KilloranCPA · Tax Advisory
Chartered Professional Accountant · Toronto

Tax and reporting for the structures behind the business.

We act for professional corporations, holding companies, family trusts, estates and investment funds: the entities that own, hold and pass on wealth. A senior tax CPA leads a CPA-qualified team across compliance, estate freezes, transactions and fund reporting for the whole structure.

What we doClient portal
100% common wholly owned Family trust T3 · 21-year date Founder & family T1 · T1135 · T1134 Holding company T2 · CSRS 4200 · T1134 Investment company T2 · T5 · GST/HST Prof. corp. T2 · T4/T5 Fund LP T5013 carried interest Carry LP T5013 Illustrative structure
Each entity, and the filings it carries
Services

Five disciplines, one point of contact

Financial reporting

Compilation engagements

Year-end financial statements for professional corporations, holding companies, operating businesses and fund entities, prepared to the standard a bank, an investor or an estate trustee expects.

CSRS 4200
Tax

Corporate, personal, trust and estate tax

Every return in the structure, with one tax lead: corporate, personal, partnership, trust, terminal and estate returns, GST/HST and foreign reporting.

T2T1T3T5013T1135T1134T2091NR4
Estate, M&A, governance

Freezes, reorganizations and transactions

Set-up structuring advice for new corporations, trusts and funds, estate freeze design with your counsel, family trust and 21-year planning, tax due diligence and pre-sale reorganizations, and the governance a family or fund board actually keeps.

s.85s.86Safe incomeTax DD
CRA disputes

Audit defence and appeals

CRA audits managed for you, Notices of Objection argued with CRA Appeals, and Tax Court appeals run with counsel. Quoted by stage.

T400ATax Court
Funds

Search fund and investment fund reporting

Fund-level tax filings, investor slips and the compliance calendar for searchers, acquisition vehicles and private funds.

T5013T3Capital accounts

Full scope of services

A filing year with us

A calendar, not a scramble

Every client gets a compliance calendar built from their structure and visible year-round in the portal. A December year-end family group looks like this.

DueWhat happensFiling
1–30 JanInterest on family prescribed rate loans paid for the prior year, by 30 January, so the income isn't attributed back to the lenderPrescribed rate loans · T5
28 FebSalary and dividend slips issued for the corporations, and T5 slips for the prescribed rate loan interest paid in JanuaryT4 · T5
31 MarTrust return and partnership information return filed; beneficiaries and partners receive their slipsT3 · T3 slips · T5013
30 AprPersonal returns for shareholders and beneficiaries, with foreign property reportingT1 · T1135
31 Mar / 30 JunHoldco and professional corporation balances due, then statements and corporate returns filedCSRS 4200 · T2
Each autumnPlanning meeting: compensation mix, passive income, capital dividend account, and how far away the trust's 21-year date isPlanning memo
1 Nov – 31 DecReview the year's income estimates for the trust and corporations, and document the trustees' resolutions allocating income to beneficiaries before year-endTrust resolutions
How it works

A qualified team, senior review. No paper.

Engagement letter first

Every engagement starts with a letter setting out the scope and the fees, agreed before any work starts.

Onboarding in the portal

Documents, questionnaires and prior-year files move through a secure client portal with two-step sign-in.

Work, review, sign

Statements and returns are reviewed with you on a call, then signed electronically in the same portal.

Who this firm is for

  • Lawyers and other professionals practising through a professional corporation
  • Holding companies and family investment corporations
  • Investment funds, their general partners and search fund vehicles
  • Families implementing or unwinding an estate freeze, and the trusts and estates that follow

We don't perform audits or review engagements. If you need one, we'll refer you.

“Clients should be able to reach the person who actually did the work.”
About the firm

Founded by Mac Killoran, CPA, CA, after twenty years in mid-market public practice, the last decade leading a Toronto firm's tax division. Deliberately small, cloud-based and senior-led, with an office at Yonge and St. Clair.

Mac's profile

Services

What we do

Everything below is prepared by a CPA-qualified team and reviewed by a senior tax CPA, in a secure portal, on a published calendar. We work closely with your counsel and other advisers, and refer audit and review engagements out.

Financial reporting

Compilation engagements

Annual compiled financial statements for professional corporations, holdcos, operating businesses and fund entities, with the basis-of-accounting note banks now ask for.

CSRS 4200
Corporate tax

Professional corporations and holding companies

Corporate returns and slips, associated-group and passive-income planning, capital dividend and refundable tax tracking, and the compensation plan between you and your corporation.

T2T4T5CDARDTOH
Partnerships and trusts

Partnership and trust returns

Partnership information returns, family and investment trust returns, beneficial ownership reporting, and the 21-year planning around them.

T5013T3Schedule 15
Estates

Estates and date-of-death filings

For executors and estate trustees: a review of the terminal return as filed and whether it should be amended; optional returns and elections; deemed dispositions on death and the values used; the estate's T3 returns and graduated rate estate designation; loss carrybacks to the terminal return; post-mortem planning for shares of private corporations; and the clearance certificate before distributions to heirs, including heirs and estates outside Canada.

Terminal T1Optional returnsT3GREs.164(6)TX19
Personal, GST/HST, foreign

Owners, families, indirect tax and cross-border filings

Personal returns for shareholders and beneficiaries; GST/HST for holdcos, funds and professional corporations; and the foreign reporting a structure attracts, including section 116 clearance on non-resident dispositions.

