Filing corporate taxes in Canada can be challenging due to the constantly changing tax laws and regulations. Understanding Canadian corporate tax law is crucial for compl
iance with the Canada Revenue Agency (CRA) guidelines. This blog post provides an overview of filing a Corporation tax Return service Ontario and offers tips to make the process easier. Topics covered include whether to file when to file and pay, what information to file, and whether to file your corporate income tax return.
Is it necessary to submit a corporate income tax return?
Canadian resident corporations have to submit a corporate income tax return annually, regardless of whether they owe taxes or not. This applies to various entities, including for-profit, non-profit, tax-exempt, and inactive corporations. Non-resident Canadian corporations must also file if they operated an incorporated business in Canada, had a capital gain, or sold Canadian property subject to tax. The filing requirement remains even if profits and gains are exempt from Canadian income tax due to a tax treaty.
When is it mandatory to file a corporate income tax return?
Corporate tax returns (T2) must be filed within six months of the end of the tax year, which is typically the fiscal period for the company. If the year ends on the last day of a month, the deadline is the last day of the sixth month following the end of the tax year. If the year ends in the middle of a month, the deadline is the same day of the sixth month. For example, if the business year-end is February 28, the deadline is August 31, if it's May 31, the deadline is November 30, or if it's June 14, the deadline is December 14. If the due date falls on a weekend or public holiday, the tax return will be considered filed on time as long as the Canada Revenue Agency receives it or postmarks it by the next business day.
At what point are corporate taxes required to be paid?
Corporations with taxes owing must pay within two months of the fiscal year's end but can be extended to three months if certain conditions are met. These include being a Canadian-controlled private corporation (CCPC), having claimed the small business deduction in the previous year, and having taxable income within the previous year's $500,000 business limit. The total taxable income of all associated corporations in the previous year cannot exceed their limits. The Canada Revenue Agency also requires corporations to make tax installments if the taxes owed exceed $3,000. These installments allow businesses to spread out payments over the year, avoiding the need to file a large amount of money when filing the corporate tax return.
Necessary Details for Filing a  Corporate Income Tax Return
• Trial Balance: Summarizes individual accounts in a company's ledger for a specific reporting period.
• General Ledger: Comprehensive record of all financial activities of an incorporated business over a specific period.
• Bank and Credit Card Reconciliation: Verifies the accuracy of transaction data for each business bank and credit card account.
• Accounts Receivable Aging Report: Provides an in-depth snapshot of the total amount a customer owes to the company at the end of the fiscal year.
• Accounts Payable Aging Report: Shows a comprehensive overview of outstanding payments owed to vendors and suppliers as of the year-end date.
• Fixed Asset Continuity Schedule: Provides an overview of all capital assets previously purchased by the company and the cumulative depreciation taken for each type of asset.
• Legal Obligation: Incorporated businesses are legally obligated to keep tax records for six years of all financial transactions performed.
The Bottom Line
Filing corporate taxes in Canada can be simplified by understanding rules, utilizing deductions and credits, and consulting an experienced accountant. This approach ensures accurate reporting of necessary information, saving time and money for small business owners, while maximizing company savings.