Can my corporation deduct a year-end bonus paid later?
Unpaid Bonuses and the 180-Day Rule. Canadian tax guidance, practical records to gather and questions to resolve before preparing your return with Arsen Accounting.
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Corporate records and payments: 10 tax questions · Browse the 100-article collection
The direct answer
An accrued employment-remuneration expense needs to meet the ordinary deduction conditions, and the payment timing matters. If it remains unpaid 180 days after the tax year-end, the statutory rule generally shifts the deduction to the year of payment. Recording a journal entry is not the same as making payment. Payroll reporting and remittances also need to be considered.
Record when the obligation arose and was paid
An accrued bonus needs more than a year-end journal entry. Keep the authorization, recipient, amount, entitlement and actual payment evidence. The timing of payment can affect the corporation's deduction. Give the preparer the full history, including any change or cancellation, rather than assuming that booking the expense settles its tax treatment.
Coordinate the deduction with payroll records
The corporate expense and the payroll reporting should tell a consistent story. Identify withholding, remittances and the relevant slips when the amount is paid. Do not move payment dates in a spreadsheet to fit a desired deadline. If the amount remained unpaid, flag it for the appropriate adjustment and follow-up instead of leaving the same accrual unexplained indefinitely.
What to gather before the review
- Bonus authorization and accrual details
- Actual payment dates and bank evidence
- Payroll deductions, remittances and reporting records
Does a year-end bonus entry guarantee a deduction for that year?
No. The obligation and payment timing must meet the applicable requirements. The 180-day rule is a reason to track the actual settlement carefully, not merely the accounting entry.
Your next step
Document the bonus obligation and actual payment date and diarize the 180-day limit.
Related reading
Official sources
Sources checked for this collection on October 28–29, 2026. Annual forms may refer to a specific tax year. Use the rules and limits for the year being filed. General information; eligibility, elections and deadlines depend on the facts. No deduction or tax saving is guaranteed.
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