T1T2091GST/HSTT1135T1134T1141NR4s.116
Estate, M&A, governance

Freezes, reorganizations and transactions

Structuring advice when you set up a new corporation, holding structure, trust or fund. Valuation coordination, freeze and trust design with your lawyer, the annual compliance a freeze creates, and board or family-council reporting. On a transaction: tax due diligence on the target, purification and pre-sale reorganization, share-versus-asset analysis, rollovers, safe income planning and the tax side of the purchase agreement, for the vendor, the acquirer or the search fund.

s.85s.86Safe incomeLCGETax DD
CRA disputes

Audit defence, objections and appeals

Representation from the first CRA letter: pre-assessment reviews and audits managed on your behalf, Notices of Objection prepared and argued with CRA Appeals, and Tax Court of Canada appeals coordinated with tax counsel.

T400AAppealsTax Court
Funds

Search fund and investment fund compliance

Capital account statements, fund tax filings and investor slips, and the tax reporting covenants in your fund documents.

T5013T3
Search & investment funds
How an engagement is set up

Clear on who we act for, what's in, and what's out

Every engagement letter names our clients and the related parties we don't act for, sets out the facts we're relying on, and splits the work into phases so you can decide whether to go ahead after each one.

Review and written advice

We review the filings, books and the work of current advisers, then brief you and confirm our advice in a written memo: compliance status, exposure, and the options.

Remediation plan

A step plan with owners and dates for you, your counsel and other advisers, including a voluntary disclosure strategy where that is the right course.

Returns and filings

The returns, elections and information returns the plan requires, filed and tracked on your compliance calendar.

Each letter also states what is outside scope, such as bookkeeping, legal advice and foreign tax, and who we will co-ordinate with on those points.

Fees

Fees agreed in writing before any work starts

Every engagement letter sets out how we will bill before we begin. Recurring compliance, such as a year-end, a trust return or an estate filing, is usually a quoted fee billed at milestones and on completion. Advisory, transaction and dispute work, where the scope can change, may instead be billed by the hour at rates set out in the letter, with an estimate and regular updates. Either way, you agree the basis before you commit.

Payment methods and the credit card surcharge are set out on the Pay an invoice page and in every engagement letter.

Typical engagement scopes

  • Professional corporation: compilation, T2, T4/T5, GST/HST, owner T1, one planning meeting
  • Holdco and freeze: holdco compilation and T2, trust T3, beneficiary T1s, 21-year calendar
  • Fund: annual T5013 or T3, investor slips, compliance calendar
  • Estate: review of the terminal return, optional returns, estate T3s and GRE designation, clearance certificate before distribution
  • CRA dispute: quoted by stage, from audit response to objection to appeal
Search funds · investment funds

Reporting that survives investor scrutiny

Fund managers, general partners and searchers share a problem: sophisticated investors, thin internal finance, and a document set full of reporting covenants. We run that side so you can run the fund, the deal or the search.

From search to hold

Where we come in

Search phase

Search entity structure, investor unit accounting, and the vehicle's tax filings.

Acquisition

Working-capital true-up support, opening balance sheet, purchase price allocation, and a reporting package for the board and lenders from month one.

Holding structure

The acquisition holdco's compilation and tax, and the year-end figures lenders and investors need.

Investment funds

Capital account statements, distributions and allocations, partnership or trust returns, and investor slips on the dates your LPA promises.

Why a boutique

Fund work at a scale the large firms don't staff for

A search fund or a first private fund is too small for a national firm's fund practice and too specialized for a general practitioner. That gap is the reason this firm exists.

What you get on day one

  • A compliance calendar built from your fund documents
  • A portal workspace per entity, with investor-safe document folders
  • A named CPA who answers the phone
Profile

Mac Killoran, CPA, CA

Founder of Killoran, CPA - Tax Advisory. Mac has practised in public accounting since 2004, entirely in mid-market firms, and from April 2013 led the tax group of a Toronto mid-market firm as tax partner.

He is hands-on with every file: filings complete and accurate before they go out, each return assessed as filed, and a call to CRA when it isn't. His aim is that every filing position has been considered and no capital is left on the table.

Credentials

  • Chartered Professional Accountant (CPA, CA), Ontario, Canada, 2007
  • Member, Institute of Chartered Accountants of Ontario and Institute of Chartered Accountants of Canada (now CPA Ontario and CPA Canada), 2004
  • In-Depth Tax Course, 2008 and 2009
  • In-Depth GST/HST, 2010; Non-Resident HST, 2011
  • Bachelor of Business Administration and Commercial Studies, Huron University College, Western University, 2004
  • Diploma in Accounting, The University of Western Ontario, 2004
Background

Over twenty years in the mid-market, on the tax side of the table

Growing up, before he became an accountant, Mac worked at Weber's, his family's Muskoka business. That is where his instinct for privately held structures, and for the families behind them, comes from. The numbers matter because of who owns them.

Outside the office he is a member and former director of The Badminton and Racquet Club of Toronto and sits on the advisory committee of a public charitable foundation.

