Guides for the decisions that affect the file
Each guide explains a specific question Canadian IT professionals come up against: what CRA looks at, what the numbers usually look like, and what to organize before a return is filed. Written for the file, not for SEO.
Compliance & filings
What needs to be filed, when, and on which authority's deadline: for both sole proprietors and incorporated contractors.
-
GST/HST Registration for Canadian IT Contractors
Once you cross $30,000, registration timing depends on whether you exceed the threshold in one quarter or over several quarters.
~ 5 min /Updated Mar 13, 2026 → -
QST Registration for IT Contractors in Quebec
In Quebec, both GST and QST are administered by Revenu Québec. One agency, two taxes, one registration process.
~ 5 min /Updated May 19, 2026 → -
Quarterly Tax Instalments for Canadian IT Contractors
CRA charges interest on missed instalments even if you settle the full balance in April.
~ 4 min /Updated Mar 18, 2026 → -
2025 Tax Document Checklist for IT Contractors and Tech Consultants
T4A slips from clients don't always arrive on time, and a missing one is enough to trigger a reassessment.
~ 3 min /Updated Feb 25, 2026 → -
How IT Contractors Should Organize Tax Documents for T1, T2125, and T2 Filing in Canada
Most of the scramble at tax time is avoidable. It comes down to what you track during the year and where you keep it.
~ 3 min /Updated Mar 25, 2026 → -
GST/HST Filing After Registration for IT Contractors
Registration opens a recurring filing cycle. Each period needs a net tax calculation, a return, and a remittance on a deadline separate from income tax.
~ 10 min /Updated Jun 15, 2026 → -
GST/HST and QST ITC/ITR Documentation for IT Contractors
An input tax credit is only as good as the paper behind it. CRA and Revenu Québec deny claims that lack the required supplier and purchase details.
~ 9 min /Updated Jul 3, 2026 → -
Provincial Permanent Establishment for Remote IT Contractors
Which province taxes the corporation depends on where the permanent establishment is, not where the client is based, and remote work makes this less obvious.
~ 4 min /Updated Jul 10, 2026 → -
PST/RST Sales Tax Issues Outside GST/QST for IT Contractors
GST/HST is not the only sales tax an IT contractor can owe. BC PST, Saskatchewan PST, and Manitoba RST can apply to software sold into those provinces.
~ 5 min /Updated Jul 16, 2026 → -
Instalment Catch-Up Strategy When Income Jumps
CRA's instalment reminders are based on last year's income. When this year is much higher, following them can leave a large balance due.
~ 4 min /Updated Jul 22, 2026 → -
Annual Compliance Calendar for Incorporated IT Contractors
The full-year filing and remittance calendar for an incorporated IT contractor: T2, T1, GST/HST, QST, payroll, T4, T5, and the annual corporate return.
~ 6 min /Updated Jul 27, 2026 →
Setup & structure
Deciding the business structure, registering correctly, and understanding which arrangements carry CRA risk before signing the contract.
-
Should I Incorporate as an IT Contractor?
The tax savings are real, but so is the admin cost. Whether it makes sense depends on your income level and how you work.
~ 4 min /Updated Mar 17, 2026 → -
Sole Proprietor vs Corporation for IT Contractors
Incorporation isn't automatically the better structure. The answer depends on your income level, risk tolerance, and how you work with clients.
~ 6 min /Updated May 9, 2026 → -
Personal Services Business Risk for Incorporated IT Contractors
If CRA classifies your corporation as a personal services business, most deductions disappear and the tax cost goes up significantly.
~ 4 min /Updated Apr 24, 2026 → -
The First Year as an Independent IT Contractor
The transition from employee to independent contractor changes your tax structure immediately. Here is what to register, track, and file in year one.
~ 11 min /Updated Jun 6, 2026 → -
T4 and T4A in the Same Year: IT Contractors in Transition
When you leave employment and start contracting in the same year, both a T4 and self-employment income appear on the same T1.
~ 10 min /Updated Jun 29, 2026 → -
Ottawa Federal Government IT Contractors: Tax and Incorporation Considerations
Federal government IT contracting has a specific risk profile. Long engagements, single clients, and on-site work create PSB exposure that needs to be assessed.
~ 10 min /Updated Jun 29, 2026 → -
Switching Accountants as an Incorporated IT Contractor
Switching accountants involves more than a new engagement letter: CRA authorization, prior-year records, and a review of what the last file missed.
