canada-bookkeeping

Section 1 -- Quick Reference

Quick Reference

Field	Value
Country	Canada
Currency	CAD ($) only
Financial year	Corporations: any year-end; Sole proprietors: calendar year (Jan 1 – Dec 31)
Accounting standards	ASPE (Part II — private enterprises); ASNPO (Part III — not-for-profits); IFRS (Part I — public)
Governing body	Accounting Standards Board (AcSB) of CPA Canada
Tax authority	Canada Revenue Agency (CRA)
Key legislation	Income Tax Act (ITA); Excise Tax Act (GST/HST); Canada Business Corporations Act
GST/HST registration threshold	$30,000 in four consecutive quarters (small supplier threshold)
Record keeping requirement	6 years from end of the last tax year to which records relate
GIFI codes	General Index of Financial Information — CRA's standardized code system for T2 filing

Section 2 -- Standard Chart of Accounts

Canadian small businesses use 4-digit codes mapped to GIFI for T2/T2125 reporting.

Assets (1000–1999)

Assets (1000–1999)

Code	Account	GIFI	Type
1000	Cash — Operating Account	1001	Current asset
1010	Cash — Savings Account	1001	Current asset
1020	Petty Cash	1001	Current asset
1050	Short-Term Investments	1180	Current asset
1100	Accounts Receivable	1060	Current asset
1110	Allowance for Doubtful Accounts	1061	Contra asset
1150	GST/HST Receivable (ITC)	1300	Current asset
1200	Inventory	1120	Current asset
1210	Prepaid Expenses	1300	Current asset
1220	Prepaid Insurance	1300	Current asset
1300	Land	1600	Non-current asset
1310	Buildings	1680	Non-current asset
1311	Accumulated Amortization — Buildings	1681	Contra asset
1320	Machinery and Equipment	1740	Non-current asset
1321	Accumulated Amortization — Equipment	1741	Contra asset
1330	Furniture and Fixtures	1740	Non-current asset
1331	Accumulated Amortization — Furniture	1741	Contra asset
1340	Computer Hardware	1740	Non-current asset
1341	Accumulated Amortization — Computer	1741	Contra asset
1350	Motor Vehicles	1740	Non-current asset
1351	Accumulated Amortization — Vehicles	1741	Contra asset
1360	Leasehold Improvements	1740	Non-current asset
1361	Accumulated Amortization — Leasehold	1741	Contra asset
1400	Intangible Assets (Software, Patents)	1700	Non-current asset
1401	Accumulated Amortization — Intangibles	1701	Contra asset
1500	Goodwill	1740	Non-current asset

Liabilities (2000–2999)

Liabilities (2000–2999)

Code	Account	GIFI	Type
2000	Accounts Payable	2600	Current liability
2010	Accrued Liabilities	2620	Current liability
2050	GST/HST Payable (Collected)	2680	Current liability
2060	GST/HST Net (Control)	2680	Current liability
2100	Income Tax Payable	2700	Current liability
2110	Payroll Liabilities — CPP	2620	Current liability
2120	Payroll Liabilities — EI	2620	Current liability
2130	Payroll Liabilities — Income Tax W/H	2620	Current liability
2140	Vacation Pay Payable	2620	Current liability
2150	Workers' Compensation Payable	2620	Current liability
2200	Credit Card Payable	2600	Current liability
2300	Current Portion of Long-Term Debt	2700	Current liability
2400	Bank Loan — Long-Term	2780	Non-current liability
2410	Mortgage Payable	2780	Non-current liability
2500	Shareholder Loan	2780	Non-current liability
2600	Deferred Revenue	2640	Current liability

Equity (3000–3999)

Equity (3000–3999)

Code	Account	GIFI	Type
3000	Share Capital (Common Shares)	3500	Equity
3010	Share Capital (Preferred)	3500	Equity
3100	Retained Earnings	3600	Equity
3200	Owner's Equity / Capital (sole prop)	3500	Equity
3210	Owner's Drawings	3500	Equity
3220	Owner's Contributions	3500	Equity
3300	Dividends Declared	3600	Equity
3400	Current Year Net Income/Loss	3680	Equity