Areas of practice
  • Corporate tax for professional corporations and holdcos
  • Partnership reporting for investment funds and search vehicles
  • Trust and estate returns, terminal returns, graduated-rate estates
  • Estate freezes, family trusts and 21-year planning
  • M&A structuring: pre-sale reorganizations, share vs. asset, section 85 rollovers, safe income, capital gains exemption planning
  • GST/HST, including non-resident and cross-border matters
  • Foreign reporting: T1135, T1134, T1141/T1142, NR4 and section 116
  • CRA audit defence, objections and Tax Court appeals with counsel
Career

Twenty-two years in public practice

  1. Early yearsWorks at Weber's, the family business in Muskoka
  2. 2004Graduates from Western University (BBA, Huron University College; Diploma in Accounting) and joins mid-market public accounting
  3. 2007Earns the Chartered Professional Accountant designation (CPA, CA), Ontario
  4. 2008–2009In-Depth Tax Course
  5. 2010–2011In-Depth GST/HST and Non-Resident HST courses
  6. April 2013Tax partner, heading the tax group of a Toronto mid-market firm
  7. 2027Opens Killoran, CPA - Tax Advisory at 2 St. Clair Avenue West
“Peace of mind is knowing every filing position was considered, not hoping it was.”
Clients can reach Mac directly

416-257-6225
mac@killoran.ca

Insights

Short notes on the things clients actually ask

Written for taxpayers, owners, trustees and investors rather than for other accountants.

Tax season · 14 October 2026

Your 2026 tax checklist

Two ways to gather what your 2026 return needs: download the full organizer as a PDF, or answer a few questions online and get a checklist of only what applies to you.

Do it online

To be notified when new articles are published, email info@killoran.ca with “Insights” in the subject. You can unsubscribe at any time.

← Insights
Prefer paper? Download the full 2026 Tax Organizer (PDF, 31 pages), fill it in, and send it through the portal. Or answer the questions below to build your checklist online.
← Insights Cross-border

Why a US LLC is often the wrong vehicle for a Canadian resident

15 October 2026Mac Killoran, CPA, CA

A US limited liability company is the default choice for Americans setting up a small business or holding a rental property. US lawyers, realtors and online formation services recommend it to Canadians too. For someone who lives in Canada, it often produces more tax, not less, and a good deal more paperwork.

The problem: the two countries see it differently

The IRS generally treats a single-member LLC as disregarded, and a multi-member LLC as a partnership. Its income flows through and is taxed in the hands of the members each year. The CRA does not follow that. For Canadian tax purposes, a US LLC is generally treated as a corporation.

United StatesCanada
What the LLC isFlow-through (disregarded or partnership)A foreign corporation
Who is taxed on the profitYou, as the member, in the year it is earnedNobody in Canada until the LLC pays you a distribution
What a distribution isGenerally not taxable againA foreign dividend, taxed at full rates with no dividend tax credit
Your filingsUS return as a non-resident memberT1 or T2, plus foreign reporting (T1135 or T1134)

How that turns into double tax

You pay US tax personally on the LLC's profit in the year it is earned. Canada taxes you only when money comes out, and it taxes that money as a dividend from a foreign corporation. The income is taxed in different years, as different kinds of income, in the hands of what each country considers a different taxpayer.

A foreign tax credit is how Canada normally prevents double tax. Here the mismatch in timing and in who paid the US tax can leave part of the US tax uncreditable. The result can be a combined rate well above what you would pay if you had earned the same income directly or through a better-suited entity.

Other ways an LLC can hurt

  • Treaty benefits. Because the LLC itself usually isn't taxed in the US, it often can't claim the protections of the Canada–US tax treaty in its own right.
  • Passive income. An LLC that holds investments or rental property can earn what Canada calls foreign accrual property income. If you control it, that income can be taxed in Canada each year whether or not you take it out.
  • Foreign reporting. Shares of a foreign corporation are foreign property. Depending on who owns the LLC and what it cost, that can mean a T1135 or a T1134 every year, with penalties for late or missed filings.
  • Selling, winding up or dying. Unwinding an LLC, selling the property inside it, or dealing with it on death raises its own mismatches between the two systems, including possible US estate tax exposure.

What tends to work better

The right answer depends on what the entity will hold and where the income is earned. Common alternatives include:

  • Owning directly, often with suitable liability insurance, for a single US rental property.
  • A US limited partnership, which both countries generally treat as flow-through, so income is taxed once, in the same year, in the same hands.
  • A US corporation, where a corporate structure is wanted, often owned through a Canadian holding company.
  • Electing corporate treatment for an existing LLC in the US, so both countries see the same thing. This needs careful timing and advice before it is done.
Already have an LLC?

Don't wind it up on your own. Moving property out of an LLC, or changing how it is taxed, can itself trigger tax in one or both countries. Get advice on both sides of the border first.

This article provides general information only and is not tax or legal advice. Cross-border structures depend on the facts and on both countries' rules; please get advice in both countries before acting.

← Insights Getting started

How to authorize us with the CRA, and why the process has changed

14 October 2026Mac Killoran, CPA, CA

Before we can file, correct or discuss your returns with the Canada Revenue Agency, you need to name us as your authorized representative. Only you can do that. For most clients it takes about ten minutes online.

Client guide (PDF, 9 pages)

Our step-by-step guide covers individuals, businesses, new corporations, non-residents, trusts and estates, with the exact screens to use.

Why you need to do this again

Authorizations belong to a firm, not a person. When you authorize an accounting firm, the CRA records the firm's business number. An authorization you gave a previous firm stays with that firm. It does not follow your accountant when they move, so it has to be given again to Killoran, CPA - Tax Advisory Professional Corporation.

We ask you to authorize the firm. Authorizing our business number, rather than one person's representative ID, lets the members of our team who work on your file see it. It also means your access doesn't lapse if someone is away.

