Why the other options are wrong:

• Quebec does not allow small service businesses to incorporate.: The accountant recommends sole proprietorship for her income and cash needs. A Quebec prohibition on incorporation is not mentioned.
• Incorporation would prevent her from claiming home office expenses.: Home-office expenses are discussed separately; a loss of that deduction through incorporation is not stated.
• Her business income is below the legal minimum for incorporation.: The accountant gives an income-based recommendation, not a legal minimum income for incorporation.

Correct Answer: They must file a separate provincial corporate return.

Why this is correct: The accountant says corporations in Quebec must file a CO-17 return with Revenu Quebec. This is a separate provincial corporate return in addition to the federal T2 return for the CRA. The woman did not know about this requirement.

Why the other options are wrong:

• They must file a personal return by June fifteenth.: Filing by June fifteenth applies to sole proprietors, not corporations.
• They must submit GST and QST returns quarterly.: The stated corporate requirements are the T2 and CO-17 returns. Quarterly GST/QST filing is not identified as a corporate requirement.
• They must close their fiscal year on December thirty-first.: The accountant gives corporate deadlines relative to year-end, without requiring a December 31 year-end.

Correct Answer: When the balance of tax owing must be paid.

Why this is correct: The woman says the tax payment deadline is one thing she keeps missing. The accountant explains that sole proprietors file by June fifteenth but must pay any balance owing by April thirtieth. She struggles with the earlier payment date.

Why the other options are wrong:

• When GST and QST registrations become mandatory.: GST and QST registration rules are explained by the accountant, but the woman does not say she misunderstands them.
• When kilometre logs must be submitted.: Kilometre log submission deadlines are not mentioned as something she has trouble with.
• When instalment reminders are issued by the CRA.: The accountant discusses filing and payment deadlines and later instalment requirements. Missed instalment reminders are not described.

Correct Answer: It can help with administration but requires disciplined saving.

Why this is correct: The accountant says annual filing can simplify cash flow for the woman. However, he warns that she must set aside the tax she collects throughout the year. This means it is easier to manage but requires discipline with saving.

Why the other options are wrong:

• It reduces the overall amount of tax owed.: Annual filing is offered to simplify cash flow, with tax collected set aside. A reduction in tax owed is not stated.
• It eliminates the need to track collected tax during the year.: Annual filing does not eliminate the need to track collected tax, since the money must still be set aside.
• It is only available to incorporated businesses.: Annual filing is not limited to incorporated businesses - sole proprietors can also choose it.

Correct Answer: Home office and vehicle expenses.

Why this is correct: The accountant says the CRA often reviews home and vehicle expenses. The source does not restrict that review to claims without logs.

Why the other options are wrong:

• Software subscriptions purchased in Ontario.: Software subscriptions from Ontario are not identified as the commonly reviewed expenses.
• Meals claimed while working from home.: Home-working meals are not the expenses named in the review statement.
• Professional fees paid to lawyers.: Legal fees arise as an incorporation cost, rather than the expenses named in the CRA review statement.

Correct Answer: Review whether she must start paying instalments.

Why this is correct: The accountant says they will check whether quarterly instalments are required next year to avoid interest. Reviewing that requirement is the stated next step.

Why the other options are wrong:

• Apply for a refund of past GST payments.: Applying for a refund of past GST payments is not discussed.
• Recommend closing her QST account.: Recommending she close her QST account is never mentioned.
• Change her fiscal year-end to December.: Changing her fiscal year-end is not part of the plan they discussed.