Service
Personal Income Taxes
A return with one T4 on it is a form. A return with dividends, a rental property, a capital gain, and a foreign account on it is a set of decisions.
What this covers
Personal income tax work covers the T1 return and the planning around it: instalments, registered plan timing, capital gains and property reporting, foreign asset disclosure, and the interaction between what you take out of a corporation and what you pay personally. For an owner-manager the personal and corporate returns are one decision reported on two forms.
Who this is for
- Owner-managers whose personal return depends on corporate decisions
- Professionals and executives with income from several sources
- Individuals with rental property, a second property, or foreign holdings
- Executors filing a final return for someone who has died
What you end up with
The point of the exercise
A return that agrees with the company
Personal and corporate filings prepared together, so dividends, salary, and loan balances reconcile.
No interest for the avoidable reasons
Instalments set correctly and the April 30 payment date respected even where June 15 filing applies.
Someone to call about the letter
CRA review requests and adjustments handled directly rather than landing on your desk.
Personal Income Taxes in detail
Deadlines, and the one everybody gets wrong
The general filing deadline for a personal return is April 30. If you or your spouse carried on a business during the year, the filing deadline extends to June 15 — but the balance owing is still due April 30. Interest starts running on May 1 regardless of which filing deadline applies to you. This is the most common and most expensive misunderstanding in personal tax.
Instalments are the second. Where your net tax owing exceeds $3,000 in the current year and in either of the two preceding years, the CRA requires quarterly instalments on March 15, June 15, September 15, and December 15. Owner-managers who switch from salary to dividends frequently land in instalment territory for the first time and only discover it when the interest appears.
Property, and the reporting that is not optional
The principal residence exemption can eliminate the gain on a home, but claiming it requires reporting the disposition on the return, including a designation identifying the property and the years designated. Failing to report a disposition — even a fully exempt one — can attract penalties and, in some cases, an extended reassessment period.
Where a property was not your principal residence for the whole period you owned it, or where you held more than one property, the calculation apportions the gain across designated and non-designated years. Rental use, a change in use, or a period of non-residence each change the answer. This is worth getting right at the time, because the records needed to support a designation are usually decades old by the time anyone asks.
Foreign holdings
If the total cost of your specified foreign property exceeded $100,000 at any point in the year, Form T1135 is required. The threshold is cost, not market value, and it is cumulative across holdings — foreign shares held in a non-registered account, foreign bank deposits, and foreign real estate held for investment all count. Property held inside an RRSP, TFSA, or similar registered plan does not, and personal-use foreign property such as a vacation home you do not rent out is excluded.
The late-filing penalties for T1135 are among the harshest in the Act, and they apply per year. Where a filing has been missed, the voluntary disclosures programme is usually a better route than waiting.
The corporate connection
For an owner-manager, the personal return is downstream of decisions made inside the company: how much salary was paid, which dividend pool the distributions came from, whether the shareholder loan account was cleared, and whether the split income rules apply to amounts paid to a spouse or adult child.
Preparing both returns with a view of the whole picture is not a convenience — it is the only way the numbers reconcile. Eligible and non-eligible dividends carry different gross-up and credit treatment, and a dividend declared without checking the corporate pools can cost more personally than the corporation saved.
Alternative minimum tax, and other things that surprise people
The alternative minimum tax runs a parallel calculation with fewer deductions and credits, and charges the higher of the two results. The regime was substantially revised effective 2024, with a higher rate and a broader base, and it now bites hardest in a year with a large capital gain, significant use of the capital gains exemption, or substantial charitable donations of appreciated securities. Any amount paid can generally be carried forward and recovered against ordinary tax over the following seven years, but the cash goes out first.
Other items that regularly need attention in advance rather than at filing time: employee stock option timing, a capital gains reserve on a sale paid in instalments, the departure tax on ceasing Canadian residence, and the final return of a deceased individual, which has its own deadlines and its own opportunities.
Rules and thresholds change with each budget. This page describes the general framework and is not advice about your own return.
Diarise these
The deadlines that cost money
| Filing or payment | Due |
|---|---|
| T1 return — most individuals | April 30 |
| T1 return — self-employedFiling only. The balance owing is still due April 30. | June 15 |
| Balance owingInterest accrues from May 1 regardless of your filing deadline. | April 30 |
| RRSP contributionTo be deductible against the preceding taxation year. | 60 days after year-end |
| Quarterly instalmentsRequired where net tax owing exceeds $3,000. | March 15, June 15, September 15, December 15 |
| Form T1135Where specified foreign property exceeded $100,000 in cost at any time in the year. | With the return |
Deadlines shift when a due date falls on a weekend or holiday, and the rules change with each budget. Confirm your own dates before relying on them.
How it runs
What working together looks like
Plan before December 31
Most of what can be changed has to be changed before year-end — loss selling, donation timing, instalment top-ups, and the remuneration mix.
Assemble once, properly
A single checklist covering slips, dispositions, foreign holdings, and the corporate amounts, so the return is not rebuilt three times.
Reconcile against the corporation
Dividends, salary, and shareholder loan movements are matched to the corporate records before the personal return is filed.
File and confirm
Return filed, instalment schedule set for the coming year, and the notice of assessment reviewed against what was filed.
Handle correspondence
Review requests, adjustments, and objections dealt with on your behalf, so a routine CRA letter does not become a project.
Questions
Personal Income Taxes, answered
General information about how the rules work, current at the time of writing — not advice about your situation. Speak to Ray Loucks before acting on any of it.
When is my personal tax return due if I'm self-employed?
The filing deadline is June 15, but any balance owing is still due April 30 and interest accrues from May 1. The extension applies to the return, not the payment. If you expect to owe, the practical deadline is April 30 regardless of when you intend to file.
Do I have to report the sale of my home?
Yes. Even where the principal residence exemption eliminates the entire gain, the disposition must be reported on the return and the property designated. Failing to report can attract penalties and can extend the period during which the CRA may reassess. Where the property was not your principal residence for every year you owned it, part of the gain is taxable and the calculation apportions it across the designated years.
When do I have to pay tax instalments?
When your net tax owing exceeds $3,000 in the current year and in either of the two preceding years. Instalments are due March 15, June 15, September 15, and December 15. The CRA sends reminders based on prior-year figures, but the obligation is yours whether or not a reminder arrives — and the common trigger is a shift from salary, where tax is withheld at source, to dividends, where it is not.
What is the alternative minimum tax, and who does it hit?
It is a parallel tax calculation that disallows or limits certain deductions and credits and charges the higher of the two results. Following the changes effective in 2024, it most often affects individuals in a year with a large capital gain, a significant claim of the lifetime capital gains exemption, or substantial donations of appreciated securities. Amounts paid can generally be carried forward and recovered against regular tax over the next seven years, so it is frequently a timing cost rather than a permanent one — but it is still cash out the door in the year it applies.
Do I need to report my foreign investments?
If the total cost of your specified foreign property exceeded $100,000 at any time during the year, Form T1135 is required with your return. The test is cost rather than market value, and it aggregates across holdings. Property in registered plans and personal-use property such as a vacation home you do not rent are excluded. The late-filing penalties are severe and apply per year, so a missed filing is worth addressing promptly.
Often needed together