Build the tax provision and post the year-end entry
The Income taxes worksheet is a balancing machine : it starts from the opening balance, adds notice-of-assessment adjustments, subtracts payments, adds the year's provision (federal and provincial), subtracts instalments, and shows you the gap against the TB. It then generates the adjusting entry ready to post.
The core convention : owed = positive
The whole worksheet turns on one convention : a balance owed is a positive number, a refund receivable is negative. That's the opposite of the standard accounting sign at the balance sheet (payables are credits, so negative in TB columns). Ledger does the flip for you : in the worksheet, everything owed to governments shows positive, receivable in parentheses.
Most lines have two entries : federal amount and provincial amount. Total is computed for each section. The worksheet keeps the two worlds separate through the entry, where they both debit the same expense account « Current income taxes ».
Enable the worksheet and configure
Enable from Worksheets (auto-suggested when the TB has a balance or tax activity). Then Configuration tab, map the seven TB accounts for the worksheet's columns : federal tax payable, provincial tax payable, RDTOH, DTR, current income taxes (P&L), capital tax, REQ dues.
When you open next year's engagement, Ledger auto-repopulates the seven accounts from last year. A message invites you to double-check before saving in case the chart changed.
Worksheet tab : the A → M skeleton
Read the worksheet top-down, section by section :
Each section auto-computes the next. K, TB status, compares the expected total (E + H) to the TB balance (J) and shows « Balanced » or « Gap » with the signed amount.
If K shows a gap, that's not normal. The TB balance doesn't match what the worksheet reconstructs. Check the TB (a forgotten tax account in the configuration ?) and the worksheet (a missing adjustment or payment ?). Once K reads « Balanced », the entry is valid.
Section F : the provision in detail
Section F, click Add a line to build the year's provision. Ledger offers 9 typical lines : Part I Tax, Refundable fraction, Capital tax, Part IV Tax, Refund of dividend tax, REQ dues, Non-deductible interest, Other 1 / 2. Each line has a tooltip reminding the sign and the mirroring rules.
Sections B (adjustments), D (payments), L (subsequent)
Section B captures CRA and RQ adjustments (reassessments, interest, penalties, refunds). Section D lists the year's payments on prior assessments (each with a cheque reference and date). Section L captures payments made after year end on the current provision, reducing the balance to be filed on the T2 / CO-17.
A payment is always entered as a positive number : the sheet does the subtraction itself (E = C − D), and a negative amount in D is refused. A refund received from a government is not a negative payment : it goes in section B, as a negative, like any credit the notice of assessment applies to your account.
Entry tab : generated adjusting entry
The entry follows the standard accounting logic, locked by convention :
- P&L accounts (Current income taxes, Capital tax, REQ dues, Others) : debit, to record the fiscal charges.
- Balance sheet accounts (Federal and provincial tax payable) : credit, to recognize the payables to governments.
- RDTOH (Equity) : always debit.
- DTR (Equity) : always credit.
The DR/CR signs for RDTOH and DTR are locked by accounting convention. Amounts refresh automatically as you change the provision.
Click Submit to adjusting entries. Default description : « Income taxes adjusting entry, year end ». Re-submitting proposes Replace or Keep both.
Future income tax tab
For files with future income taxes, the dedicated tab lets you enter items with a gap between book value and tax value (capital assets, provisions, deferred expenses). Each item is categorized LT or CT, with a federal gap and a provincial gap. Ledger totals the subtotals and pre-selects the three typical future-income-tax accounts (P&L, LT balance sheet, CT balance sheet) for entry generation.
Print and send FS
The Print button produces a PDF with sections A → M unfolded, provision detail, generated entry. The firm's brand applies.
The Send to client button (also on the financial statements page) pulls the final federal and provincial amounts to pre-fill the transmission letter and the Québec payment code if applicable.