For many small businesses in Canada, corporate tax returns are due just around the corner.
It’s an unavoidable part of running a business in Canada, and we understand that not everyone is as gung-ho about accounting and compliance as we are here at AIS Solutions. With that in mind, we’ve put together a brief guide to help you through the corporate tax return season.
Record the Important Dates
If your business is classified as a sole proprietorship (that is, an unincorporated enterprise owned and run by only you where there is no legal distinction between yourself and the business entity), June 15th is your tax filing deadline.
For corporations, the tax filing deadline depends upon your year end. You’re required to file your tax return within six months of the end of each tax year. If your tax year ends on the last day of the month, the return must be filed on the last day of the sixth month following the end of the tax year. If the last day of the tax year is not the last day of the month, however, the return must be filed by the same day of the sixth month after the end of the tax year.
For example, if your tax year ends on March 31st, your filing due date is September 30th. If your tax year ends on August 31st, you must file by February 28th. If your tax year ends on September 23rd, your filing due date is March 23rd.
It follows, then, that small businesses with a tax year end date of December 31st must then file their tax return by June 30th.
For more information, visit the Canadian government website for important dates for corporations.
Looking to save on taxes this year? Download our free guide: Tax Saving Strategies for Every Small Business Owner.
While tax return filing dates fall six months following the end of the tax year, the corporate tax balances owing are due either two or three months after the fiscal year end. Here is a guide to help you determine whether you fall into the two or three month category.
Since you won’t know the amount owed until you’ve prepared the return, the vast majority of the time businesses will file their tax return at that same two or three month mark for simplicity’s sake.
Collect the Necessary Documents
Once you’ve got your dates sorted, it’s time to move on to documents.
Business owners are required to keep documentation of all business-related expenses from the previous six years. These records include financial statements, tax returns, cheques, receipts, invoices, and bank statements. Keeping organized records of these documents will prove to be hugely beneficial come tax season, and it can help you to receive beneficial deductions and tax credits.
Now, there are a range of accounting documents and business records needed to file your corporate tax return in Canada:
- Deposit slips
- Bank statements
- Business credit card statements
- Income records
- Loan agreements
- Year-end balance statements
- Year-end inventory listing
- Capital purchase/sale receipts
If you have employees or subcontractors:
- T4SUM: Summary of Remuneration Paid
- Worker’s compensation payments/benefits
- Source deductions and taxable benefits for employees
- T5019: Statement of Contract Payments
Tax Slips, Correspondence, and Receipts
- Previous Tax Returns
- Previous Notices of Assessment
- CRA correspondences
- Income tax, GST/HST/PST and payroll installment payments
- T4: Statement of Remuneration Paid
- T4A: Pension, retirement, annuity, and other income
- Y5013: Partnership Information Return
If you’re incorporated:
- T2: previous incorporation tax return
- Shareholder dividends and transactions
- T2 Financial statements
- T5SUM: Return of Investment Income
- Articles of Incorporation
- Annual Registry Return
- RRSP contribution slips
- T3 slips
- T5 slips
- TFSA transactions
- T5008 Statement of Security Transactions
- Stock purchases and sales invoices
- Business taxes, licenses, memberships
- Bad debt
- Legal and accounting fees
- Motor vehicle expenses
- Charitable donations
- Business insurance premiums
- Office expenses
- Salaries, wages, and benefits incurred by you as an employer
- Gross salary amount paid to employees
- Employer paid CPP and EI contributions
- Employer paid premiums for sickness or disability insurance
The T2 form operates as a federal, provincial, and territorial income tax for Canadian corporations. If you’re located in Alberta or Quebec, however, you’re also required to file a separate provincial corporate tax return.
How to File Your Corporate Tax Return
You can file your corporate taxes electronically, and in many cases the CRA mandates electronic filing. If so, you must do so using CRA certified software.
From there, you can choose to either file your taxes using a tax software and online submission, using CRA certified software before filing through the mail, or by using a professional service to file your corporate taxes on your behalf.
While it’s possible to file your own corporate taxes, there are some significant benefits to hiring a professional service to do so on your behalf. Investing in a professional tax service helps you to ensure that you are fully compliant, that you receive all possible benefits, and that you avoid unknowingly incurring costly penalties.
AIS Solutions is proud to offer a full-service tax planning and filing solution. For more information regarding filing corporate tax returns in Canada, please contact the team at AIS today.