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Professional Corporations - Year Ends

Subject: Professional Corporations Number: 04-07 Date: 3/19/2004

It is possible to restructure to allow a professional corporation to use the alternative method.

Professional individuals can elect under the "alternative method" to have a non-calendar year-end. Professional corporations may also elect a non-calendar year-end unless they are members in a partnership.

A non-calendar year-end may be preferred for the professional corporation in order to defer income to the next year.

There are several ways to deal with this:

Professional corporations (PCs) in a "corporate partnership" might consider incorporating the professional practice and adopting a new non-calendar fiscal year for the operating company. Each PC might also be able to apply to the Canada Revenue Agency for a year-end change to align the PC year-ends with the new operating company.

Alternatively, it might be possible to take the practice out of a partnership and transfer it to the individual PCs. By doing so, the PCs can report on a non-calendar year basis.

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