~ 7 min /Updated Jul 6, 2026 →
Deductions & expenses
Which contractor expenses are deductible, what evidence the file needs, and where ambiguity tends to live.
-
Home Office and Business Expenses for IT Contractors
Home office, software, and equipment are all deductible: but CRA's documentation requirements are stricter than most contractors expect.
~ 4 min /Updated Mar 22, 2026 → -
Business Expenses for Quebec IT Contractors
Quebec IT contractors claim expenses across two agencies and two forms. QST input tax refunds, TP-80, and Quebec rules change how the deductions work.
~ 10 min /Updated May 21, 2026 → -
Home Office Expenses for Quebec IT Contractors: TP-59 and the Employee Route
Incorporated IT contractors who take salary may be able to claim home office expenses using T777 and TP-59. The rules differ from the self-employed route.
~ 6 min /Updated Jun 15, 2026 → -
Professional Development Expenses for IT Contractors
Courses, certifications, conferences, and professional dues can be deductible for IT contractors. The rules differ depending on whether you are incorporated.
~ 9 min /Updated Jun 29, 2026 → -
Technology Equipment and CCA for IT Contractors
Computers, workstations, phones, and monitors are capital property for IT contractors. CCA is how the deduction works. First-year incentives can accelerate it.
~ 12 min /Updated Jun 30, 2026 → -
Owner-Paid Expenses, Reimbursements, and Corporate Credit Cards for IT Contractors
Owner-paid business expenses need receipts and proper reimbursement. Personal charges through the corporation create shareholder benefit or loan risk.
~ 14 min /Updated Jul 2, 2026 → -
Software, SaaS, Cloud, AI Tools, Domains, and Subscriptions
GitHub, AWS, ChatGPT, and a domain renewal are all deductible, but they are not all the same kind of expense. Prepaid annual plans need their own treatment.
~ 7 min /Updated Jul 8, 2026 → -
Home Office Expenses for Incorporated IT Contractors Outside Quebec
Incorporated contractors paid by salary claim home office costs through T777 and T2200, a narrower route than the sole proprietor T2125 deduction.
~ 6 min /Updated Jul 13, 2026 → -
Vehicle Expenses for Incorporated IT Contractors
Incorporated contractors can claim vehicle costs through corporate ownership, a per-kilometre allowance, or an employee expense claim, each taxed differently.
~ 7 min /Updated Jul 13, 2026 → -
Insurance, E&O, Cyber Coverage, and Deductibility for IT Contractors
Professional liability, cyber, and general liability insurance are deductible for IT contractors, but which entity should pay depends on structure.
~ 5 min /Updated Jul 17, 2026 →
Compensation & cash-flow
How incorporated contractors pay themselves, the payroll cost differences by province, and what to settle before year-end closes the options.
-
Salary vs Dividend for Incorporated IT Contractors
The salary vs. dividend question isn't just about the tax rate. CPP, RRSP room, and loan eligibility all depend on how you pay yourself.
~ 9 min /Updated Jun 27, 2026 → -
Salary vs. Dividend for Quebec Incorporated IT Contractors
The salary vs. dividend calculation looks different in Quebec. QPP, QPIP, HSF, and a separate TP-1 all shift the math for Quebec owner-managers.
~ 7 min /Updated May 20, 2026 → -
Reasonable Salary for Incorporated IT Contractors
There's no formula for what to pay yourself from your corporation. But the decision affects your RRSP room, CPP, and what a lender counts as income.
~ 5 min /Updated May 6, 2026 → -
Shareholder Benefits and Corporate Leakage for Incorporated IT Contractors
Personal spending through a corporation is not a grey area. Unsupported personal expenses are commonly reassessed as shareholder benefits.
~ 7 min /Updated May 19, 2026 → -
Retained Earnings and Retirement Planning for Incorporated IT Contractors
Retained earnings inside your corporation are not a retirement account. The tax cost of getting them out depends on how and when you extract them.
~ 11 min /Updated Jun 21, 2026 → -
CPP and the Dividend-Only Trap for Incorporated IT Contractors
Taking dividends instead of salary eliminates CPP contributions. That saves money now. What it costs you later depends on when you plan to draw benefits.