Revenue (4000–4999)

Revenue (4000–4999)

Code	Account	GIFI	Type
4000	Sales Revenue — Taxable (GST/HST)	8000	Revenue
4010	Sales Revenue — Zero-Rated	8000	Revenue
4020	Sales Revenue — Exempt	8000	Revenue
4100	Service Revenue	8000	Revenue
4200	Professional Fees Earned	8000	Revenue
4300	Rental Income	8210	Revenue
4400	Interest and Investment Income	8090	Revenue
4500	Other Income	8230	Revenue
4600	Gain on Disposal of Assets	8210	Revenue
4900	Sales Returns and Allowances	8000	Contra revenue
4910	Sales Discounts	8000	Contra revenue

Cost of Goods Sold (5000–5999)

Cost of Goods Sold (5000–5999)

Code	Account	GIFI	Type
5000	Purchases — Merchandise	8300	COGS
5010	Purchases — Raw Materials	8300	COGS
5020	Freight-In / Shipping Costs	8300	COGS
5030	Direct Labour	8340	COGS
5040	Subcontractor Costs	8360	COGS
5100	Opening Inventory Adjustment	8300	COGS
5110	Closing Inventory Adjustment	8300	COGS
5200	Manufacturing Overhead	8320	COGS

Operating Expenses (6000–6999)

Operating Expenses (6000–6999)

Code	Account	GIFI	Type
6000	Rent	8910	Expense
6010	Property Tax	8810	Expense
6020	Utilities (Hydro, Gas, Water)	8910	Expense
6030	Insurance — Business	8690	Expense
6040	Repairs and Maintenance	8960	Expense
6100	Salaries and Wages	8340	Expense
6110	Employer CPP Contributions	8360	Expense
6120	Employer EI Premiums	8360	Expense
6130	Employee Benefits (Health, Dental)	8340	Expense
6140	Workers' Compensation	8360	Expense
6200	Advertising and Promotion	8520	Expense
6210	Meals and Entertainment (50% deductible)	8523	Expense
6220	Travel Expenses	8520	Expense
6230	Vehicle Expenses — Fuel	8764	Expense
6240	Vehicle Expenses — Insurance	8764	Expense
6250	Vehicle Expenses — Repairs	8764	Expense
6260	Vehicle Expenses — Lease Payments	8764	Expense
6300	Office Supplies and Expenses	8810	Expense
6310	Postage and Courier	8810	Expense
6320	Telephone and Internet	8810	Expense
6330	Software Subscriptions (SaaS)	8810	Expense
6400	Professional Fees — Accounting	8860	Expense
6410	Professional Fees — Legal	8860	Expense
6420	Professional Fees — Consulting	8860	Expense
6500	Bank Charges and Credit Card Fees	8710	Expense
6510	Interest Expense — Bank	8710	Expense
6520	Interest Expense — Other	8710	Expense
6600	Amortization (Book Depreciation)	8670	Expense
6610	Bad Debts	8590	Expense
6700	Business Tax and Licences	8760	Expense
6800	Miscellaneous / Sundry Expenses	9990	Expense

Other Income / Expenses (7000–7999)

Other Income / Expenses (7000–7999)

Code	Account	GIFI	Type
7000	Interest Income	8090	Other income
7010	Dividend Income	8090	Other income
7100	Loss on Disposal of Assets	8210	Other expense
7200	Foreign Exchange Gain/Loss	8230	Other income/expense

Tax (8000–8999)

Tax (8000–8999)

Code	Account	GIFI	Type
8000	Income Tax Expense (Current)	9060	Tax
8010	Deferred Income Tax	9060	Tax

Section 3 -- Revenue Recognition

ASPE Section 3400 Revenue

• Revenue recognition criteria — Revenue is recognised when: Performance is achieved (goods delivered / services rendered); Collection is reasonably assured; Amount is measurable (ASPE Section 3400)

Revenue recognition by type (ASPE Section 3400)

