Category Archives: Corporation Income Tax

Filing of Corporation Income Tax Toronto

For corporations in Canada who want to claim the small business deductions when filing corporation income tax Toronto or other Canadian cities such as Calgary, Vancouver, the net tax rate effective from January 2012 has been 15%. The corporation is a popular business structure form in Canada. This is because the distinction in liability protection for  corporations offers as against a sole proprietorship concern. Canadian corporations are taxed slightly differently than the other business categories when filing the corporation income tax Toronto or other Canadian cities such as Calgary, Vancouver.

The important tax change when considering corporation income tax Toronto or other cities is that the corporation is a legal entity within its own rights and is taxed separately from individual proprietorship. There are different kinds of corporations in Canada. The type will determine whether or not a corporation can claim certain deductions and rates. An important type of corporation in Canada is the Canadian Controlled Private Corporation (CCPC). It has to be incorporated in Canada. The shares of its capital stock are not listed by class on any designated stock exchange. A public corporation is defined by getting its category of shares listed on a Canadian stock exchange which is designated as a public enterprise.

Canadian corporations have multiple methods to reduce the income tax amounts in Canada. They have to either follow some tax guidance which will help earn them some tax credits or they will have to take advantage of income corporate tax credits.

As all corporations are distinct legal entities, they have to complete and file a T2 Form every year. This is applicable to all corporations operating in Toronto or other Canadian cities even if the corporation happens to be an inactive one. The one exception to the rule is if the corporation is a registered charity enterprise.

Corporation Income Tax applies to all corporations with a T2 Short Return Form if they are a Canadian controlled private corporation through the tax period. The corporation could have a nil net income or a loss for the purpose of income tax. The corporation also should have a permanent establishment in only one territory or a provincial region. The corporation should not be claiming any refundable tax credits in addition to the refund of installments that it has paid. For a T2 Short Return Form, it is also mandatory that the corporation not receive or also pay out any taxable dividends. The corporation has to report its accounts in Canadian currency. In absence of all these conditions, a corporation has to file a regular T2 Return.

It is recommended that the Corporation Income Tax returns be prepared by experienced and professional tax experts as completion of a T2 Corporation Income Tax form will require usage of the General Index of Financial Information (GIFI) and it is more complex than the T1 Personal Income Tax Return.

Corporation Income Tax in Toronto or other cities has to be filed within half a year of the end of the fiscal year. If the year-end date for filing taxes is March 31st, it has to be filed before 30th September of that year.

Corporation Income Tax in Toronto or other Canadian peer cities can be filed electronically through an eFile and this applies to even non-resident corporations. If a corporation has any balance outstanding due on its corporate income tax, that balance has to be paid within a period of two months after the close of the tax year.


Filing Canadian Corporation Income Tax to CRA

Who is Liable to File the Corporation Income Tax?

All Canadian corporations, whether they are non-profit organizations or inactive corporations, are required to file T2 returns. It is obligatory for these Canadian corporations to file the corporation income tax returns every tax year whether there is any tax payable or not by a corporation.

Determining the Tax Year of a Corporation

The tax year of a corporation is also called the fiscal period that is 371 days or 53 weeks. The tax year cannot exceed the defined time frame. It is very important to determine the tax year of a corporation. The tax year of a corporation can be declared on the first T2 return of the corporation after its incorporation. You must make sure that you attach the financial statement for the corresponding tax year. At the time of filing the first corporation income tax return, the date of incorporation will be your tax year start date and for all subsequent returns your new tax year will start right after the end of your current tax year.  You choose the fiscal year end for your business when you setup the corporation.

T2 Return Filing Period of Your Corporation

All corporations are required to file their return no later than the six months after the ending of their tax years each time. If the tax year of a corporation ends at the month’s last day, you should file your corporation income tax return by the last day of six months after your tax year’s ending. If your tax year ends on any other day of the month and not the last day of the month, you should file a T2 return by the same day six months after the ending of your tax year.  If a corporation has profits, its T2 payment will be due two to three months after the ending of its fiscal year.

For example if Dec 31st is the last day of a corporation’s tax year, the following June 30th will be the due date for its return filing. The due date for filing the return for a corporation with tax year ending at September 23 will be March 23. You should always file your corporation income tax return within the required period of time to save yourself from facing any inconvenience or penalty.

Filing T2 Return and Reporting

All of the corporations for which the tax year end after 2009 and have the gross revenue of over $1 million are required to file their T2 returns online. In the case of non-compliance by the corporation for which the tax year ends after 2011, it will be subject to penalty. A corporation will have to file its tax return with CRA in order to report its corporation income tax. You will have to use your business numbers to file the provincial corporation taxes with the federal income tax return of the corporation. All of the corporations are liable to file their returns each of their tax year whether there is tax payable or not.

Reliable Corporation Income Tax Services

Although there are various options available for the corporations to file their own returns, when it comes to filing the return it is better to let the professionals handle it. The corporation income tax return of Canada is extremely complicated and can take a lot of your precious time if you do not have the required knowledge and experience. The slightest oversight or mistake in the return can cause serious issues.

Experienced tax accountants with proper knowledge and experience will make sure that the tax payable stays as low as possible. In addition, the tax accountants will make sure of accurate tax calculations and on time filing of return; they will also guide you through proper tax deductibles. Finally, in case of tax audits, experienced tax accountants can really make a difference in the final audit results.

In order to stay secure and to avoid any inconvenience or a penalty, you should hire an experienced and certified tax accounting firm. Tax 911 Now is a reliable tax accounting firm in Canada that can make sure that you pay the accurate taxes at the right time and with no problems with your accounts or corporation income tax liabilities.  Call 1-877-918-2991 today for your initial free consultation.