Deducting Incorporation Costs

The 2016 Canadian Federal budget included a new tax deduction regarding incorporation costs and fees. The 2016 Budget also proposed to allow small balances of eligible capital property carried over to the new CCA class to be deducted more quickly and to allow up to $3,000 in incorporation costs to be deducted as a current expense. The latter measure will allow approximately 80 per cent of newly incorporated businesses to deduct the full amount of the incorporation expenses in their initial year.” This measure is applicable as of January 1, 2017, and is also valid for reorganization and amalgamation costs.

Incorporation costs comprise:

  • The applicable government fee
  • Buying pre-filled forms for your articles of incorporation
  • Legal fees for preparing and filing the articles of incorporation
  • The Nuans reports needed for the incorporation (sometimes there’s more than one report)
  • Purchasing a minute book (A binder with tabs, share certificates, registers for shareholders, directors, officers, and transfers)
  • Legal fees for organizing the corporation, including customizing bylaws and issuing shares
  • Legal fees for customizing shareholder agreements
  • Legal fees for preparing minutes of meetings of directors and shareholders