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The federal government, provinces, and tax authorities regularly adjust rules to respond to economic conditions, competitiveness concerns, and fiscal priorities. 

For businesses, especially small and medium-sized enterprises (SMEs), staying on top of these changes is no longer just a good practice - it’s a strategic necessity and something Joanne De Mederios, CPA, CA, SMCP, with Constella Strategy & Accounting Professional Corporation, will discuss at a Business Growth Series workshop on Dec. 18 (Thursday) at our office entitled Tax Tips: Year-End Strategies for Every Business Professional.

“One of the key things that I’m seeing a lot of is business operators not necessarily paying attention to the bookkeeping and their record keeping and how it is being done,” she says. “You would be surprised at how many times a prospective client comes to me and starts asking a question without even knowing what is that they are deducting.”

Understand your processes

Joanne says quite often, because they may be wearing many hats and are busy, they put their bookkeeping reliance on someone else, such as a family member, who may not do it every day.

“That can be a problem at the end of the day because the business owner is the one on the hook not the person preparing the books,” she says, adding waiting until the last minute to file can also lead to issues. “They could show up with a big box at tax time trying to get all their stuff together and then are surprised they have a tax bill at the end. My clients know what they are deducting because I have empowered them.”

Understanding your processes and tax changes are essential says Joanne when it comes to your bookkeeping and can lead to financial success.

Businesses that stay informed can reduce taxes, improve cash flow, take advantage of incentives, and avoid costly surprises. Those who ignore or delay keeping up with changes risk overpaying, missing out on benefits, and making strategic decisions based on outdated information.

Lean on the professionals

“Your numbers are telling you a story and when you understand that storyline you are actually in a better position to make some decisions, whether they are tax relevant or not,” she says, adding knowing the difference between a bookkeeper, a tax preparer and a tax strategy is also important.

“There are business owners who may be working with someone who does tax strategy but doesn’t have the credentials and are not registered with CPA Ontario. It doesn’t mean these people are bad at what they are doing but the onus is on the business owner to ‘connect the dots’ of their bigger picture to ensure they have professionals guiding them, so they don’t miss any opportunities.”

Misunderstanding the professionals they are working with and not communicating with them properly to bridge the gaps are common pitfalls business owners often make, says Joanne, noting that trying to pay next to nothing in taxes is never a realistic goal. 

“The ultimate goal is to maximize your after-tax cash flows and keep most of it in your pocket,” she says. “I’m hoping people leave the workshop feeling empowered and with some direction and maybe not just thinking about their taxes, but thinking about what they are building in 2026.”

Click here to register for our Business Growth Series workshop.

In terms of notable changes in the tax rules, Joanne outlines the following:

Updates to the 2025 personal tax brackets

The lowest federal tax bracket is decreasing, and a new Top-Up Tax Credit preserves the value of larger personal credits, like medical, tuition, and donations, etc.  This directly affects owner compensation strategies – specifically, how much to pay yourself in salary versus dividends to optimize tax and maintain credit value. For incorporated owners, it’s worth review this mix before year-end. 

Capital investment incentives

The new immediate expensing measure allows qualifying manufacturing or processing business to fully deduct the cost of constructing or acquiring eligible building upfront. For owners in trades, fabrication, food production, and similar sectors, this can significantly improve cash flow and reduce taxable income during major expansion years.

Quite relevant if someone is thinking about how they are growing and making a go/no-go decision on a capital expansion.  

Even for service-based businesses, it’s a nudge to think strategically about future growth and timing of capital investments.

Payroll cost increases (CPP Enhancements)

CPP costs are rising by about 5% year-over-year for both employers and higher-income employees. Not because the rate is changing, but because the wage ceilings are increasing. 

Owners will feel this through higher payroll costs and tighter margins. It may influence staffing plans, pricing decisions, and again, the balance between salary and dividends for owner-managers. It's a good reminder to not miss payroll expenses in a business’s forecast – wages are usually captured, but CPP and EI are usually missed, and they could be big enough to impact whatever decision you are making with that forecast. 

Business sale planning changes

The Canadian Entrepreneurs’ Incentive – which was expected to reduce capital gains on some business sales – has been cancelled. Any owner thinking about succession, transition, or a future sale should revisit tax planning. Without this incentive, more of the gain will be taxable, which affects timelines and valuation conversations.

Trust and reporting obligations tightening

Bare trust arrangements, common in family businesses and real estate situations, will require formal filing for the 2026 year. Many owners may have filing obligations they don’t realize – particularly if assets are held in one person’s name on behalf of another. It’s a compliance risk worth clarifying ahead of the 2026 filing deadlines.