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Canadian accounting differs from US accounting first in who writes the rules. In Canada the Accounting Standards Board sets them, and publicly accountable companies must use IFRS while most private companies can pick IFRS or the private-enterprise standards (ASPE). In the United States, public companies follow US GAAP, which the FASB writes.
Which accounting standards does Canada use?
Canada has a split system, and which side you land on depends on who owns you. The Accounting Standards Board requires publicly accountable enterprises to use IFRS for their interim and annual statements. That means an entity that has issued, or is issuing, debt or shares traded in a public market, or one that holds assets for a broad group of outsiders.
Everyone else is a private enterprise. The CPA Canada Handbook lets a private enterprise choose IFRS (Part I) or ASPE (Part II). The CRA also says most private companies have the option of IFRS.
| Type of business | Canada | United States |
|---|---|---|
| Publicly accountable or listed | IFRS, required | US GAAP for public companies filing with the SEC |
| Private company | ASPE or IFRS, your choice | We did not confirm the rules for private firms |
| Who writes the standards | Accounting Standards Board | FASB, recognized by the SEC |
Is US GAAP the same as IFRS?
No. They’re two frameworks, and a company that reports under one doesn’t automatically meet the other. Where the two treat the same item differently, the numbers on the statements move. CPA Canada publishes a side-by-side comparison of ASPE and IFRS, but the page refused our request, so we’re not listing line-by-line differences. If your business reports to a US parent or lender, ask which framework they need before you sign off on year-end.
Old advice pages love to say that one country is “more flexible” or “more conservative”. We couldn’t find that in any standard-setter source, so we’ve left it out.
Do financial statements set your tax bill in Canada?
Not directly. Your statements and your tax return are two different calculations. The clearest example is buildings and equipment. The CRA says you can’t deduct the cost of a rental property in one year. You deduct it over time as capital cost allowance, and you pick the amount each year within the allowed maximum. Your accounting depreciation follows your standard, and your CCA follows the tax rules, so the two lines rarely match.
The CRA has a set of pages on how IFRS affects taxable income. If you moved from ASPE to IFRS, or the other way, read them before your next T2.
What do the tax rules add for a Canadian business?
Federal corporate tax is 15% on general income and 9% on the first $500,000 for a Canadian-controlled private corporation, after the small business deduction. Provinces add their own. For a CCPC in Ontario with $300,000 of active business income, the corporate tax calculator shows $35,088 of tax, about 11.7%. Without the small business rate, the same income pays $79,500, or 26.5%.
That gap is why the choice of company type matters more than the choice of accounting standard for many owners. The calculator ignores the taxable capital limit, and it handles associated corporations through an optional box, so use it as a first estimate.
Canadian bookkeeping also carries sales taxes, and they need their own accounts. If you sell in Ontario you collect HST, in Alberta only GST, and in Quebec both GST and QST. The GST and HST calculator shows what each adds to a price. Payroll adds its own remittances, which the payroll remittance calculator covers.
What do people get wrong when they compare the two?
The first mistake is assuming every Canadian company uses IFRS. Private ones can choose ASPE. The second is assuming that a US accountant’s numbers can be pasted straight into a Canadian return. Tax law is separate in each country, and we didn’t compare US tax rules here.
A third is treating “GAAP” as a single global thing. In Canada the phrase usually means the Handbook’s standards. In the US it means the FASB’s. If someone says “GAAP” in a contract, ask which one.
Self-employed people often ask the same question, and for them the tax side is the whole story. The self-employed tax calculator shows income tax on business profit. It lowers income tax with your deductions, but not CPP, and it leaves out EI.
Where do the numbers come from?
The standards come from the Canadian Accounting Standards Board through CPA Canada and the CRA’s IFRS pages. The US position comes from the SEC’s statements on the FASB. The corporate rates come from the CRA’s T2 guide and corporation tax rates page, and the tax figures from the site’s calculators. We read these in September 2026. This website has no connection with the CRA or any government.
Frequently asked questions
Do Canadian companies use US GAAP?
Canadian public companies use IFRS. We did not confirm any general rule that lets Canadian firms use US GAAP, so ask the securities regulator or your accountant.
What is ASPE?
Accounting Standards for Private Enterprises, Part II of the CPA Canada Handbook. A private enterprise can use it or choose IFRS.
Who sets accounting rules in Canada?
The Accounting Standards Board, through the CPA Canada Handbook.
Who sets US GAAP?
The FASB, which the SEC recognizes as the standard setter for public companies.
Does my accounting depreciation decide my tax deduction?
No. For rental and other property the CRA lets you deduct cost through capital cost allowance, at an amount you choose up to the maximum.
Information only. This page is general information, not tax, legal or accounting advice. Tax-Services.ca is an independent publisher: we don't prepare or file tax returns or offer tax services, and we have no connection with the CRA, Revenu Québec, any government or any company named on this page. Check the figures that matter with an official source or a qualified professional.