without, and a fund that makes its institutional investors late twice does not raise a second fund easily. If returns have never been filed, they can be brought forward on Form RC199 through the Voluntary Disclosures Program, which is a far better outcome than an assessment.
How do I allocate fund income and losses to limited partners?
You allocate the way the limited partnership agreement says, and then you evidence it. Income and loss are computed once at the partnership level, then split among the partners according to the agreement, which normally tracks the waterfall: return of capital, the preferred return, the general partner catch-up, then the carry split on the balance. ITA subsection 103(1) lets CRA recast an allocation where its principal reason appears to be reducing tax rather than reflecting the deal, so the agreement and the waterfall calculation are the evidence that protects you. In practice the allocation is only as good as the capital accounts behind it. If contributions, allocations and distributions have never been posted per partner, the allocation cannot be supported and neither can anyone’s adjusted cost base. We build both.
What are the at-risk rules and how do they cap a limited partner’s loss?
ITA subsection 96(2.1) limits the loss a limited partner can deduct in a year to that partner’s at-risk amount, computed under ITA subsection 96(2.2). Broadly, the at-risk amount reflects what the partner genuinely has on the line: the adjusted cost base of the interest, adjusted for amounts owing to the partnership and for any benefit or guarantee protecting the partner against loss. The point of the rule is that a passive investor should not be able to deduct losses beyond real economic exposure. The excess is not destroyed; it becomes a limited partnership loss carried forward under ITA paragraph 111(1)(e) and remains available against future income from the same partnership. A fund’s early years produce losses by design because the management fee runs before any gain exists, so this computation is needed every single year. Whether a given partner is a limited partner for this purpose is tested on the facts and the agreement.
What happens when a limited partner’s adjusted cost base goes negative?
ITA subsection 40(3.1) deems a capital gain to the limited partner at the end of the fund’s fiscal period to the extent the adjusted cost base of the interest is negative. This is the single most missed item we find on venture fund files, because nothing announces it. Adjusted cost base goes up under ITA paragraph 53(1)(e) for contributions and allocated income, and down under ITA paragraph 53(2)(c) for allocated losses and for every distribution taken out. A fund that returns capital after an early exit, while still allocating losses from the management fee, can push a partner below zero without anybody noticing. The gain is real, it is reportable in that year, and it is found later with penalties and interest attached. We test every interest at every fiscal period end.
How do I value a private portfolio company for the financial statements?
You measure it at fair value and you evidence the estimate. A venture fund holds shares with no market price, so the number in your limited partner report is a judgment supported by inputs: the most recent priced round and who led it, the terms and liquidation preference attaching to your class, subsequent financing or the absence of it, revenue and operating performance, and comparable transactions where any exist. The IPEV guidelines are the reference most Canadian funds use, and under IFRS the fair value hierarchy in IFRS 13 puts these positions in Level 3 on unobservable inputs. Which framework applies to your fund, whether ASPE with AcG-18 or IFRS, is settled in the engagement. What we never do is tell you that one methodology is the right answer for a given holding. We document the inputs, because under CAS 540 an auditor tests the estimate and the inputs behind it, not the number itself.
Does my fund need an audit, a review or a compilation?
It is usually the limited partnership agreement that decides, not the law. Institutional limited partners and pension investors commonly require audited fund financial statements and say so in the agreement or in a side letter, and once that is signed the requirement is contractual. A CSRE 2400 review engagement is the middle option where the investor base allows it, and a CSRS 4200 compilation is what we normally prepare for the general partner corporation and the management company, which is also what a bank reads before advancing an operating facility. The practical point is to read the agreement before the first close rather than after, because retrofitting an audit onto a fund with no capital accounts and no valuation file is expensive. We scope the engagement level against what you have actually signed.
How is carried interest taxed in Canada?
