Corporate Tax Services Overview
All corporations are required to file a T2 corporate tax return on an annual basis per Canada Revenue Agency’s established tax requirements. Canadian tax law requires corporations to file their taxes 6 months after their established fiscal year end to avoid a breach in compliance to this requirement.
Your corporate tax return requires financial statement and qualitative legal disclosures across a series of CRA formatted schedules and forms. It’s critical that the preparation and issuance of these forms be executed by a certified and competent accountant to avoid miscomputations, omission of required legal disclosures or errors. Such instances can result in material fines, penalties, and/or correcting and resubmitting your return.
Corporate tax complexities are further exacerbated as the “tax treatment” on the nature of many transactions differs from the “accounting treatment”, which can result in significant variances in your calculated tax consequences. Dependent on the activities performed and transactions reported in your corporation’s fiscal year, you may or may not be eligible for various deductions, exemptions and/or credits to reduce your current or future taxes payable. It’s your accountant’s responsibility to prepare your return and identify all available deductions and legal tax strategies to minimize your tax consequences.
Stratos’s experienced, knowledgeable accountants specialize in Canadian tax law and have been preparing corporate tax returns for our clients over 15 years. Our team has mastered the T2 Corporate Tax filing process and have streamlined our approach to allow for an incredibly simple filing process and optimal results for your business. At Stratos, we guarantee to minimize your tax liability, ensure your tax submission is error free, file your taxes on time, and prevent you from facing another stressful tax season.
Our Corporate Tax Services
- Corporate Tax Return Submission (T2)
- Sales Tax Return Preparation and Filing
- Comprehensive Tax Planning
- Financial Statement Preparation & Tax Format Conversion
- Nil Return Filings
- T4 / T5 Filings
- Payroll Taxes
- Information Return Submissions
- Incorporation Services
- Articles of Amendments
- CRA Correspondence Management
- CRA Supplementary Review and Audit Support Services
- Profit, Non Profit and Trust Entity Corporate and Information Filings
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Personal Tax Services Overview
Your Personal Tax Return (T1) is due each year by April 30th or June 15th dependent on if you have business income. Our Stratos tax experts have extensive experience providing our clients with valuable tax planning and tax preparation services. Beyond filing, we assist our clients with CRA correspondences, audits, and supplementary reviews. We offer a turn-key personal tax service to ensure we maximize your refund amount and exhaust all available credits and deductions. With the continuous changes to the Canadian Tax Act and newly emerging credits and incentives, it’s important to have a competent tax specialist file your return. Beyond filing your CRA reported income tax slips, there are a number of available forms that can reduce your tax liability or increase your personal tax refund amount, namely:
- Employment Expenses (T777 & T2200 Forms)
- Investment Income and Interest Deductions (T101, T102, T5003, T5004, T1-CP)
- Statement of Business Income and Expenditures (T2125)
- Expenses Relating to a Rental Property
- Education Tax Credit
- Registered Retirement Savings Plan Contributions
- RPP Deductions
- Capital Gain Deductions
- Home Buyers Plan
- Membership Fees, Union and Professional Dues
- Moving Expenses
- Meals and Lodging Expenditures
- Teacher’s Tax Credit
- Child Care Expense Deductions and Relief Credits
- Travel Expenditures
- Motor Vehicle Expenditures
- Depreciation Schedules
- Alimony and Maintenance Payment
- Disability Support Expenses
- Allowable Business Investment Losses (ABIL)
- Legal Fees
- Stock Options
- Income Tax Installments Paid
- Trillium Benefit Application
- Seniors Home Safety Tax Credit
- COVID-19 Work From Home Tax Credit
- Medical Expenditures Tax Credit
- And many more…
Our Personal Tax Services
- Personal Tax Preparation and Filing (T1)
- Statement of Business Income (T2125)
- Summary of Rental Income (T776)
- Other Income Statements
- GST/HST Preparation and Filings
- CRA Audit
- CRA Representation and Correspondence
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Personal Tax Requirements and Compliance
Personal Tax Filing Requirements, Penalties and Interest
Personal tax requirements and compliance in Canada are quite complex and involve multiple levels of government. All Canadians must pay taxes on their income, which is collected by the federal and provincial governments. At the federal level, the Canada Revenue Agency (CRA) administers the Income Tax Act, which sets out the rules and regulations governing personal income tax. The Act requires individuals to declare their income, report any deductions and credits, and pay taxes on the net income. The CRA also administers the Goods and Services Tax (GST), which applies to most goods and services sold in Canada. At the provincial level, each province has its own tax system and sets its own tax rates. For example, in Ontario, individuals must pay income tax on their income, as well as a provincial sales tax (PST) on certain goods and services. In addition to income tax, individuals may also be required to pay other taxes, such as capital gains tax, estate tax, and payroll tax. Individuals may also be liable for other fees and charges, such as the Harmonized Sales Tax (HST), which applies to certain purchases in certain provinces. In order to comply with the personal tax requirements in Canada, individuals must:
- File an income tax return each year
- Keep accurate records of income and expenses
- Pay taxes on time
- Report any changes in income or deductions
- Report any changes to their address or contact information
- Claim any applicable deductions or credits Individuals who fail to comply with the personal tax requirements can face serious penalties, including fines and even criminal charges.
