Corporate Tax Returns in Etobicoke
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Filing corporate tax returns in Etobicoke
In general, companies based in Canada are subject to Canadian Corporate Income Tax (CIT) on worldwide income. Non-resident corporations are subject to CIT from income from business in Canada and from capital gains from operating Canadian taxable businesses. The buyer of a Canadian taxable property is generally required to deduct tax on the amount paid if the non-resident seller does not obtain a certificate of approval.
At WebTax Online, we have in-depth corporate tax experience. We, therefore, know the intricacies of preparing a T2 tax return.
Our goal is to make life easier for entrepreneurs, which is why we have developed this section, which contains a wealth of information and tools to help you better understand what it means to prepare a T2 corporation income tax return in Canada.
What is a T2 tax return?
T2 is a mandatory corporate tax return form for the federal government of Canada. The exact term for this statement is the “corporate income statement.”
Each company must file a corporate income tax (T2) for each fiscal year. Businesses can complete one of two types of T2 returns proposed by the Canadian tax administration.
T2 corporation income tax return (8 pages)
An eight-page T2 profit and loss account that can be used by any company. However, in addition to T2, there are several times. It is not enough to simply file a T2 corporation income tax return to fulfill your company’s obligations to the federal government of Canada. There are other financial statements that need to be included in the General Financial Information Index (GIFI) with appropriate planning.
T2 Short return
The second type, T2 Short Return, has only two pages and three floors. In common tax jargon, it is often referred to as “Short T2”. However, it is important to know that not all companies can use T2 – Short Return. You should refer to Guide T4012, Guide T2 – Income Tax Businesses to make sure you can use it before completing it.
What data is needed to fill out a T2 tax return?
Whether you prepare your tax returns for your business or have them processed by an accountant, you must have the following information:
- Company name and address
- Business number of the Canadian Financial Agency
- Names (first and last names), addresses, and countries of residence of all shareholders of the company
- Names (full name), address, and country of residence of all eligible shareholders subscribed by the company.
- Complete balance sheet (income statement, balance sheet) contained in the General Index of Financial Information (GIFI)
- The main activities of the company
- Various sources of income for the company (investment income, etc.)
- Whether the shareholders own shares in other companies or if the company is linked or affiliated with other companies
- Whether the company conducts its business or owns assets overseas
- If the activities take place in other Canadian provinces
- Whether the company has received or paid dividends
- Acquisition or disposal of fixed assets
This list is far from exhaustive, but it does provide a good overview of the type of information needed to present T2 in Canada.
Who has to file the T2 tax return?
All companies based in Canada must file a T2 declaration with the Canadian Revenue Agency. The law is very strict; all companies must do it, even if the company
- doesn’t have to pay taxes
- Is inactive with no activity (no income)
- is a non-profit organization
- It is exempt from tax
So you have to take corporate tax liability very seriously. There are some exceptions for some types of companies, and you can check these cases with the tax authorities. Sometimes, depending on different situations, non-resident companies are required to file a T2 in Canada. For example, a non-resident company that operated in Canada or made a taxable gain or lost Canadian taxable assets.
How is the T2 tax return presented?
Hire an accountant
The easiest way to file a tax return with our company in Canada is to do business with an accountant to prepare your taxes. Request the documents and information stated above. Then, once the work is completed, it will force you to sign a T183 CORP permit. The T183 CORP form is a corporate return to electronic transmission. After reviewing your return and signing the T183 CORP, your accountant will be able to electronically file a T2 tax return with the Canadian Revenue Agency.
Use of software solutions
You can submit your T2 via the T2 software and submit it via the Internet or in paper format. If you have decided, you can still fill in the declaration with PDF z. However, we do not recommend filing directly on the government page, as there is too much risk of miscalculations or omissions of important times.
Note that if your business has a gross income over $ 1 million, it cannot file a paper tax return. Below is the link for more information on the course: Compulsory internet filing for corporate tax returns. Canadian tax authorities impose a $ 1,000 fine on companies that do not file online.
What are the deadlines for submitting the T2 tax return?
Every company in Canada must file a T2 tax return form within six months of the end of each tax year.