The CRA has moved authorization online. The fastest and most complete route is now for you to add us from your own CRA account. The paper form, AUT-01, replaced the older T1013 and RC59 forms. It still works, but it is slower and gives us phone and mail access only, not online access. When we start a request on your behalf, the CRA asks you to confirm it online within ten business days, or it is cancelled.

What to enter

FieldEnter
RepresentativeKilloran, CPA - Tax Advisory Professional Corporation
Our business number784249047 (no spaces)
Authorization levelLevel 2: view and update
Online accessYes
Scope (businesses)All accounts
ExpiryDoes not expire

Some older instructions ask for Level 3. The CRA does not allow Level 3 for a firm's business number, so choose Level 2.

Find your route

  • Individuals: sign in to your CRA account, open My Account, go to Profile, then Authorized representative(s), and add our business number. Each spouse does this from their own account.
  • Businesses: open My Business Account, choose the business number, go to Profile, then Authorized representatives, and select All accounts. Repeat for each business.
  • New corporations: if the company hasn't filed a return yet, call CRA business enquiries first to link your SIN to the business number, then add us online.
  • Trusts: the primary trustee registers through Represent a Client, then adds us in My Trust Account.
  • Estates: the CRA must first accept the executor's documents. Send them to us and we'll prepare the request for the executor to certify.
  • Non-residents: the route depends on whether you have a SIN, an ITN or an NR account. The guide covers each.

No CRA account yet? The guide explains how to register, including identity verification. If you can't register, we can start the request using details from one of your notices of assessment.

When you're done

Email us or send a message in the client portal to say you've added us. You don't need to send the CRA confirmation page. We'll check that the access appears on our side and let you know.

Stuck on a screen that doesn't match? Call us at 416-257-6226 or email info@killoran.ca and we'll walk you through it.

Steps reflect the CRA's screens as of October 2026. The CRA changes its wording from time to time.

← Insights Trusts

Bare trust reporting: what you need to know for 2026

13 October 2026Mac Killoran, CPA, CA

After several years of postponements, bare trust reporting is going ahead. The Canada Revenue Agency (CRA) has confirmed that bare trusts must file for taxation years ending on or after December 31, 2026, so the first returns are due March 31, 2027.

The rules reach far beyond formal trusts. Anyone who holds legal title to property for someone else (a parent on a child's home, a nominee shareholder, a corporation holding property for a related company) may now have a filing obligation. Many people in these arrangements will not think of themselves as trustees, which is why we recommend reviewing your situation now rather than in March.

What is a bare trust?

A bare trust exists when one person holds legal title to property but someone else is the real (beneficial) owner. Ask yourself four questions:

  1. Do you hold title to something that is not really yours?
  2. Is someone else the true beneficial owner?
  3. Are your duties limited to simply holding title or custody of the property?
  4. Are you basically acting as a nominee or agent for that other person?

If the answers are yes, you likely have a bare trust. If you are a part owner, you may have a bare trust over the part you do not own.

Common examples include:

  • A parent on title to a child's home, or a child on title to a parent's home or cottage
  • A family member holding a bank or investment account for another family member
  • Nominee shareholders, including shares held for a corporation or another individual
  • A corporation holding real estate or other property for a related company or its shareholders
  • One partner holding property on behalf of a partnership
  • A child named on a parent's account for estate planning purposes, where the parent remains the true owner

What has to be filed, and when

The legal owner (the bare trustee) is responsible for filing. Where no exception applies, the steps are:

  1. Get a trust account number from the CRA by filing Form T3APP. Allow time, since processing can take several weeks.
  2. File a T3 Trust Income Tax and Information Return. For a bare trust, most of the return is left blank; only the identifying fields are completed.
  3. Complete Schedule 15 (Beneficial Ownership Information) identifying every trustee, beneficiary and settlor, plus anyone who can exert control over the trust. Each person's name, address, date of birth, country of residence and SIN (or other taxpayer number) is required.
  4. File by March 31, 2027 for the 2026 taxation year, and every year after that the arrangement continues.
Who pays the tax

The filing does not change who pays tax. All income, gains and losses from the property continue to be reported on the beneficial owner's own return.

Exceptions that may apply

Several exceptions remove the filing requirement, but you must fit one precisely; coming close does not count.

ExceptionWhen it applies
Small valueTotal fair market value of the property is $50,000 or less throughout the year
Short durationThe arrangement has existed for less than three months
Owners are also the beneficiariesAll legal owners hold the property for their own use and benefit, e.g., a joint bank account of family members
Parent on title for a mortgageA related individual is on title to a principal residence, e.g., to help a child qualify for a mortgage
One spouse on titleSpouses jointly occupy the family home, but only one is on title
Partnership propertyA partner holds property for the use or benefit of the partnership
Lawyer trust accountsA lawyer's general trust account, or a client-specific account of $250,000 or less in cash, term deposits or GICs

Whether an exception applies depends on the specific facts. Keep notes and supporting documents for any arrangement you conclude is not a bare trust or is exempt, since they are your best defence if the CRA questions it later.

What about express trusts?

Express trusts (formal trusts created by a trust deed or will, such as family trusts and estate-freeze trusts) are separate from bare trusts. They have been subject to the enhanced reporting rules since taxation years ending on or after December 31, 2023, and most must file a T3 return with Schedule 15 every year, even if the trust has no income.

