Common Self-Filing Mistakes Ontario Business Owners Make (And How They Cost You)

Ali Alsharif, CPA, MPAcc — Chrome Accounting

Self-filing can feel like a smart way to save money—until a CRA review, missed deadline, or unclaimed deduction turns that “savings” into penalties, interest, and lost tax credits. Ontario business owners who prepare their own T1, T2, or HST returns often make the same avoidable mistakes. Here are the ones we see most frequently.

1. Missing or incorrect HST obligations

Many sole proprietors and corporations register for HST but then fail to charge, collect, or remit it on taxable supplies (including short-term rentals). Others miss the registration threshold altogether. The result is often years of unreported HST plus interest and penalties. Input tax credits (ITCs) are also frequently missed or claimed incorrectly because supporting invoices weren’t retained.

For a closer look at how one HST registration can reach activities you didn’t expect, see You Registered for HST to Invoice Your Corporation. That Number Also Covers Your Airbnb.

2. Poor tracking of capital gains and adjusted cost base (ACB)

Business owners who sell shares, real estate, or other property often rely on broker statements without adjusting for return of capital, identical property averaging, or foreign exchange. Understated ACB leads to overstated gains and higher tax. The reverse creates problems if CRA later reassesses.

Selling real estate? Read Selling a Rental Property in Ontario? Here’s How Capital Gains Tax Works.

3. Mixing personal and business expenses

Vehicle, home-office, travel, and meal costs are commonly claimed without proper logs, reasonable allocations, or supporting documentation. CRA frequently disallows these on audit, and the business owner then faces both tax and penalty exposure.

Our Small Business Tax Deductions Checklist (Ontario) outlines what you can claim and what records to keep.

4. Incorrect treatment of investment income in a corporation

Interest, foreign income, and non-eligible dividends received generate refundable tax that is tracked in the NERDTOH (Non-Eligible Refundable Dividend Tax On Hand) account. Eligible dividends received feed the ERDTOH account. Failing to track these balances or claim the available dividend refund when non-eligible dividends are paid means the corporation pays more tax than necessary.

How and when you pay yourself affects these refunds — see Salary vs. Dividends: How Ontario Owner-Managers Should Pay Themselves.

5. Incomplete or inaccurate loss carryforwards

Non-capital losses, capital losses, and other restricted losses must be applied correctly on the T1 or T2. Many self-filers either forget to apply available losses or apply them in the wrong order or against the wrong type of income, leaving tax on the table.

For the full rules, see How Ontario Business Owners Carry Losses Backward and Forward (CRA Rules Explained).

6. Foreign property reporting (T1135) and foreign tax credits

Owning foreign shares, real estate, or other property with a cost of more than $100,000 CAD triggers Form T1135. Missing it brings penalties. At the same time, foreign tax withheld on dividends or interest is often not claimed as a foreign tax credit (or the related subsection 20(11)/20(12) deduction), resulting in double taxation.

7. Late or incomplete corporate filings

T2 returns, associated schedules (including GIFI), and HST returns that are filed late or with incomplete information generate immediate penalties. In some cases, the corporation also loses the ability to claim certain refunds or carry losses forward properly.

Know your dates: Corporate Tax Filing Deadlines & Penalties in Ontario.

Why these mistakes happen

Most self-filers are competent at running their business but do not have the time or specialized knowledge to stay current with CRA rules, tax software quirks, and documentation requirements. Small errors compound over multiple years and only surface during a review or when the owner tries to sell the business or apply for financing.

How professional filing protects you

A CPA firm that regularly prepares Ontario T1, T2, and HST returns will:

• Identify registration and filing obligations before they become problems
• Properly calculate ACB, refundable tax accounts, and loss carryforwards
• Claim all available ITCs, foreign tax credits, and deductions with supporting documentation
• File on time and respond efficiently if CRA has questions

The cost of professional preparation is almost always lower than the cost of penalties, interest, and missed credits.

Next step

If you have been self-filing and want a second look at prior returns, or if you would rather hand off the work entirely, Chrome Accounting can help. We work with Ontario business owners on a virtual basis and focus on practical, accurate filings that reduce risk and keep more money in your pocket. Learn more about our corporate tax filing and personal tax for business owners services, or meet the founder, Ali Alsharif, CPA.

Disclaimer: This article is for general information only and does not constitute tax, legal, or accounting advice. Tax rules change and individual circumstances vary. Always consult a qualified CPA or tax professional before making decisions about your specific situation. Chrome Accounting is not liable for any actions taken based on this content.