Fiscal year ending on the last day of the month:
If your company has chosen a tax period that ends on the last day of the month, you must file the T2 tax return by the last day of the sixth month following the end of the tax period. Specific examples are given below:
- The end of the fiscal year for your company is December 31, and the application deadline will be June 30
- The end of the fiscal year for your company is July 31, and the application deadline is January 31
- The tax year that does not end on the last day of the month
If your company has determined that the tax period does not expire on the last day of that month, it must file a T2 tax return no later than the same day of the sixth month following the end of the tax period for your agency.
Here is an example:
The end of the fiscal year for your company is September 14, and the application deadline is March 14.
It is very important to file a T2 tax return on time because Revenue Québec has several legal means to impose penalties and interest on your company.
How to determine your company’s fiscal year
For a company that is not in its first year of existence
If it happens that your company is not in the first year of existence and has already filed a T2 tax return in the past, you will be forced to keep the same fiscal year-end date as your company. If you want to change this end date, there is a way to do it: you will need to send a letter to your company’s tax center specifying the reason for the change. Without the consent of the tax authorities, you must continue to strictly adhere to the set finish date.
For the company, in the first year of its existence
If your company is in its first year, you can choose the end date for the fiscal year. You should be aware of the following rules:
- The company’s fiscal year cannot exceed 53 weeks or 371 days.
- In the first year, you must select a start date as the start date of your company’s fiscal year. You must count on the 371st day from this constitution date.
You are free to choose the end date of the fiscal year for your company; it is not necessary to use the calendar year or December 31. It is a good idea to choose the end date of the fiscal year that occurred when your business is least active. If you have multiple companies, it is easier to choose the same end date for all of your companies.
What other plans do I need to fill in my T2 tax return?
The list of times that may be required for T2 is too long to be posted on this site. However, we will provide you with a small list of some of the most important times.
- Information on the T2SCH100 financial statements
- T2SCH101 Introductory information on the balance sheet
- Information on the income statement T2SCH125
- T2SCH141 Notes checklist
Companies must then fill in the following attachments:
- T2SCH1 Net profit (loss) for income tax purposes
- Information for T2SCH50 shareholders
The list of 50 shareholder information is relatively straightforward. However, table 1 of net profit is more complex. This program is used to reconcile accounting and tax profit, which is not a chore for laymen. Indeed, the accounting profit may not necessarily be the taxable income used to determine the corporate tax rate. First, there are the ineligible costs (tax penalties, golf expenses, personnel, depreciation, etc.), and second, 50% deductible expenses, such as expense representation, not to mention a number of other exceptions.
In addition, the most used corporate attachments are:
- Charitable Donations and T2SCH2: Plan 2 is used for companies that have contributed to charitable or political contributions.
- T2SCH3 Dividends Received, Taxable Dividends Paid, and Part IV Calculation of Taxes: Scheme 3 applies if you have paid dividends to your shareholders or if you have received dividends from other companies.
- T2SCH4 Corporation Loss Continuity and Application: Schedule 4 is used to calculate the history of the various losses suffered by the company during its existence.
- T2SCH5 Calculation of Additional Taxes – Company: Appendix 5 is used to distribute the income in the provinces where the company has a permanent establishment in order to deposit the taxable income in the respective provinces.
- T2SCH6 Overview of capital assets: Appendix 6 is required if you have sold or disposed of assets (stocks, assets, bonds, assets, etc.)
- T2SCH7 Aggregate Investment Income and Active Business Income: Plan 7 is used to actively distinguish between investment income and operating income because the tax rate and deduction approach for small businesses are different.
- T2SCH8 Contribution to Capital Expenditure (CCA): Template 8 is used to calculate the tax amortization of eligible expenses. As mentioned above, depreciation is not tax-deductible. However, you are entitled to tax depreciation, which is calculated with predetermined depreciation rates based on asset categories according to tax laws.
- T2SCH9 Associated and associated companies
- T2SCH10 Cumulative deduction of eligible capital
Here is a link to the Canadian Tax Office, which collects most of the times needed to file a T2 tax return:
http://www.cra-arc.gc.ca/formspubs/clntgrp/bsnss/crprtn-eng.html
Where to send T2 paper statements?
If your business does not need to apply online because its gross income is less than $ 1 million, you can submit your paper return to the Canadian Revenue Agency.
You must send the tax return corresponding to your business address. You can find the tax center corresponding to your company on the Canadian Revenue Agency website.