Express trusts have their own exceptions, and they differ from the bare trust list above:

  • Specified assets of $50,000 or less. The trust holds only cash, GICs, government debt, listed securities or mutual fund units, worth $50,000 or less throughout the year.
  • Proposed $250,000 threshold. Draft legislation released in August 2025 proposed raising this to $250,000 for trusts holding only those specified assets, subject to further conditions.
  • Other exceptions. Trusts in existence for less than three months, and certain registered plans, charities, non-profits and lawyers' trust accounts.

The $250,000 threshold does not apply to bare trusts, which use the $50,000 test described above. If you have both a family trust and a bare trust arrangement, each needs to be assessed under its own rules.

What the CRA clarified in October 2026

On October 5, 2026, the CRA expanded its FAQ, Enhanced Reporting Rules for Trusts and Bare Trusts. The key points:

  • No more blanket relief. The CRA's earlier administrative exemptions for bare trusts no longer apply for taxation years ending on or after December 31, 2026. Only the exceptions in the legislation remain.
  • New worked examples. The CRA walked through common family situations: spouses with a joint investment account in GICs and listed shares (exempt as owners for their own benefit), a mother-in-law on title so a couple could get a mortgage (exempt), and a family home where only one spouse is on title (exempt).
  • A shorter T3 for bare trusts. Only the lines marked with a check (✓) symbol on the T3 return must be completed. The rest can be left blank.
  • Open question on partnerships. The CRA did not say whether the partnership exception covers partnerships that rely on administrative relief from filing a T5013 without a specific waiver. If this affects you, talk to us before assuming it applies.

Penalties for not filing

The trustee who fails to file faces a late-filing penalty of $25 per day, from a minimum of $100 up to a maximum of $2,500.

Where the failure is deliberate or due to gross negligence, the penalty is the greater of $2,500 and 5% of the highest value of the trust property during the year. On a $2 million property held by a family member as nominee, that is $100,000 for a single year, even though the arrangement may produce no tax at all.

What to do now

Review any arrangement where the name on title or on the account is not the person who really owns the property. Do it before year-end, so there is time to obtain trust account numbers ahead of the March 31, 2027 deadline.

Killoran can help you:

  • Identify potential bare trust arrangements across your family and business holdings
  • Determine whether an exception applies, and document that conclusion
  • Gather the information needed for Schedule 15
  • Obtain CRA trust account numbers
  • Prepare and file the required T3 returns

If you think you may have a nominee, bare trust or similar ownership arrangement, contact Killoran at info@killoran.ca or 416-257-6226. We would be pleased to review your circumstances.

This article provides general information only and is not tax or legal advice. The rules are detailed and fact-specific; please consult your advisor before acting.

← Insights Onboarding

Why we ask for so much: the data behind a clean tax onboarding

13 October 2026Mac Killoran, CPA, CA

Yes, it's a long list

Our full onboarding checklist runs to 87 items across eight sections. New clients often see it and ask, fairly, "Do you really need all of this?"

The short answer is yes, and the reason isn't paperwork for its own sake. A tax return is the last page of a long story. Each figure on this year's return depends on elections, balances and transactions from years, sometimes decades, earlier. When we take over your filings, we inherit that whole story. The checklist is how we read it.

The good news: most clients only see part of it. We remove whole sections that don't apply, so a single Canadian corporation with no trust and no U.S. ties gets a much shorter letter.

Why the tax system runs on history

The tax system doesn't treat each year as a fresh start. Much of what you owe today rests on numbers carried forward from earlier years. Four features drive most of the data we ask for.

Balances that carry forward. Corporations keep running tax accounts that never appear on the financial statements. The capital dividend account (CDA), refundable dividend tax on hand (RDTOH) and the general rate income pool (GRIP) decide how much can be paid out tax-free or at a lower rate. Each is a running total built from every prior year. If one year is wrong, every year after it is wrong too.

Elections that last for decades. A section 85 rollover, a section 86 reorganization or an estate freeze sets the tax cost of shares for as long as they are held. The paperwork may be ten years old, but it still decides the gain when those shares are sold or deemed sold.

Relationships, not just entities. Canadian rules look through the corporate structure. Whether corporations are associated affects access to the small business deduction. Attribution rules ask who funded a trust and who benefits. Schedule 50 and the T3 Schedule 15 beneficial ownership rules exist because ownership itself is reportable.

More than one country. A U.S. citizen living in Toronto files in both countries. A family member who moved abroad can trigger departure tax, withholding and clearance certificates. Each border crossed adds forms, deadlines and penalties of its own.

Put together, a single client file can draw on federal, provincial and U.S. rules, several entity types and many years of history at once. That is why we ask for the history, not just last year's return.

What we ask for, and why

Each section of the checklist answers a specific question we must settle before we sign a return.

