How Do Financial Statements Align with Tax Reporting in Ontario?

Financial statements are directly tied to tax reporting, as they provide the data needed to prepare tax returns.

• •Income Statement: Helps calculate taxable income by detailing revenue and deductible expenses.
• •Balance Sheet: Supports tax filings by showing assets, liabilities, and equity changes.
• •HST/GST Reporting: Accurate financial records ensure proper tracking of HST/GST collected and remitted.

For corporations, financial statements must align with the CRA’s requirements, and discrepancies between tax filings and financial statements can trigger audits.