Rates
Canadian companies must adhere to established tax rules. While registered businesses and the self-employed are taxed at the personal income tax rate, corporate taxable income equals income minus:
- current expenses, which are deducted in the year in which they are paid and include wages, rents, rents, production inputs, and interest on loans;
- purchases of capital goods, such as buildings and machinery, which are deducted overtime at the rates set for the various classes of depreciable assets; And
- Business losses that are deducted for previous or subsequent years.
Additionally, corporations pay taxes on their taxable income around the world, while foreign corporations pay taxes on their taxable income in Canada.
The company pays a base corporate tax rate of 38.0%, and in some cases, the rates may be reduced. Corporations that pay provincial/territorial corporation tax receive a 10% federal reduction, which reduces the corporate income tax rate to 28.0%.
When do I have to pay taxes on my T2?
Visit the following link to get the answer: When do I have to pay my company’s taxes?
What penalties can be associated with my T2 tax return?
Here is a list of penalties and links to the Canadian Revenue Agency website for more information on the various penalties:
- Fine for no-show
- Installment issues
- Sanctions for large companies
- Penalty for false declarations or omissions
- Penalties for false declarations of tax matters by third parties
- Fine for non-resident companies
- Penalty for non-compliance with mandatory internet production
- Other penalties
WebTax Online: Your T2 news source in Etobicoke and Canada
Don’t ignore your tax obligations; your company’s financial and legal health depends on it. We hope this article has provided you with a wealth of information to help you with your research.
If you still have questions about the T2 tax return, simply contact our team of experts. You can use personalized support when filling out tax documents.
Justification
Through the War on Business Profits Act, the Canadian federal government introduced a corporate income tax in 1916 to help finance the country’s involvement in World War I.
Corporate income tax has its drawbacks and advantages. Regarding the former, although the goal of the Canadian tax system is to tax income only once, income can be taxed twice: when it is earned by a company and then when shareholders receive dividends taxed as personal income.
In addition, corporate taxation can have negative consequences for investments, corporate finance, consumers, and employees. For example, because corporate income tax is applied to the return on investment, this can affect a company’s decision to make new investments.
In regards to corporate finances, the deductibility of interest on taxable income can lead companies to rely more on debt than equity to finance their investments, with a potentially greater risk of insolvency or bankruptcy.
For consumers and employees, the corporate tax burden can be passed on to consumers through higher prices and/or to consumers through lower refunds. According to a 2012 Canadian Tax Foundation report, much of this burden is passed on to employees.
This means that there are reasons to keep the corporate tax system. First, instead of immediately distributing all corporate income to shareholders as dividends to be taxed as personal income, companies can withhold some of the income as retained earnings, which can raise share prices and generate capital gains for shareholders. Since capital gains are considered the personal income of shareholders only after the shares have been sold and the profits have been realized, the collection of corporate income tax leads to an early collection of the tax income.
Second, some – if not all – corporate income can be distributed to foreign shareholders, where Canadian income is taxed in accordance with tax treaties. In this case, the taxation of Canadian corporations would ensure the collection of at least part of the tax revenue.
Recognizing that corporate taxation has advantages, Canada has introduced measures to reduce at least one of its disadvantages: double taxation. For example, the value of taxes paid by Canadian companies is returned to shareholders through a dividend tax discount, which reduces the incidence of double taxation.
What if I do not pay t2 corporation income tax?
Your company can be dissolved if it does not submit its annual reports. We have a responsibility to ensure that company information is up to date. If your company does not submit its annual reports, we will assume that it is not working and will take steps to dissolve it (thus legally ceasing its existence).
Cancellation can have serious consequences, including a lack of legal capacity to do business.
We recognize that some companies, especially small businesses, may not always be aware of these storage requirements. So although the law allows us to dissolve a company one year after the application has not been filed, it is our policy to dissolve the company only if the company has not filed the application for two years. Additionally, if your company is threatened with cancellation, we will send you a final notification of the cancellation in progress and give you an additional 120 days to submit the required annual returns. This final notification will be sent to all valid addresses we have on file (including the addresses of current directors). In addition, the name of the company to be liquidated will be disclosed in the monthly transactions of Corporations Canada.
Who issues my corporation tax refund check?
For fiscal years ending January 1, 2009, or later, the Canadian Tax Office issues federal and Ontario tax reimbursement checks. The refund amount will be reduced by any unpaid federal and/or provincial taxes.
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How long will it take to process my Ontario corporation tax credit application?