SectionItemsExamplesWhy we need it
Corporate20Articles, minute book, share registers, three years of financials and trial balances, CCA schedulesConfirms who owns what, and ties the books to the return
Personal, family and estate11Family tree, will, powers of attorney, prior estate freezesAttribution, estate planning and who can benefit from income splitting
Trusts13Trust deed, trustee resolutions, beneficiary list, distribution history, 21-year dateTrust filings depend on the deed and every past distribution
Tax returns10T2 and T1 returns, assessments, slips, loss and donation carryforwardsGives us the starting balances and shows what CRA has already accepted
Elections and corporate tax accounts10CDA, RDTOH, GRIP continuity, s.85 and s.86 elections, safe incomeRebuilds the hidden balances that decide how cash comes out of a company
U.S. and non-resident matters10Citizenship history, day counts, departure dates, s.116 clearancesDetermines where each person is taxable, and what cross-border filings apply
U.S. returns and reporting7Form 1040, FBAR, Form 8938, Forms 5471 and 3520U.S. information returns carry steep penalties even when no tax is owed
Engagement and administration6Engagement letter, ID verification, authority to actLets us act for you, and meets our professional and privacy obligations
Total87

Most requests go back three years. That matches the period in which CRA can normally reassess most returns, and it gives us enough history to test the carry-forward balances.

The full checklist

All 87 items, with a note on what each one covers, are in our client information checklist. Ask us for a copy, or for a version tailored to your structure.

What a missing document can cost

Gaps rarely show up on day one. They surface later, usually at the worst moment.

  • A capital dividend that isn't. If the CDA balance is overstated, a dividend paid as tax-free can become taxable, with penalty tax on the excess.
  • Shares with the wrong cost. Without the original rollover election and valuation, we can't confirm the tax cost of shares. A sale or a death then becomes a reconstruction exercise.
  • Unfiled foreign reporting. Missed T1134, T1135, FBAR or Form 3520 filings can draw penalties even when no tax is owed.
  • A trust deadline nobody tracked. Most trusts face a deemed disposition every 21 years. Missing the date removes planning options.
  • Losses or refunds left behind. Loss carryforwards, refundable taxes and donation credits are only usable if we know they exist.

Rebuilding this history after the fact takes far longer, and costs more, than collecting it up front. Onboarding is the cheapest time to get it right.

Making onboarding easier

You don't need to have everything at once. A few habits make the process much faster.

  • Send items as you find them. There's no need to wait for a complete package. We start work as documents arrive.
  • Mark what doesn't apply. Write N/A beside an item rather than skipping it, so we know it was considered.
  • Ask before you assume. If you're unsure whether an item applies, ask. "I didn't think that mattered" is the most common source of later surprises.
  • Start with your previous adviser. Much of the corporate and tax history sits in their working papers. A signed authorization lets us request it directly.
  • Use the secure upload. Never send full Social Insurance Numbers, Social Security numbers, passwords or account numbers by email.

The payoff

A thorough onboarding is an investment that pays back every year after. With a complete file, we can confirm your balances, spot planning opportunities and file with confidence, instead of discovering problems during an audit or a sale.

If you're thinking about moving your compliance work to Killoran, CPA - Tax Advisory, contact us at info@killoran.ca or 416-257-6226. We'll send a checklist tailored to your structure, with only the items that apply to you.

← Insights Family trusts

Can your family trust pay for your kids' expenses? What the CRA will (and won't) accept

13 October 2026Mac Killoran, CPA, CA

Yes, a Canadian family trust can pay for many of your children's costs, from tuition to hockey fees to braces. But the line between "for the child" and "for the parents" matters, and the CRA looks closely at which side of it a payment falls on.

Get it right, and the trust deducts the income and it's taxed in your child's hands. Get it wrong, and the income can be taxed in the trust at the top marginal rate, and in your hands too. Here's what you need to know.

The ground rules

A trust can deduct income that is paid or payable to a beneficiary in the year, under subsection 104(6) of the Income Tax Act. The child then reports that income. Three things make or break that deduction.

The payment has to benefit the child, not you. In Ferrel v. The Queen (1999), the Federal Court of Appeal accepted that amounts spent for minor beneficiaries, including reimbursing parents for the children's expenses, count as paid to the children. The key is that the expense truly benefits the child rather than covering the parents' own costs.

The trust deed has to allow it. At the 2024 STEP CRA Roundtable, the CRA pointed to Maurice Kissel Family Trust v. The King. There, payments to minor beneficiaries that the trust deed prohibited were held not payable, and the trust lost its deduction. Read your deed before you spend.

Timing matters. The amount must be paid, or legally payable, in the same tax year it's allocated.

What the trust can usually pay

CategoryExamplesRisk
EducationPrivate school or university tuition, textbooks, laptops, tutoring, special education, residence, meal plansLow
HealthDental, orthodontics, vision, prescriptions, speech or occupational therapy, disability supports not covered by insuranceLow
ChildcareDaycare, before- and after-school programs, camps, a nanny whose duties are limited to child careLow to moderate
ActivitiesSports and league fees, music, dance or art lessons, equipment, school tripsLow to moderate, if reasonable for the child's age
Student housingApartment rent, dorm fees and utilities for a post-secondary studentLow to moderate, if tied to school
Living costsThe child's clothing, a reasonable share of food, transportation to school and activitiesModerate: allocate and document

Education costs are the least challenged by the CRA when properly documented. Living costs need the most care: pay only the child's reasonable share and keep a record of how you worked it out.

What it generally shouldn't pay

  • Your own personal living expenses
  • Rent, mortgage payments, renovations or utilities on the family home
  • Shared groceries with no reasonable allocation
  • Family vacations that are mainly leisure
  • Vehicles mainly used by the parents
  • General "family support" or income replacement for parents

What happens if you get it wrong

If the CRA decides trust money went to the parents rather than the child, the trust can lose its deduction and the income is taxed in the trust at the top rate. The benefit can also be taxed in the parents' hands under subsection 105(1). Interest applies, and penalties can follow where there's gross negligence.