Revenue Type	Recognition Point
Sale of goods	Risks and rewards transferred, amount measurable, collection probable
Rendering of services	Percentage of completion, or completed contract if outcome uncertain
Interest income	Accrued over time on effective interest basis
Royalties	Accrued per agreement terms
Dividends	When right to receive established
Construction contracts	Percentage of completion (ASPE 3400)

Cash vs Accrual for Sole Proprietors

Cash vs Accrual for Sole Proprietors

Method	CRA Requirement
Accrual	Default for all businesses
Cash (modified)	Permitted for farming, fishing, and commission-based sales agents only
Billed-basis	Permitted for professionals (accountants, lawyers, doctors, etc.) — WIP can be excluded from income

Most sole proprietors must use the accrual method — income when invoiced/earned, expenses when incurred.

Section 4 -- Expense Classification

T2125 Categories (Statement of Business Activities)

T2125 Categories (Statement of Business Activities)

Line	Category	Description	Nominal Codes
8521	Advertising	Marketing, advertising, signage	6200
8523	Meals and entertainment	50% deductible for tax	6210
8590	Bad debts	Written-off uncollectable accounts	6610
8690	Insurance	Business insurance premiums	6030
8710	Interest and bank charges	Loan interest, service charges	6500–6520
8760	Business taxes, licences, dues, memberships	Professional dues, municipal permits	6700
8764	Motor vehicle expenses (not CCA)	Fuel, insurance, repairs, lease	6230–6260
8810	Office expenses	Supplies, stationery, postage	6300–6330
8860	Professional fees	Accounting, legal, consulting	6400–6420
8871	Management and admin fees	Fees paid to related parties	6420
8910	Rent	Business premises rent	6000
8960	Repairs and maintenance	Building/equipment repairs	6040
9180	Property taxes	Municipal/provincial property tax	6010
9200	Travel	Airfare, hotels, transport	6220
9270	Utilities	Electricity, gas, water, phone	6020, 6320
9936	Capital cost allowance (CCA)	Tax depreciation (not book)	See Section 5

Non-Deductible Expenses (CRA)

• Non-deductible items — Personal expenses and owner's drawings; 50% of meals and entertainment (only 50% deductible); Club membership dues (golf, fitness) — not deductible since 1972; Political contributions — claim as federal/provincial tax credit instead; Fines and penalties imposed by law; Capital expenditures (must claim CCA); Life insurance premiums (unless collateral for loan); Accrued bonuses not paid within 180 days of year-end (CRA)

Section 5 -- Asset vs Expense Thresholds

Capital Cost Allowance (CCA) — Key Classes

Capital Cost Allowance (CCA) — Key Classes

Class	Rate	Method	Typical Assets
1	4%	Declining balance	Commercial buildings (post-1987)
1 (M&P)	10%	Declining balance	Manufacturing buildings
8	20%	Declining balance	Office furniture, equipment, tools ≥ $500
10	30%	Declining balance	Motor vehicles (cost ≤ $38,000 + tax in 2025)
10.1	30%	Declining balance	Passenger vehicles > $38,000 limit (separate class per vehicle)
12	100%	Full write-off	Small tools < $500, computer software (not systems)
13	Lease term	Straight-line	Leasehold improvements
14.1	5%	Declining balance	Goodwill and other eligible capital property
43	30%	Declining balance	Manufacturing and processing machinery (post-2025)
50	55%	Declining balance	Computer hardware and systems software
53	50%	Declining balance	M&P machinery (acquired 2016–2025)
54	30%	Declining balance	Zero-emission passenger vehicles
55	40%	Declining balance	Zero-emission non-passenger vehicles

Accelerated Investment Incentive (from 2025)

• Accelerated Investment Incentive — For eligible property acquired after 2024 and available for use before 2030: first-year CCA = up to 3× the normal half-year amount (effectively suspending the half-year rule and tripling first-year deduction). (unsure)

Practical Thresholds

Practical Thresholds

Threshold	Treatment
< $500	Expense immediately (supplies); or Class 12 at 100%
$500 – above	Capitalize: Class 8 (20%) or appropriate class
Current expense test	Repair vs improvement — repairs maintain; improvements extend/enhance

