Based on federal legislation, all corporations (minus registered charities and tax-exempt corporations) are required to file a corporate tax return (T2) each year. This includes inactive corporations and non-profit organizations.
In most cases, all resident corporations may file their return electronically. However, if their revenues exceed $1 million (CDN), the filing is mandatory via the Internet. This comes in under the “Mandatory Internet Filing” requirement.
This read will illustrate key information for filing a corporate tax return in Canada including how much it costs.
The basic cost is set at $150.44 + tax.
In general, the corporation will pay more than the basic cost while filing a corporate tax return. These numbers fluctuate depending on the corporation in question, its data, revenues, and related information.
This determination is made by the tax professional analyzing the corporation’s case and pinpointing what the best course of action is. In most cases, the cost is going to settle in the $500-$1500 range. Larger corporations receive hourly rates starting at $90/hour due to the complexity of their documents.
If necessary, additional costs are tacked on based on the accumulation of data and potential vetting of data. This is included in the cost associated with the return and is paid by the corporation.
While filing the necessary forms, the corporation is required to have access to specific information. This information is used to accurately fill out the forms and ensure the corporation does not face legal complications with Revenue Canada.
What information is required by the government?
Revenue Canada asks for the following information:
1) Revenue Sources
2) Expenses (Types of Expenses)
3) General Information About Business (Name)
4) Maintenance and Repairs
5) Equipment Rental (Any Other Type of Rentals)
6) Conferences and Meetings
7) Incoming or Outgoing Interest
8) Training Costs
9) And More!
Everything Revenue Canada requires is mentioned on their official website and is important while filing a corporate tax return.
Candidates For Filing
As mentioned, a corporate tax return has to be filed by all resident corporations.
This includes non-profit organizations, inactive corporations, and some tax-exempt corporations. Even if the corporation has zero tax payable, they’re required to put together a tax return as long as they’re official.
The corporation would have to be legally terminated for it to avoid a filing.
The next question is, what about non-resident corporations that are working from abroad?
The answer is simple enough. All non-resident corporations are expected to file a corporate tax return (at the established time and cost) if they had taxable capital gain, conducted business in Canada, or sold Canadian property under its name.
If the corporation checks any of these boxes, it will be expected to fill out the necessary form(s). If not, the corporation is liable for legal consequences and might face additional trouble based on their business in the country.
Timing of Filing
With regards to the cost of filing a corporate tax return, it’s also important to know when to file the return. If the filing is late, there are additional charges tacked on top of what’s already in place, and it can be a steep penalty.
In general, a corporation has less than six months after the end of a tax year to complete its filing. Please note, the tax year is dependent on the business and its fiscal year (not the calendar year). If the filing falls on a public holiday, it will be officially filed on the first business day back. This means you should file it well in advance to avoid a penalty as it will be deemed late by the government.
This is an important factor and should be kept in mind before filing a corporate tax return.
Also, there is a $1000 fine for any corporation with $1 million+ revenues if they don’t file via the Internet. This is a general stipulation set by the government and is expected to be adhered to. All corporations and its representatives are asked to read and follow the General Index of Financial Information (GIFI).
Payment of Taxes
This will depend on the established structure by the corporation while filing its tax forms.
In most cases, the corporation will have an established monthly or quarterly payment schedule if the amount payable is greater than $3000 for the tax year. The payments can be made late but there are late penalties for doing so, and they vary based on the deadline.
It’s important to note, the corporation may pay its taxes as they deem fit. This means the payment can be made via the Internet or financial institution.
After the first payment date is established, the corporation is expected to make their payment on the same day during their next payment period. For example, if the first payment was made on the 30th, it’s expected the next monthly payment is made on the following 30th.
This keeps things streamlined for all involved parties.