Five habits that keep you on side

  1. Pay the vendor directly, or reimburse specific receipts. The trust paying the school, or reimbursing you for a receipted camp fee, is the lowest-risk approach. Lump-sum cash to parents is the highest.
  2. Put it in writing. Pass trustee resolutions authorizing payments and keep every receipt and invoice. Each payment should trace to a specific child-related cost.
  3. Review the trust deed every year. Confirm it permits payments to, or for the benefit of, minor beneficiaries for the expenses you plan to cover.
  4. Don't double-dip. Before claiming the child care expense deduction or the medical expense tax credit, confirm you're eligible for any amount the trust paid or reimbursed.
  5. File on time. The trust's T3 return, including the beneficial ownership information on Schedule 15, is due within 90 days of the trust's year end.

Watch for TOSI

If the trust's income is dividends from a private corporation, amounts allocated to a child under 18 will generally be caught by the tax on split income (TOSI) and taxed at the top marginal rate. That can wipe out the tax benefit even when the expense itself is a perfectly appropriate use of trust funds. The attribution rules and alternative minimum tax are also worth checking, depending on how the trust was settled and funded.

The bottom line

A family trust can be a very effective way to fund your child's education, care and development. The test is simple to state: the deed allows it, the child benefits, and the paper trail proves it.

If you're a trustee or parent and want a second look at how your trust is paying for your kids' expenses, or you're getting ready for this year's T3 filing, contact Mac at mac@killoran.ca or 416-257-6225.

This post is general information, not tax advice for your situation. Speak with a qualified advisor before acting on it.

← Insights Search funds

What your investors want to see in a quarterly search update

13 October 2026Mac Killoran, CPA, CA

Your search investors backed you, not a business. Until you find one, the quarterly update is most of what they see of you. The good ones answer four questions with numbers and one with a paragraph.

Most search investors sit on several searches at once. They read your update quickly, and they compare it with the others in their inbox. They aren't looking for polish. They want the same few numbers every quarter, so they can see the trend without having to ask.

1. How much runway is left?

Show cash on hand at quarter-end and the months of search remaining at your current monthly spend. Then show it against the original budget: if you raised for 24 months and you're 14 months in, investors want to know whether you'll need an extension round, and when you'll tell them.

A runway number that drops faster than the calendar is the first thing an experienced investor looks for.

2. Where did the money go?

One short table: budget versus actual for the quarter and since inception, in four or five lines. Salary, travel, deal costs (legal, quality of earnings, diligence), data and subscriptions, and everything else. Deal costs are the line that moves; explain any quarter where they jump, because that usually means a deal got far enough to spend real money on it.

3. What does the funnel look like?

Businesses reviewed, owners spoken to, indications of interest, letters of intent signed, and deals in diligence. Give the quarter's numbers and the running totals. Investors know the funnel is steep. What they want to see is that it's moving, and that the businesses at the top look like the thesis you raised on.

4. How much search period is left?

State plainly how many months remain under your search agreement and what happens at the end of it. If you're likely to ask for an extension, the update two quarters before is the place to say so.

The paragraph: what changed, and what you need

One paragraph, not a newsletter. What you learned this quarter (an industry you've dropped, a seller who walked away and why), and what you need from investors: introductions, a view on a sector, an expert call on a deal in diligence. Investors who are asked for something specific tend to give it.

The financial page underneath

Behind the update, each investor should be able to see their own position: capital contributed, their share of search capital spent, and how their units convert if you close a deal. Getting that right matters most at acquisition, when search capital typically rolls into the deal with a step-up and every investor checks the arithmetic. If the capital accounts have been kept properly every quarter, that conversation is short.

The tax side of the search vehicle also needs attention from the start. How search costs are treated depends partly on whether the search ends in an acquisition, and the vehicle's year-end filings follow from how it was set up.

A one-page template

SectionWhat goes in it
RunwayCash at quarter-end; months remaining at current spend; months remaining in the original budget
SpendBudget vs actual, quarter and inception to date, five lines
FunnelReviewed, conversations, IOIs, LOIs, in diligence: quarter and cumulative
Search periodMonths remaining; any extension plan
NarrativeOne paragraph: what changed, what you need
Investor statementEach investor's contributions, share of spend, units

We prepare the year-end statements, investor capital accounts and tax filings for search vehicles. Contact Mac at mac@killoran.ca or 416-257-6225.

This article provides general information only and is not tax, legal or investment advice.

← Insights Estate planning

The 21-year rule is a calendar problem

13 October 2026Mac Killoran, CPA, CA

Every family trust has a date in its future when the CRA treats it as having sold everything it owns. The tax is rarely the hard part. The hard part is finding out in year 19, when most of the good options need two or three years of lead time.

What the rule does

Under subsection 104(4) of the Income Tax Act, a personal trust is deemed to dispose of its capital property at fair market value on its 21st anniversary, and every 21 years after that. Any accrued gain is taxed in the trust, at the top marginal rate, even though nothing was sold and no cash came in.

For an estate-freeze trust holding common shares of a family company, that gain is usually the whole of the growth since the freeze. On a business that has done well, it can be a very large number.

Why now

Many Ontario family trusts were set up in the estate-freeze wave of the mid-2000s. A trust settled in 2006 reaches its 21st anniversary in 2027. If your trust was settled between 2005 and 2010, its date is within the next four years.