~ 8 min /Updated Jun 23, 2026 → -
Year-End Corporate Tax Planning for Incorporated IT Contractors
How to estimate your corporation's T2 liability before the fiscal year closes: SBD rates, passive income grind, the salary lever, and instalment alignment.
~ 7 min /Updated Jun 28, 2026 → -
Health and Dental Benefits for Incorporated IT Contractors
Your corporation can pay for dental, prescriptions, and extended health. Whether those payments are deductible depends on how the plan is set up.
~ 8 min /Updated Jun 25, 2026 → -
Dividend Declarations and T5 Slips for Incorporated IT Contractors
A dividend declaration requires a board resolution, sets eligible vs. non-eligible status, and triggers T5 obligations. The steps behind it matter.
~ 8 min /Updated Jul 1, 2026 → -
Bonus Accruals and the 180-Day Rule for Incorporated IT Contractors
A bonus accrued before the corporate year-end is only deductible that year if it's paid, or applied against the shareholder loan, within 180 days.
~ 7 min /Updated Jul 6, 2026 → -
Corporate Investments and Passive Income for Incorporated IT Contractors
Investing retained earnings inside a corporation triggers rules that can erode the small business deduction and raise the tax rate on active income.
~ 6 min /Updated Jul 9, 2026 → -
Paying a Spouse or Family Member for Admin Work
Paying a spouse for genuine admin work can be a reasonable corporate deduction, but wages have to reflect real work and hold up as reasonable in amount.
~ 4 min /Updated Jul 17, 2026 → -
Employee Benefits Beyond PHSP for Incorporated IT Contractors
Group insurance, wellness stipends, life insurance, and disability coverage each have their own tax treatment, and none of them follow the PHSP rules.
~ 5 min /Updated Jul 24, 2026 → -
TOSI and Paying Family Members in Contractor Corporations
TOSI taxes dividends to family shareholders differently than salary, and most single-client IT contractor corporations fail the key exclusion tests.
~ 5 min /Updated Jul 27, 2026 →
Canada & the U.S.
USD clients, exchange-rate documentation, GST/HST on cross-border work, departure tax, RRSP treatment after emigration, and the Canada-U.S. tax treaty.
-
U.S. Client Income for Canadian IT Contractors
USD revenue is taxable in Canadian dollars at the exchange rate on the invoice date, not the day the money lands in your account.
~ 4 min /Updated Apr 27, 2026 → -
W-8BEN and W-8BEN-E for Canadian IT Contractors
U.S. clients often request a W-8 form before paying. Which version you submit depends on whether you're a sole proprietor or a corporation.
~ 3 min /Updated May 10, 2026 → -
Departure Tax When Moving from Canada to the U.S.
When you leave Canada for the U.S., CRA treats the departure date as a deemed sale of most property. This guide covers what that means before you file.
~ 8 min /Updated Jun 2, 2026 → -
Your RRSP When You Leave Canada for the U.S.
Your RRSP isn't triggered when you leave Canada, but withdrawals as a non-resident bring new rules. This guide covers what changes and what to plan for.
~ 7 min /Updated Jun 3, 2026 → -
Canadian Filing Obligations While Living in the U.S.
Moving to the U.S. doesn't end your Canadian tax obligations. Non-residents with Canadian-source income have specific annual filing rules.
~ 11 min /Updated Jun 5, 2026 → -
Canada-U.S. Tax Treaty for IT Contractors
Canada-U.S. tax treaty basics for IT contractors: residency tie-breakers, withholding rates, RRSP treatment, and business income rules when you live in the U.S.
~ 12 min /Updated Jun 13, 2026 → -
T1135 for Foreign Assets and USD Investment Accounts
Once specified foreign property crosses CAD $100,000, T1135 must be filed, and foreign brokerage accounts or foreign securities are commonly missed triggers.
~ 5 min /Updated Jul 9, 2026 → -
USD Accounts, Payment Processors, and FX Records for IT Contractors
Wise, PayPal, Stripe, and USD bank accounts each generate exchange-rate records the corporation needs, and fees and FX gains get tracked differently.
~ 4 min /Updated Jul 10, 2026 →
Incorporated contractors
How the T2 and T1 interact, what a Quebec establishment adds to the filing picture, and how compensation flows from corporation to owner.