Book Amortization vs Tax CCA

• Book amortization vs CCA — Book amortization (ASPE Section 3061) uses straight-line over useful life. CCA is a separate tax schedule. They rarely match — the difference creates a deferred tax timing difference. (ASPE Section 3061)

Section 6 -- P&L Format

Income Statement (ASPE Multi-Step)

INCOME STATEMENT
For the year ended [date]
                                            $           $
Revenue                                               xxx
Cost of goods sold                                   (xxx)
                                                     ────
Gross profit                                          xxx

Operating expenses:
  Salaries and wages                      (xxx)
  Rent                                    (xxx)
  Advertising                             (xxx)
  Office expenses                         (xxx)
  Professional fees                       (xxx)
  Insurance                               (xxx)
  Utilities                               (xxx)
  Amortization                            (xxx)
  Vehicle expenses                        (xxx)
  Other operating expenses                (xxx)
                                                     (xxx)
                                                     ────
Operating income                                      xxx

Other income (expenses):
  Interest income                          xxx
  Interest expense                        (xxx)
  Gain (loss) on disposal of assets        xxx
  Foreign exchange gain (loss)             xxx
                                                      xxx
                                                     ────
Income before income taxes                            xxx
Provision for income taxes                           (xxx)
                                                     ────
Net income                                            xxx
                                                     ════

Section 7 -- Balance Sheet Format

Statement of Financial Position (ASPE — Vertical / Report Form)

BALANCE SHEET
As at [date]
                                            $           $
ASSETS
Current assets:
  Cash                                               xxx
  Accounts receivable                                xxx
  Allowance for doubtful accounts                   (xxx)
  Inventory                                          xxx
  Prepaid expenses                                   xxx
  GST/HST receivable                                 xxx
                                                     ────
Total current assets                                  xxx

Capital assets:
  Land                                    xxx
  Buildings (net of amortization)         xxx
  Equipment (net of amortization)         xxx
  Vehicles (net of amortization)          xxx
  Leasehold improvements (net)            xxx
  Computer hardware (net)                 xxx
                                                      xxx
Intangible assets (net)                               xxx
Goodwill (net)                                        xxx
                                                     ────
TOTAL ASSETS                                          xxx
                                                     ════

LIABILITIES
Current liabilities:
  Accounts payable                                   xxx
  Accrued liabilities                                xxx
  GST/HST payable                                    xxx
  Income taxes payable                               xxx
  Current portion of long-term debt                  xxx
  Deferred revenue                                   xxx
                                                     ────
Total current liabilities                             xxx

Long-term liabilities:
  Bank loan                                          xxx
  Mortgage payable                                   xxx
  Shareholder loan                                   xxx
                                                     ────
Total long-term liabilities                           xxx
                                                     ────
TOTAL LIABILITIES                                     xxx

SHAREHOLDERS' EQUITY
  Share capital                                      xxx
  Retained earnings                                  xxx
                                                     ────
TOTAL SHAREHOLDERS' EQUITY                            xxx
                                                     ────
TOTAL LIABILITIES AND EQUITY                          xxx
                                                     ════

Section 8 -- Bank Reconciliation Patterns

Common Canadian Bank Formats

Common Canadian Bank Formats

Bank	Export Format	Key Fields
RBC Royal Bank	CSV, OFX, QFX	Account Type, Date, Description 1, Description 2, CAD, USD
TD Canada Trust	CSV, OFX, QIF	Date, Transaction Description, Withdrawals, Deposits, Balance
BMO	CSV, OFX	Date, Description, Amount, Balance
Scotiabank	CSV, OFX	Date, Description, Debit, Credit, Balance
CIBC	CSV, QFX	Date, Description, Withdrawals, Deposits, Balance
Desjardins	CSV, OFX	Date, Description, Montant/Amount, Balance
National Bank	CSV	Date, Description, Debit, Credit, Balance