The usual answer, and why it takes time

The most common plan is to distribute the trust's property to Canadian-resident beneficiaries before the anniversary. Under subsection 107(2), capital property can generally be distributed to a resident beneficiary at the trust's tax cost, so no gain is triggered. The beneficiary takes the property, and the deferred gain, with them.

That sounds simple. In practice, each of these has to be settled first:

  • Does the deed allow it? Some deeds restrict capital distributions, name a vesting date, or give the trustees less discretion than everyone assumed.
  • Who should get what? Distributing shares of the family company is a decision about control and succession, not only tax. Beneficiaries who were children at settlement may now be adults with spouses, creditors or no interest in the business.
  • Where do the beneficiaries live? The rollover is generally not available on a distribution to a non-resident beneficiary. A child who has moved to the US or the UK changes the plan.
  • Was the trust tainted at the start? If subsection 75(2) applied to the trust (for example, because a beneficiary contributed property to it), subsection 107(4.1) can deny the rollover on distributions to other beneficiaries. That needs to be checked against the settlement documents.
  • What is it worth? You will want a current valuation, both to understand the exposure and to support whatever is done.

The other options

  • Pay the tax. Sometimes the accrued gain is modest, or the lifetime capital gains exemption can be used by allocating gains to beneficiaries on a sale before the date. It is worth modelling before ruling it out.
  • Reorganize the company first. A second freeze or a reorganization can move future growth outside the trust, or crystallize the trust's interest at today's value, before any distribution.
  • Move to a new trust. In limited circumstances, property can move to a new trust, but a trust-to-trust transfer generally keeps the original 21-year date.

What to do in year 15

  1. Find the date. It runs from the day the trust was settled, which is on the deed. Put it in the compliance calendar.
  2. Read the deed with your lawyer. Distribution powers, vesting provisions, who the beneficiaries actually are.
  3. List the beneficiaries' residency and circumstances. Plans change when a beneficiary moves abroad or marries.
  4. Get an indication of value. Enough to size the exposure.
  5. Choose the plan, then implement it over two or three years. Distributions, reorganizations and family conversations all take longer than people expect.

The trust's T3 and Schedule 15 are filed every year in the meantime. Each year's return is a good moment to check how far away the date is.

If your family trust was settled before 2012 and nobody has looked at its 21-year date, contact Mac at mac@killoran.ca or 416-257-6225.

This article provides general information only and is not tax or legal advice. Trust planning depends on the deed and the facts; please consult your advisors before acting.

← Insights Professional corporations

Passive income inside your professional corporation: the $50,000 line

13 October 2026Mac Killoran, CPA, CA

Leaving surplus in your professional corporation and investing it there is one of the main reasons to have one. Above $50,000 a year of investment income, though, the corporation starts paying more tax on the income you earn from your practice.

How the grind works

A Canadian-controlled private corporation pays the low small business rate on its first $500,000 of active business income. That $500,000 business limit is reduced by $5 for every $1 of "adjusted aggregate investment income" over $50,000 earned in the previous taxation year. At $150,000 of investment income, the federal small business deduction is gone.

The limit is shared by associated corporations, and so is the investment income count. A holding company owned with your spouse, or alongside your professional corporation, is usually part of the same calculation.

Investment income last yearFederal small business limit this year
$50,000 or less$500,000
$75,000$375,000
$100,000$250,000
$150,000 or moreNil

What it costs an Ontario practice

Ontario did not adopt the federal passive income grind, so the Ontario small business rate continues to apply. The effect in Ontario is the difference between the federal small business rate and the federal general rate: income that loses the federal deduction is taxed at about 18.2% combined instead of 12.2%.

At the extreme, with the full $500,000 ground away, that is roughly $30,000 more corporate tax a year. Part of it comes back: income taxed at the higher rate adds to the corporation's general rate income pool, so it can later be paid out as eligible dividends, which are taxed less in your hands. The real cost is less than the headline, but it is not zero, and it arrives every year the grind applies.

What counts, and what doesn't

  • Counts: interest, rent, foreign income, portfolio dividends from public companies, and the taxable half of realized capital gains on investments.
  • Doesn't count: unrealized gains, gains on the sale of active business assets, and dividends from connected corporations.

Three ways to manage it

  1. Change what the corporation earns, not how much. A portfolio built for deferred growth (low-turnover equity, funds that distribute little) produces less annual investment income than one built for interest or high distributions. Only realized gains count, and only half of them. This is usually the first lever and the cheapest.
  2. Move some savings out of the investment-income count. Growth inside an exempt corporate-owned life insurance policy, or contributions to an individual pension plan, are generally outside adjusted aggregate investment income. Both have costs and long horizons, and suit some practices better than others.
  3. Pay out more, and save personally. Salary that creates RRSP room, TFSA funding and, for some families, prescribed-rate loans can move part of the savings outside the corporation. The trade-off is giving up some of the corporate tax deferral.

The right mix depends on your investment horizon, how close you are to the line, and how much active income the practice earns. A practice earning well below $500,000 of active income may not lose anything until investment income is well above $50,000.

Check the timing

The grind uses last year's investment income. A large realized gain this year reduces next year's small business limit, so the time to look at it is before year-end, not at filing.

We review the investment income count each year as part of the professional corporation year-end. Contact Mac at mac@killoran.ca or 416-257-6225.

This article provides general information only and is not tax or investment advice. Rates are approximate Ontario combined rates for 2026; please consult your advisor before acting.

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