-
Federal and Quebec Filing Structure for IT Contractors
An IT contractor in Quebec files with two agencies. This guide maps the full structure: T2, CO-17, T1, TP-1, QST, RL slips, QPP, and two-track instalments.
~ 10 min /Updated May 26, 2026 → -
Should I Incorporate as a Quebec IT Contractor?
Quebec IT contractors need a different incorporation break-even: higher filing costs, QPP/QPIP payroll overhead, QST, and two tax agencies.
~ 10 min /Updated May 21, 2026 → -
T2 and T1 Filing for Incorporated IT Contractors
The T2 and T1 are separate returns, but the compensation decisions you make for one directly affect what you owe in the other.
~ 7 min /Updated May 13, 2026 → -
Tax Filing for IT Contractors with a Quebec Establishment
Working in Quebec adds a second set of returns: CO-17 alongside the T2, TP-1 alongside the T1, and QST alongside GST.
~ 6 min /Updated May 13, 2026 → -
Quebec Quarterly Tax Instalments for IT Contractors
Quebec residents face two separate instalment tracks: one to CRA and one to Revenu Québec. Missing either triggers interest independently.
~ 7 min /Updated May 21, 2026 → -
Quebec Tax Document Checklist for IT Contractors
Quebec IT contractors file with two agencies. This checklist adds RL slips, QST return documents, TP-80, TP-1, and CO-17 to the federal document list.
~ 8 min /Updated May 21, 2026 → -
Winding Down a CCPC: What IT Contractors Need to Know
A CCPC wind-down is more than closing CRA accounts. Retained earnings, RDTOH, and the clearance certificate all affect timing and tax.
~ 15 min /Updated Jun 15, 2026 →
CRA compliance
What CRA penalties and interest look like in practice, and what to do when CRA initiates contact.
-
CRA Penalties and Interest for IT Contractors
CRA interest on late payments starts the day after the due date. By April, some contractors owe more than they expected.
~ 4 min /Updated Mar 22, 2026 → -
What IT Contractors Should Do When CRA Contacts Them
A CRA letter can be a routine review or the start of an audit. Either way, the first step is understanding exactly what they're asking for.
~ 4 min /Updated Mar 25, 2026 → -
Behind on Books: Cleanup Before Filing
Unreconciled bank feeds, missing receipts, and overdue GST/HST do not clear themselves. There is a sequence that gets a messy file back to filed.
~ 6 min /Updated Jul 7, 2026 → -
CRA Review Evidence Packages for IT Contractors
A CRA information request names specific line items. What satisfies each one differs for home office, ITCs, PSB risk, T4As, payroll, and shareholder loans.
~ 8 min /Updated Jul 8, 2026 →
Running the corporation
The ongoing mechanics of an incorporated contractor's file: shareholder loan, GST/HST filing, payroll, monthly close, and year-end review.
-
Shareholder Loan Account for Incorporated IT Contractors
Every draw and personal expense the corporation pays accumulates in the shareholder loan. A debit balance past the section 15(2) window is personal income.
~ 11 min /Updated Jun 15, 2026 → -
Year-End Review for Incorporated IT Contractors
The year-end review is when compensation, shareholder loan, corporate tax, and personal planning are aligned before the fiscal year closes and options narrow.
~ 8 min /Updated Jun 27, 2026 → -
Corporate Fiscal Year-End for Incorporated IT Contractors
The fiscal year-end sets corporate filing and payment dates and shapes salary, bonus, dividend, and personal tax timing.
~ 8 min /Updated Jun 16, 2026 → -
Payroll, T4, and Source Deductions for Owner-Managers
When an incorporated IT contractor pays salary, the corporation becomes an employer with source deductions, remittances, and T4 obligations.
~ 14 min /Updated Jun 17, 2026 → -
Monthly Close for Incorporated IT Contractors
A monthly close keeps the shareholder loan current, confirms GST/HST balances, and gives the year-end review numbers before options close.
~ 12 min /Updated Jun 17, 2026 → -
Agency Invoices, EFT Payments, and GST/HST for Incorporated IT Contractors
How the agency invoice flow works, what GST/HST obligations apply, and how EFT payment timing connects to income recognition in your corporation.
~ 11 min /Updated Jun 18, 2026 → -
Setting Up an Accounting System for an Incorporated IT Contractor
What the corporation's accounting system needs to do before the first invoice is paid, and how to configure it so the books stay accurate through the year.