It depends entirely on the agreement, and anybody who answers it in one line has not read yours. Carried interest can be structured as an allocation of partnership income to a carry vehicle that is itself a partner, as a fee for services, or as a return on capital the general partner actually invested, and the tax consequences differ in each case. Where it is an allocation, character flows through from the partnership and ITA subsection 103(1) is live if the allocation does not follow the deal. Where it looks like remuneration, it is taxed very differently. Who holds the carry, whether it is a corporation or individuals, and whether the holder is resident all change the answer. We read the limited partnership agreement and the carry documents and give you a position with the reasoning written down, rather than a rule of thumb.
How does the distribution waterfall work?
A waterfall is just an order of payment, and the order is in your agreement. Proceeds from an exit typically go first to return drawn capital to the limited partners, then to pay the preferred return on that capital, then through a general partner catch-up, and only then are split so the general partner receives the carried interest. The reason it matters for accounting is that the waterfall drives the allocation, the allocation drives every T5013 slip, and the slip drives each partner’s adjusted cost base. Most funds also carry a clawback so that carry paid early on a winner is returned if the fund as a whole does not clear the hurdle by the end of its life. We model the waterfall from your own agreement and tie it to the capital accounts, so the numbers reported to your investors and the numbers filed with CRA come from the same calculation.
Do I charge HST on the management fee, and can the fund claim input tax credits?
These are two questions and they have different answers. The fund’s own activity, acquiring and disposing of shares and debt, is a financial service under ETA subsection 123(1) and exempt under Part VII of Schedule V, so the fund claims no input tax credits and the 13% on legal, diligence, administration and audit is an unrecoverable cost of every deal, including the deals that die. A management fee charged by a management company under a management agreement is a different supply, and a management or administrative service is not automatically an exempt financial service just because a fund is on the other side of the invoice. We review what is actually being supplied against the agreement before anything is charged or claimed, because getting it wrong in either direction is expensive. Registration follows once taxable revenue passes $30,000 over four consecutive calendar quarters.
What can a venture capital firm and its management company write off?
At the management company: investment team salaries, bonuses and benefits, office rent, directors and officers insurance on board seats, deal sourcing travel and conference costs, Carta, Juniper Square, Affinity and Standard Metrics subscriptions, CVCA and ILPA dues, legal and professional fees, and technology. On capital, laptops and servers go to Class 50 at 55%, office furniture to Class 8 at 20%, application software to Class 12 at 100%, the office leasehold to Class 13 over the lease term, and an acquired management contract to Class 14.1. At the fund itself the picture is different, because the portfolio is capital property rather than depreciable property and there is no capital cost allowance pool at all. Fund formation and unit issue costs are tested against the five-year write-off in ITA paragraph 20(1)(e), and investment counsel fees against ITA paragraph 20(1)(bb), rather than simply expensed.
What happens when a portfolio company fails, and how do I wind up the fund?
Most positions in a venture portfolio go to zero and a few carry the whole fund, so the treatment of a failure is ordinary business here rather than an exception. What the write-off produces depends on what the fund held, whether shares or debt, on the issuer’s status at the time, and on who ultimately reports the loss, because the fund allocates it out rather than using it. The conditions in ITA paragraph 39(1)(c) and the election in ITA subsection 50(1) are the provisions we test the facts against, and we evidence them at the time rather than reconstructing them years later. At the end of the fund’s life, the wind-up rules in ITA section 98 govern the final distribution of remaining positions and cash to the partners, and the final T5013 and slips have to be filed even in the year the partnership ceases. We plan the termination rather than letting it happen.

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Venture Capital Accounting & Tax Done Right.

T5013 partnership returns with a slip for every limited partner, a capital account maintained from the first close, adjusted cost base built under ITA paragraphs 53(1)(e) and 53(2)(c) and tested for the deemed gain in ITA subsection 40(3.1), at-risk computations under ITA subsection 96(2.2) behind every allocated loss, portfolio positions carried at a documented fair value an auditor can test under CAS 540, and the distribution waterfall read from your own agreement. AFFORDABLE flat fees, no hourly billing. Licensed CPA Ontario. 1300+ five-star reviews. 30-Day Money-Back Guarantee.



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