Therefore, it is important to ensure that all taxes are paid on time and reported accurately. Some of the key components of the ITA pertaining to Personal and Corporate Tax Requirements are:
- All residents of Canada are required to report their world-wide income to the Canada Revenue Agency
- Residency is established based on the significant ties between the individual and Canada. Considerations include:
- Location of Residence
- Bank account location
- Family dwelling
- Passport ownership, etc.
- Personal taxes must be filed and paid by April 30th of each year, or June 15th if you, or your spouse are self-employed. Failure to do so can result in late filing penalties, interest, and arrears interest.
- Failing to pay your taxes is not a crime, but failing to file your taxes can be considered tax evasion. The penalties for tax evasion are harsh. According to Section238 of the Income Tax Act, failing to file your tax return can result in a fine of $1,000 – $25,000 and up to one year in prison.
- Late filings can result in penalties up to 17% of the taxes owed on first time late filers. For subsequent late filings, if any of the prior 3 years we’re filed late, you can face up to 50% in penalties and interest
- Failing to file, even if there are nil taxes owed, can result in disqualification of HST rebates, Child Canada Benefits, Guaranteed Income Supplements etc.
Personal Tax Benefits and Credits
Personal tax credits and benefits are financial incentives provided by the Canadian government to individuals and families. These credits and benefits are designed to reduce the amount of tax paid, while providing additional financial support to those in need. The Canada Child Benefit (CCB) is one of the most well-known credits and benefits offered. This benefit provides monthly payments for families with children under 18. The amount of the payment depends on the family’s income, the number of children in the family, and the age of the children. The Canada Workers Benefit (CWB) is another tax credit and benefit available in Canada. This credit helps low-income workers and their families by providing additional money to help cover their living expenses. The amount of the benefit is based on the family’s income and number of children in the family. In addition to the CCB and CWB, other tax credits and benefits available in Canada include the Goods and Services Tax/Harmonized Sales Tax Credit (GST/HST Credit), the Working Income Tax Benefit (WITB), the Disability Tax Credit (DTC), the Northern Residents Deduction, and the Climate Action Incentive. Tax credits and benefits vary from province to province, so it’s important to check with your provincial government to see what credits and benefits are available. It’s also important to remember that tax credits and benefits can change from year to year, so it’s important to stay up to date with the latest information.
- Refundable tax credits are credits that can be used to reduce your taxes owing, and any unused portion of the credit can be refunded to you as a cash payment. Examples of refundable tax credits include the Canada Child Benefit, the Working Income Tax Benefit, and the Goods and Services Tax/Harmonized Sales Tax Credit.
- Non-refundable tax credits are credits that can be used to reduce your taxes owing, but any unused portion of the credit cannot be refunded to you. Examples of non-refundable tax credits include the Disability Tax Credit, the Northern Residents Deduction, and the Climate Action Incentive.
In order to apply for these credits, specific forms and schedules are required for completion. The CRA requires that you maintain your documents (receipts/invoices) for up to 7 years in which you incurred the expense in the event of a review.
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Corporate Tax Requirements and Compliance
Corporate Tax Filing Requirements, Penalties and Interest
In Canada, corporate income tax is levied on the profits of businesses and corporations. The tax rate for corporations is set by the federal government and varies by province. Corporate taxes are paid by businesses and corporations to the Canada Revenue Agency (CRA). In order to comply with the corporate tax requirements in Canada, businesses and corporations must accurately report their income, expenses, and other financial activities. This includes filing the appropriate tax returns and paying the required taxes on time. Businesses must also keep accurate financial records and have a well-defined accounting system in place. Businesses must also ensure they are compliant with other regulations, such as filing the necessary documents and filling out the application forms for GST/HST, payroll deductions, and other taxes. Additionally, businesses may need to register for other taxes such as provincial sales tax or capital tax, depending on the province or territory in which they operate. Finally, businesses must also be familiar with the penalties and interest that can be imposed on them for failing to comply with the various tax requirements in Canada. Penalties for non-compliance can include fines, criminal charges, or even the closure of the business. It is therefore important for businesses to ensure they are aware of and compliant with the various tax requirements in Canada.
