Cash the CRA can believe
The CRA does not need your sales journal to assess a restaurant. Where records look thin, auditors may rebuild income indirectly: a net-worth assessment compares what the owners spend and own against what the business reported, a bank-deposit analysis totals every credit and asks you to explain the rest, and a mark-up projection estimates bar revenue straight from liquor purchases and expected pour counts. Hospitality sees more of this than almost any other sector, because tills still see cash.
The defence is habit, not argument. Sales are deposited intact every banking day, with no supplier paid and no advance handed out of the drawer. Staff meals and manager discounts get logged when they happen, and the POS electronic journal is kept for the full six years the law requires, because a missing journal reads like suppression whether or not any took place.
On suppression the stakes are explicit. Penalties for using, or merely possessing, electronic sales suppression software start at $5,000 and reach $50,000 on a repeat, before any tax or gross-negligence penalties are added. If a POS reseller ever offers a mode that makes transactions disappear, that is the moment to call a CPA, not after.
| What an auditor tests | The habit that answers it |
|---|---|
| Bank deposits against reported sales | Intact daily deposits; nothing paid out of the till |
| Owner lifestyle against declared income | Every draw documented as salary, dividend or repaid loan |
| Liquor purchases against bar revenue | Pour-cost tracking with spillage and comp logs |
| The POS electronic journal | Audit trail retained six years; voids carry reason codes |
If a letter arrives anyway, CRA Audit & Review Support puts the reply in professional hands while the file is still a question rather than an assessment.
Owner pay from a thin margin
How you pay yourself moves the tax bill more than any deduction in the ledger. Salary is deductible to the corporation, creates RRSP room, builds CPP and gives a mortgage lender clean T4 income to read. Dividends skip CPP in both directions and can wait for the season to prove itself, which suits a room where January looks nothing like December. Profit the household does not need can stay behind, taxed at Ontario's combined small-business rate of roughly 12.2% on the first $500,000, and fund the next renovation at a lower tax cost.
The mistake we unwind most often is the shareholder loan account used as a till of last resort: cash from the drawer, groceries on the corporate card, a transfer marked temporary. A shareholder loan still outstanding one year after the corporation's year-end is pulled into personal income in full, with no matching deduction for the company. We set the salary-dividend mix each year inside Tax Planning & Advisory and file the owner's return through Personal Tax Filing, so the corporate and household sides are decided as one.
Instalments, and HST that was never yours
The 13% rung up at the register is trust money from the moment the card taps, and spending it as working capital is the fastest way a busy room slides into CRA debt. We set a weekly sweep: an amount sized from the POS closes moves to a separate account every Monday, so the remittance is already sitting there when the return is due.
Income tax runs on its own clock. Once a corporation's tax bill passes $3,000, the CRA expects instalments through the year, monthly by default and quarterly for small CCPCs with clean compliance records; annual HST filers cross into quarterly instalments at the same $3,000 line. Interest on missed instalments compounds daily and is not deductible, a pure margin leak. The plan puts every remittance date on one calendar and sizes each payment from current-year numbers rather than last year's guess.
Family on the payroll, done properly
Paying your spouse or teenager is legitimate the moment three tests are met: the work is real, the rate is what a stranger would earn for the same shifts, and the money actually moves, by payroll deposit rather than cash from the till. Timesheets and a short job description turn a deduction the CRA questions into one it accepts. Wages are also the clean route around TOSI: the tax on split income catches dividends paid to family and taxes them at the top rate unless an exclusion applies, and the most useful exclusion demands an average of 20 hours a week of genuine work in the year, or in any five earlier years.
One nuance is worth a formal ruling: family members employed by a family-controlled corporation are not always insurable for EI, so premiums may be refundable, or wrongly assumed. We check rather than guess.
A year-end chosen for the slow weeks
A new corporation picks its own fiscal year-end, and a restaurant should pick deliberately. Set it just after the peak and three things line up: the balance owing lands while the busy season's cash is still in the account, inventory counts happen in a quiet week, and bonus decisions are made knowing exactly what the peak earned. For restaurants across Mississauga and the GTA, the whole plan, owner pay, remittance calendar, family payroll and year-end, is quoted in writing after a free 15-minute discovery call.