~ 11 min /Updated Jun 18, 2026 → -
Dormant Corporation vs. Dissolution for IT Contractors
When you stop contracting, the corporation stays open by default. Dormant and dissolved are not the same thing, and the choice has ongoing tax consequences.
~ 9 min /Updated Jun 19, 2026 → -
Corporate Records Book for Incorporated IT Contractors
The minute book is a legal requirement, not optional paperwork. Here is what it contains, why it matters, and what the contractor's ongoing role is.
~ 10 min /Updated Jun 19, 2026 →
Contractor to consultancy
When contractors grow into consulting firms: subcontractors, multiple owners, partner compensation, worker classification, and the corporate structure decisions that follow.
-
When Does an IT Contractor Become a Consultancy?
The line between contractor and consultancy is not a revenue number. It is the moment clients stop buying your time and start buying your firm's capacity.
~ 10 min /Updated Jun 3, 2026 → -
One Corporation or Multiple for a Consulting Firm?
Putting three consultants in one CCPC looks simple. The problems appear at compensation, SBD limits, and exit.
~ 13 min /Updated Jun 7, 2026 → -
Paying Consulting Firm Owners: Salary, Dividends, and Draws
When a consulting firm has two or three owners, the solo contractor compensation framework stops working. Here is what changes and why.
~ 12 min /Updated Jun 8, 2026 → -
Employees vs. Subcontractors in an IT Consulting Firm
Calling someone a subcontractor does not make them one. CRA looks at the facts, and a wrong classification can mean CPP, EI, penalties, and interest.
~ 17 min /Updated Jun 9, 2026 → -
Project Profitability in a Small IT Consulting Firm
Revenue tells you whether the firm is busy. Gross margin by project tells you whether the work is worth doing. Most small firms track one and miss the other.
~ 17 min /Updated Jun 9, 2026 → -
Shareholder Agreements for Technical Consulting Firms
Default corporate law does not fill the gaps a consulting firm needs covered: departures, valuations, deadlock, and what happens when a founder dies.
~ 15 min /Updated Jun 10, 2026 → -
The First $1M Consulting Firm: What Changes
Most IT consultancies hit $1M before fixing the infrastructure underneath. Here is what actually changes in the books and why most firms are not ready.
~ 14 min /Updated Jun 11, 2026 → -
Subcontractor Expenses for IT Consulting Firms
Paying a subcontractor is not the same as classifying them correctly. GST/HST, T4A slips, and project margin all depend on getting this right.
~ 5 min /Updated Jul 7, 2026 → -
Associated Corporations and the Small Business Deduction
Two corporations under common control share one $500,000 SBD limit. The association test is fact-specific and often catches consultants off guard.
~ 6 min /Updated Jul 15, 2026 → -
Holdco Structures for Growing IT Consulting Firms
A holding corporation lets retained earnings accumulate away from operating risk, but it adds a second T2, association exposure, and real setup cost.
~ 6 min /Updated Jul 15, 2026 → -
Non-Resident Subcontractors and Foreign Vendors for IT Consulting Firms
Paying an offshore developer or US contractor brings withholding tax, T4A-NR, and GST/HST questions a domestic subcontractor invoice does not raise.
~ 5 min /Updated Jul 16, 2026 → -
Client Reimbursements, Pass-Through Costs, and Disbursements
Billing a client for travel or a subcontractor at cost feels like a wash. GST/HST and revenue reporting do not always treat it that way.
~ 4 min /Updated Jul 22, 2026 → -
Fixed-Fee vs Time-and-Materials Contracts for IT Consultants
The contract type a firm chooses changes how revenue is recognized, how margin risk sits, and what the books need to track project by project.
~ 5 min /Updated Jul 23, 2026 → -
Deposits, Retainers, and Deferred Revenue for Consulting Firms
Cash received before work is delivered is not revenue yet. Getting the deferred revenue liability wrong misstates the corporation's actual position.
~ 5 min /Updated Jul 23, 2026 → -
SR&ED for Software and AI Contractors
Building a client's app is ordinary business income. A genuine technological uncertainty inside that work might qualify for SR&ED, but rarely the whole project.
~ 6 min /Updated Jul 24, 2026 →
Some questions are better answered against your specific file
If a guide does not match your situation, describe the file in plain terms. Teplov CPA responds within one business day.
Contact Teplov CPA