Remember how each individual must file their income tax? Well, the same goes for corporations.
What is a T2 form?
The T2 form is the taxpayer’s form for all Canadian companies to file income taxes. Businesses must submit T2 forms within six months of the end of the fiscal or calendar year. There are three main ways to fill out T2 forms, including through CRA Corporation’s Internet Filling Services and through My Business Account. Businesses can also print a return with a T2 barcode, fill in the appropriate financial information, and mail/hand it over to the CRA.
Who must complete T2?
Form T2 must be filed by all resident corporations, including non-profit, inactive, and tax-exempt corporations with annual gross receipts in excess of $1 million. The T2 is filed each year whether or not the company has taxable income. However, there are some exceptions to the rule, which you can find here.
Take help from a tax accountant near me for tax services and T2 corporation income tax returns.
How can I get T2 online?
The T2 form is available online as a PDF file which you can fill out online or print and mail/deliver to the CRA. You can find the form through CRA Corporation’s Internet Filling online service. You can also use third-party tax preparers to help you find and complete your T2 tax returns.
How to calculate business income?
Calculating a company’s taxable income requires determining gross income, which includes gross sales, discounts and returns, and income from interest and sales of taxable goods. You can use the CRA-supported tax calculators available online. Once you have your gross income, subtract the cost of goods sold (if your business sells goods), which is the amount you spend on inventory. The difference is considered your taxable income.
However, there is a final step to deduct eligible expenses such as rent, utility bills, repairs, interest on borrowed money, and service charges. The credit rating agency will tax the remainder (gross receipts minus the cost of goods and eligible expenses) using the standard tax rates for the relevant year.
How to report T5013 on T2?
Form T5013, also known as a partnership tax return, is another tax document for individuals, partnerships, corporations, and trusts. Taxpayers who need to complete form T5013 must also report this information on their T2 forms. Simply complete T5013 first and then use the information to complete sections of the T2 corporation income tax return form. Most of the T5013 slides have been adapted from the T2.
T2 distribution
The easiest way to complete your T2 corporate income tax is through certified tax preparation software approved by the Canada Revenue Agency or through an accountant.
Where do I send my T2?
Businesses are required to submit their T2 returns online using CRA-approved trading software. Take help from a tax accountant near me for tax services and T2 corporation income tax returns.
When to send T2
There is no specific month or deadline for filing a T2 form because companies have different tax years. Regardless of when yours begins, you must submit your T2 form within six months of the end of the tax year you’re reporting.
What is the deadline for the T2 tax return?
The deadline for filing a T2 depends on your company’s tax year. The fiscal year ends when your company’s fiscal year ends.
You must file your company tax return no later than six months after the end of the company’s tax year. When the company’s tax year ends on the last day of the month, file the return by the last day of the sixth month following the end of the tax year. If the last day of the tax period does not coincide with the last day of the month, submit the return within the same day of the sixth month following the end of the tax period. For example, if your company’s fiscal year ends on March 31, the T2 filing deadline is September 30. If your company’s tax year ends on March 23, the deadline for filing T2 is September 23.
If the T2 deadline for submission falls on a Saturday, Sunday, or a public holiday recognized by the CRA, the return is considered to have been submitted on time if sent on the first working day following the filing deadline.
What are the T2 penalties?
There are a number of penalties associated with submitting a T2 late or if you make errors or omissions in your return.
The easiest T2 penalty to avoid is the no-deposit penalty you incur if you show up late for T2. This penalty is equal to 5% of the unpaid tax due within the filing deadline, plus 1% of the unpaid tax for each full month of delay in filing, up to a maximum of 12 months.
A company may be charged an even higher late filing T2 penalty if the CRA issues a notice of filing and has ascertained the failure to file in any of the previous three tax years. This penalty is equal to 10% of the unpaid tax when filing the tax return, plus 2% of the unpaid tax for each full month of delay in filing the tax return, for a maximum period of 20 months.
Bottom line
We have summed up most things about t2 tax returns. There are also penalties for errors, omissions, unreported revenue, late payments, and more. For more details on the T2 late filing penalty and other penalties, visit the Canada Revenue Agency. Take help from a tax accountant near me for tax services and T2 corporation income tax returns.