Tax Season is nearing us at a fast pace! Meaning it’s that wonderful time of the year to start thinking numbers, more numbers, and deadlines. Sole proprietors, small business owners, and partnerships in Canada should remain up to date with the deadlines set out for filing and payment of taxes for their business.
Consequences of missing these deadlines can be harsh: Canada Revenue Agency (CRA) can impose a 5% penalty on the balance owing, plus 1% of the balance owing for each full month that your return is late, to a maximum of 12 months. Moreover, if you’ve incurred late-filing penalties in any of the three preceding taxation years, your late filing penalties are doubled – yikes!
This post’s purpose is to simplify and layout important deadlines for 2020 so you can avoid costly mistakes.
Tax Deadlines Based on Business Structure
Corporate taxes payable are due two months after the corporation’s fiscal year-end date. With the exception of new corporations in their first year of operations, corporations are required by the CRA to pay monthly or quarterly installments throughout the year. This is if their taxes payable for the current or preceding taxation year are more than $3,000; otherwise, interest will accumulate on any balance unpaid or due.
Canadian Controlled Private Corporations (CCPCs)
Corporate taxes payable are due three months after the corporation’s fiscal year-end. If your corporation qualifies for the small business deduction (SBD) and is expected to be taxable in the fiscal year, the CRA must have received the installments required throughout the year with the balance amount due by this date, otherwise, interest will accumulate on any balance unpaid or due.
All Corporations in Canada
Corporate tax returns (T2) must be filed within six months of your corporation’s fiscal year-end. Returns filed after this date with taxes owing will be assessed a penalty on amounts owing as well as late filing penalties.
Self-employed individuals (and their spouses or common-law partners) must file their income tax and benefit returns by June 15th. However, to avoid interest charges, balance due must be paid by April 30th.
For individuals who are members of a partnership, the T5013 is due no later than March 31st of the calendar year following the year in which the partnership’s fiscal year ended. In cases where the members of the partnerships are corporations, the T5013 is due no later than five months from the end of the partnerships fiscal period.
Other Important Deadlines
Payroll remittances are due on the 15th day of the following month for corporations with less than $25,000 in monthly withholding. If your withholding amount exceeds $25,000 then you may be required to remit on an accelerated schedule, more frequently.
Information Returns and Slips
Information returns that include T4, T4A, T5, T5018 and others must be filed on or before the last day of February in each year and shall be in respect of the preceding calendar year.
Date of Payment
All corporate tax payments which are mailed to CRA are considered to be made on the day the payment is received by CRA and not on the day it was mailed. In addition, if the due date falls on a Saturday, Sunday, or a public holiday recognized by CRA, the information return, as well as the payment for the balance owing, is due the next business day.
All in all, if this post did not suffice, the CRA is kind enough to have a Business Tax Reminders mobile app to help businesses remember their corporate tax deadlines! The app lets business users create custom reminders and alerts for key due dates related to instalment payments, returns and remittances! With all this to your avail, we hope to keep you well ahead in the yearly tax roundabout!
Disclaimer: This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact your advisor or accountant to discuss these matters in the context of your particular circumstances. Vartika Satija, CPA, CA do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.