Common Transaction Descriptions

Common Transaction Descriptions

Pattern	Likely Classification
E-TRANSFER, INTERAC	Income or personal — check direction and counterparty
PAD (Pre-Authorized Debit)	Regular expense (insurance, loan, subscription)
PAP (Pre-Authorized Payment)	Regular expense (utility, rent)
POS, VISA, MC, DEBIT	Card expense — check merchant name
CRA FED TAX, CRA GST/HST	Tax payment — not operating expense
PAYROLL, ADP, CERIDIAN	Wages / payroll processing
SHOPIFY PAYOUT, STRIPE CA	Platform income — match to invoices
BILL PAYMENT, BPMT	Expense — utility or service provider
NSF FEE, SERVICE CHARGE	Bank charges (6500)
INTEREST	Income (if credit) or expense (if debit)
MORTGAGE PMT	Split: principal (2410 reduction) + interest (6510)

Section 9 -- Micro-Entity / Small Business Simplifications

CRA Small Business Concessions

CRA Small Business Concessions

Concession	Eligibility	Detail
Quick Method (GST/HST)	Taxable revenue ≤ $400,000	Remit flat percentage of revenue; keep the difference
Instalment threshold	Tax owing < $3,000 (individuals) or < $3,000 (corporations)	No quarterly instalments required
Simplified ITC claims	Annual taxable revenue ≤ $500,000	Can claim ITCs without full documentation for purchases under $30
GIFI-Short	Revenue and assets each < $1 million	~100 common codes instead of full GIFI list
T2 Short Return	Various small corporation criteria	Reduced filing requirements
Filing deadline	Sole prop: June 15 (return); April 30 (payment)	2-month extension for filing but not paying

ASPE vs IFRS Choice

ASPE vs IFRS Choice

Factor	ASPE (Private Enterprises)	IFRS (Public / Large)
Who	Any private company	Publicly accountable entities
Complexity	Simplified (no fair value for most items)	Full fair value, complex disclosures
Goodwill	Amortize over ≤ 40 years	Annual impairment test (no amortization)
Leases	Operating vs finance classification	IFRS 16: all on balance sheet
Financial instruments	Cost/amortized cost (default)	FVTPL or FVOCI or amortized cost
Cost	Lower professional fees	Higher — more disclosures

Compilation Engagement (NTR)

Most small Canadian businesses engage a CPA for a "compilation" (Notice to Reader) — the CPA compiles financial statements from client-provided information without performing audit or review procedures. No assurance is expressed.

Section 10 -- Interaction with Tax Skills

Corporate Income Tax (T2 Return)

• T2 return mapping and considerations — Financial statements mapped via GIFI codes to T2; Schedule 1: Net Income Reconciliation (add back: amortization, meals 50%, non-deductible items; deduct: CCA, eligible capital deductions); Schedule 8: CCA calculation (separate from book amortization); Schedule 125: Income Statement Information (GIFI); Schedule 100: Balance Sheet Information (GIFI); Active business income ≤ $500,000: small business deduction (combined federal/provincial ~12.2% varies by province); Investment income: taxed at ~50%, refundable upon dividend distribution (RDTOH) (unsure)

GST/HST Return

GST/HST Return

Line	Description	CoA Mapping
101	GST/HST collected (or collectible)	2050
105	Total GST/HST and adjustments	2050 + adjustments
106	Input Tax Credits (ITCs)	1150
108	Total ITCs and adjustments	1150 + adjustments
109	Net tax (remit or refund)	2060

Payroll Remittances

Payroll Remittances (2025)

Item	Rate (2025)	Employer Portion
CPP (employee)	5.95% on pensionable earnings $3,500–$71,300	Employer matches 1:1
CPP2 (second ceiling)	4.0% on $71,300–$81,200	Employer matches 1:1
EI (employee)	1.64% on insurable earnings up to $65,700	Employer pays 1.4× employee amount
Federal income tax	Per tax tables (withholding)	Employer remits to CRA

Provincial Considerations

• Provincial tax considerations — Quebec: separate QST (9.975%) and QPP (instead of CPP); file with Revenu Québec; PST provinces (BC, SK, MB): PST is not an input tax credit — it becomes part of the asset/expense cost; HST provinces (ON, NB, NS, NL, PE): combined rate; single return to CRA; Alberta: GST only (5%), no provincial sales tax (unsure)

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