- All Canadian corporations are required to prepare and file their T2 Corporate Tax Return by 6 months after their fiscal year end
- If filed after the due date, a 5% penalty on the taxes owed is charged + up to 12% interest
- If a preceding year is filed after the due date, a 10% penalty on the taxes owed is charged + up to 40% in interest
- For corporations, a continued failure to file can result in an arbitrary assessment of the taxes owed, which is aggressive estimate of the taxes owed, usually substantially larger than the actual taxes owed.
- At this point, if the taxes remain unpaid, the CRA can freeze your corporate bank accounts and garnish the proceeds. Subsequent CRA refunds can be denied to off-set this amount owed.
As you may now be aware, failing to file or delaying your personal or corporate tax filings can result in a myriad of negative financial and even criminal consequences. At Stratos, we will ensure that you never face any of the aforementioned consequences and that you remain compliant with CRA requirements, while exhausting all available benefits and credits to minimize your tax liability and increase your refund amount.
Corporate Tax Credits and Benefits
In Canada, corporate tax credits and benefits are available to corporations that operate within the country. These credits and benefits are designed to reduce the tax burden on corporations, encouraging them to reinvest their profits and stimulate the economy.
The most common type of corporate tax credit and benefit in Canada is the Scientific Research & Experimental Development (SR&ED) Tax Credit. This credit is available to companies that invest in research and development projects. It allows them to receive a refundable tax credit for up to 35% of the total eligible costs incurred in the project.
Another common corporate tax credit and benefit available in Canada is the Apprenticeship Job Creation Tax Credit. This credit is designed to encourage businesses to hire and train apprentices in certain trades. It provides employers with a non-refundable tax credit of up to 10% of the wages paid to eligible apprentices who are employed in skilled trades.
Other corporate tax credits and benefits available in Canada include the Investment Tax Credit (ITC), which is designed to encourage businesses to invest in new machinery and equipment, and the Labour-Sponsored Venture Capital Corporation (LSVCC) Tax Credit, which is designed to encourage investments in venture capital corporations.
Overall, there are a variety of corporate tax credits and benefits available in Canada that are designed to reduce the tax burden on businesses and encourage them to reinvest their profits and stimulate the economy.
Corporation Types
In Canada, corporations are classified as either Canadian Controlled Private Corporations (CCPCs) or non-CCPCs. CCPCs are corporations that are incorporated in Canada, are owned and controlled by Canadian residents, and have no more than 50 shareholders who are all Canadian residents. CCPCs are eligible for certain tax credits and deductions that are not available to non-CCPCs, such as the Small Business Deduction and the Scientific Research & Experimental Development (SR&ED) Tax Credit. Non-CCPCs are corporations that are incorporated in Canada, but are not owned and controlled by Canadian residents, or have more than 50 shareholders. Non-CCPCs are not eligible for the same tax credits and deductions as CCPCs, but they may still be eligible for other tax credits and deductions, such as the Investment Tax Credit (ITC). Overall, CCPCs and non-CCPCs are two different types of corporations in Canada that are subject to different tax credits and deductions. CCPCs are eligible for additional tax credits and deductions that are not available to non-CCPCs.
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Why Choose Stratos as your Tax Accountants?
Stratos is a accounting and bookkeeping firm that can assist our clients with navigating their corporate and personal tax requirements and issues. Stratos’ experienced accountants and tax professionals can provide comprehensive tax planning and compliance services for our clients. We can help our clients understand their corporate and personal tax obligations, and help them to maximize their tax savings. We can provide advice on tax planning strategies, as well as help our clients to take advantage of available tax credits and deductions. We can also assist our clients with filing their corporate and personal tax returns, and help them to understand the various tax implications of their business decisions. Additionally, Stratos can assist our clients with resolving tax issues, such as disputes with the CRA, audits, and tax appeals. Our team of experienced tax professionals can provide guidance and advice on how to best resolve these issues. Overall, Stratos can help our clients navigate their corporate and personal tax requirements and issues. Our team of experienced accountants and tax professionals can provide comprehensive tax planning and compliance services, as well as assistance with resolving tax issues.