For non-refundable tax credits, with the exception of the Ontario R&D tax credit, the processing time is typically up to 60 days from the date the Canadian Financial Agency receives the T2 declaration and related plans.
All applications for an Ontario Research and Development Tax Credit (Ontario Refundable Innovation Tax Credit, Ontario Business and Research Institute Tax Credit, and Ontario Tax Credit Ontario non-refundable research and development) are being investigated in conjunction with federal scientific research and experimental development. (SR&ED). The processing time for the Canadian Revenue Agency’s SR&ED Compliance Area depends on whether the application is refundable or not.
- Refund requests are generally processed within 120 days of receipt of the completed application by the Canadian Financial Agency.
- Modified T2 Redemption Requests are generally processed within 240 days of receiving a complete request from the Canadian Treasury.
- Non-refundable claims are generally evaluated within 365 days of receipt of the completed application by the Canadian Financial Agency.
The above processing times apply to complaints that have been selected for review. Complaints received as presented are processed much earlier.
The Canadian Tax Agency’s Film Services Department reviews / verifies Ontario Film and Television Tax Credit or Ontario Production Services Tax Credit, usually under:
- 60 days from receipt of the completed complaint, if no verification is performed, or
- 120 days from receipt of the complaint filed in during the audit.
This means that there are reasons to keep the corporate tax system. First, instead of immediately distributing all corporate income to shareholders as dividends to be taxed as personal income, companies can withhold some of the income as retained earnings, which can raise share prices and generate capital gains for shareholders. Since capital gains are considered the personal income of shareholders only after the shares have been sold and the profits have been realized, the collection of corporate income tax leads to an early collection of the tax income.
Second, some – if not all – corporate income can be distributed to foreign shareholders, where Canadian income is taxed in accordance with tax treaties. Depending on the provisions of the treaties, this Canadian original income cannot be taxed. In this case, the taxation of Canadian corporations would ensure the collection of at least part of the tax revenue.
Recognizing that corporate taxation has advantages, Canada has introduced measures to reduce at least one of its disadvantages: double taxation. For example, the value of taxes paid by Canadian companies is returned to shareholders through a dividend tax discount, which reduces the incidence of double taxation.
All other refundable tax credits are processed within a reasonable time frame.
How can I voluntarily disclose Ontario corporation tax?
Since April 3, 2008, the Canadian Tax Administration has administered voluntary corporate income tax on behalf of Ontario. Ontario corporate tax returns follow the procedures set forth in the Canadian Revenue Agency’s Voluntary Disclosure Policy.
What should I do if I disagree with the Canadian Revenue Office’s decision on my objection?
If you disagree with the Canadian Treasury Department’s decision on your objection, you can appeal.
What should I do if I am dissatisfied with the services I have received from the Canadian Treasury Department after exhausting the normal complaint channels?
If you are dissatisfied with the services you have received from the Canadian Treasury, you have the right to file a formal complaint. Before considering the service complaint process, the Canadian Tax Office strongly recommends that you:
- first, try to resolve the problem with the Canadian Revenue Agency employee you have dealt with,
- If you still disagree with how your concerns are being addressed, ask your supervisor to discuss the matter.
If you are still not satisfied with how your complaint is handled, you can file a complaint about the service.
Modified/ Amended T4 briefs
If you receive a revised T4 document due to Phoenix paycheck issues, your employer will pass the revised T4 document to a credit rating agency, which re-evaluates your personal income to reflect the revised T4 document with earnings. Correct. However, the time limits provided by the Income Tax Act prevent the CRA from proactively re-evaluating individual tax returns for modified T4 vouchers if more than three years have passed since the date of the original assessment (or since initial notification that no tax).
Due to these time limits, the CRA no longer proactively re-evaluates personal income tax returns starting December 31 of the year, three years after the year to which the T4 voucher relates. For example, as of December 31, 2021, the CRA has stopped proactively re-evaluating its personal income tax return for 2018.
However, the CRA may, at the request of the employee, revalue the tax return outside the three-year period if the revaluation involves a refund or reduction of the tax due. As a general rule, the CRA will not adjust the personal income tax return to the amended T4 document outside the three-year period if this results in an additional tax.
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If you need to file your personal tax return look no further. The accountants at WebTaxOnline can get your work done for you at very competitive rates. Call us or send an email today. Just get in touch with is and we’ll be sure to get back to you within 24 hours with the relevant information regarding your personal tax return.