Every year, we file the individual personal income tax return. It’s the same way we must file corporate tax returns yearly. There are many schedules in the T2 corporate tax return. It always depends on the situation and which schedule applies to your tax situation.
The first step to prepare the T2 corporate tax return is to fill out the following schedules:
Schedule ID
- The ID page always starts with a corporate legal name/number (Box 002), which you can find on your articles of incorporation.
- Corporate residence means which jurisdiction corporation has a residence (provincially) (Box 750).
- If the corporation is incorporated in Canada, then it’s a resident of Canada (Box 080).
- Tax year start date. Choose the incorporation date if it’s a first year(Box 060).
- Tax year end date means if it’s a first year you can choose any date between 371 days (Box 061).
- If it’s the first year of filing the corporate tax return, click yes (Box 070).
- The incorporation date is always mentioned in box 70 after answering point 6 above.
- Jurisdiction of incorporatedmeansit is federally incorporated or provincially. Choose the option accordingly.
- In the account number section mention the business number (Box 001).
- In general information,the commonly chosen is the CCPC, but before you decideon the CCPC you should be under. If the corporation’s shareholder is more than 50% resident of Canada, it is CCPC; otherwise, it is another private corporation. CCPC and other privatecorporations have different tax rates(Box 040).
- Corporate address: you can always mention the updated address in the corporate tax return accordingly.
- In the additional information section, choosing the correct industry code for your business is essential. If you have more than one business, mention the percentage of each business as well (Box 284& 285).
- In the certification section,directors’ information is commonly entered until another authorized personcan sign the T2 corporate tax return.
Schedule 125 (Income statement)
Schedule 125 represents the corporation’s Income statement: total income, the total cost of goods sold (purchases), and expenses.
In the revenue section, there are many options to enter the revenue, so it always depends on which box applies to your situation. In the expenses section, enter the expense in the correct box.
Schedule 100 (Balance sheet)
Schedule 100 means balance sheet. The balance sheet contains assets, liabilities, and equity. The balance sheet must be equal, meaning the total assets number must equalthe total liabilities and equity.
Schedule 1 (Net income (loss) for Income tax purposes)
Schedule 1 starts with the accounting income but ends on taxable income. Schedule 1 is for additions and deductions for tax purposes. It always depends on the situation; this schedule determines the taxable income. This schedule is the heart of the tax return.
Schedule 50 (Shareholder information)
In Schedule 50, only shareholder information can be entered. The most common mistake is directors also joined in the shareholder information. In small businesses, directors and shareholders are the same in most cases. Shareholder information contains the first and last name, SIN number, and the percentage of each shareholder who owns the corporation.
Schedule 141 (General index of financial information)
In this schedule, answer carefully for each section. If you do not understand,then contact the corporate tax accountant.
Schedule 2 (Charitable donations and gifts)
Schedule 2 basically details the donation information: charity name and amount. Charitable donations can be carried forward for the following years.
Schedule 3 (Dividends received and paid)
Schedule 3 has two sections. Section one is for the dividends from other sources in the tax year.Enter dividends received (name of payer corporation). It’s a connected corporation, yes/no. Business number of the payer corporation.Year-end of the payer corporation. Eligible dividends or other than qualified dividends.
The second section is when the corporation pays the dividends to shareholders. Fill in the information according to the situation.
Schedule 4 (Corporation loss continuity)
Schedule 4 is for the previous year’s lossesto save it. If you have losses from the earlier years, they can be carried forward for the next 20 years, and once you have income in the future, these losses will be applicable first on the taxable income.
Schedule 6 (Summary of disposition of capital property)
In Schedule 6, if you have a capital property sold out in the year, you must enter capital gain/loss in this schedule.
Schedule 7 (Aggregate Investment income)
Schedule 7 is for investment income. It’s a reconciliation of investment income. The investment income tax rate is different from active business income.
Schedule 8 (Capital cost allowance)
If the corporation owns the assets,the information must be entered in Schedule 8 to calculate the amortization to reduce the taxable income.
It is essential to complete all the schedules correctly to get the maximum deductions. If you have any questions when preparing the corporate tax return, Webtaxonline corporate tax accountants are happy to answer your questions.
T2 corporate tax return deadline
The corporate tax return must be filed after the six months of the fiscal year. For example, if the corporate year endson March 31, the due date to file the corporate tax return is September 30.
The corporate tax payable due date is different than the filing due date. The corporation tax expected due date is three months after the fiscal year-end. For example, if the corporation year end is March 31,the tax payable due date is June 30.
The corporate tax payable due date is always before the filing due date.
It is essential to complete all the schedulescorrectly to get the maximum deductions. If you have any questions when preparing the corporate tax return, Webtaxonline corporate tax accountants are happy to answer your questions.
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