Pick a year-end the punch list can respect
A corporation chooses its first fiscal year-end, and for a renovation firm that choice is worth real money in predictability. Land the year-end in the middle of your completion crunch and every year closes with half-finished stages, judgement calls on what was signed off, and a tax bill that swings with a single project's schedule. Land it after the rush, when projects are closed and counted, and the year-end becomes arithmetic instead of argument. GTA firms that push hard to finish before the holidays usually want a year-end sitting well clear of December.
Timing works inside the year too. The final stage of a project is income when it is signed off, so a punch list genuinely completed in the first week of the new fiscal year belongs there, not in the old one. That is not a trick; it is the accounting following the work. What we will not do is paper a finished project as unfinished, and a renovator who keeps clean stage records never needs to.
The same project schedule drives the tax reserve. Every punch list signed adds a knowable slice of corporate tax to the year, so we hold back a percentage of each closed project's margin into a tax reserve as it closes. A completion-heavy autumn then funds its own tax bill, instead of borrowing from next spring's deposits to pay for last year's profit.
Owner pay in a design-and-build household
Many kitchen and bath firms are run by a couple: one sells and designs, one runs the sites. When both genuinely work in the business, the planning space opens up. Salary to either spouse is deductible to the company and builds RRSP room and CPP; dividends flex between lumpy years and can be declared when a completion-heavy year calls for them. TOSI is the fence: dividends to a family member who does not really work in the business are taxed at top rates, but someone averaging 20 hours a week in the year, or who did in any five earlier years, sits inside the excluded-business carve-out. The selections meetings, the design files and the showroom calendar are the evidence. We set the mix before the fiscal year closes, because after that it is history, not planning.
Where renovator capital lands in the CCA schedule
A design-build firm carries more capital than it thinks, and each piece depreciates on its own schedule:
| Asset | CCA treatment |
|---|---|
| Crew vans and pickups | Class 10 at 30% declining balance |
| Display kitchens and bath vignettes in the showroom | Class 8 at 20%; capital assets, not project cost |
| Showroom leasehold fit-out | Class 13, straight-line over the lease term |
| Design workstations and laptops | Class 50 at 55% |
| Small tools under $500 | Deducted in full in the year |
Two habits matter more than the percentages. First, an asset earns CCA only once it is available for use, so a display ordered in March but installed after year-end claims nothing this year. Second, display kitchens bought from your own suppliers have a way of getting coded into project costs, which both misstates per-project margins and books a capital asset as an expense; we keep the showroom on the balance sheet where it belongs, depreciating on its own line.
Elections and traps, settled on purpose
The HST quick method looks tempting and almost never suits a renovator: it is capped at $400,000 of annual taxable revenue, and it surrenders input tax credits on materials, keeping them only for capital purchases. A firm buying cabinets, stone and fixtures gives up far more in credits than the reduced remittance rate returns, so we run the arithmetic before anyone elects anything.
The sharper trap is the project done on your own account. Buy a property, renovate it and sell, and the profit is business income, fully taxable; sell within 365 days of buying and the residential anti-flipping rule deems it business income with no principal-residence claim, outside a short list of life-event exceptions. Whether that project belongs in the company or in personal hands changes which return takes the hit, and it is a question for Tax Planning and Advisory before the offer goes in, not for personal tax filing after the closing.
We run these conversations quarterly against your project schedule, so the year still has room to move when we meet, and the T2 simply records decisions already made. Scope and fee come in writing once a free 15-minute discovery call confirms the fit.
