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SMALL BUSINESS

All corporations—including non-profit organizations, tax-exempt corporations, and inactive corporations—have to file a T2 return for every tax year, even if there is no tax payable.

If you file your return late, a penalty applies. The penalty is 5% of the unpaid tax that is due on the filing deadline, plus 1% of this unpaid tax for each complete month that the return is late, up to a maximum of 12 months.

Keeping records

Keep your paper and electronic records for a period of six years from the end of the last tax year to which they relate.

Business number (BN)

The BN is a numbering system that simplifies and streamlines the way businesses deal with us. It is based on the idea of “one business, one number.” This helps businesses reduce costs and be more competitive. It also increases government efficiency. You get your BN the first time you register to do business

The BN consists of two parts—the registration number and the account identifier. The four major CCRA business accounts and the account identifiers are as follows:

Corporate income tax (RC);

Import/export (RM);

Payroll deductions (RP); and

GST/HST (RT).

Capital Cost Allowance (CCA)

CCA allows a corporation to deduct part of the capital cost of certain depreciable property from income it earned in the year from a business or property. This deduction is called capital cost allowance (CCA).

HST – Harmonized sales tax for Ontario

As of July 1, 2010, Ontario harmonized its retail sales tax with the GST to implement the harmonized sales tax in Ontario at the rate of 13% (5% federal part and 8% provincial part).

Harmonized sales tax for British Columbia

As of July 1, 2010, British Columbia (BC) harmonized its provincial sales tax with the GST to implement the harmonized sales tax in BC at the rate of 12% (5% federal part and 7% provincial part).

How does the GST/HST work?

If you are a GST/HST registrant, you have to charge and collect the GST/HST on taxable supplies (other than zero-rated supplies) you make in Canada and file regular GST/HST returns to report that tax. You can claim ITCs on your GST/HST return to recover the GST/HST paid or payable on purchases and expenses you use, consume, or supply in your commercial activities

Quick Method of accounting HST:

You can begin using this method if the annual worldwide revenue from your taxable supplies and those of your associates (including zero-rated supplies) is no more than $200,000 (including the GST/HST) in any four consecutive fiscal quarters over the last five fiscal quarters.

Input tax credits: You cannot claim input tax credits (ITCs) for your operating expenses if you use the Quick Method. The Quick Method remittance rates take into account the GST/HST you pay on these purchases and expenses. You do not have to keep track of the GST/HST paid or payable on your operating expenses (such as utilities, rent, and telephone expenses), meal and entertainment expenses, and inventory purchases. However, you still have to keep records of your purchases and expenses.

Who has to make instalment payments? If you are an annual filer and your net tax for a fiscal year is $3,000 or more, you may have to make instalment payments throughout the following fiscal year.

Instalment due dates: Instalment payments are due within one month after the end of each of your fiscal quarters.

PAYROLL –

Do you need to register for a payroll account?

You need to register for a payroll account if you:

pay salaries or wages;

pay tips and gratuities;

pay bonuses and vacation pay;

provide benefits and allowances to employees; or

need to report, deduct and remit amounts from other types of remuneration (such as pension or superannuation).

New or regular payroll remitter:

We have to receive your deductions on or before the 15th day of the month after the month you made them.

What are your responsibilities?

You’re responsible for deducting income tax, Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) contributions, and Employment Insurance (EI) premiums from your employees’ paycheques. You are also responsible for remitting this money to us at regular intervals, usually on or before the 15th day of the month following the month in which you deducted it. For example, if you make your deductions from

an employee’s paycheque on the 10th of May, you then have to remit the money to us on or before the 15th of June. If the 15th of June falls on a Saturday, Sunday, or holiday, the remittance is due on the next business day after the 15th. It’s a good idea to remit payroll deductions on time. If your payment is late, you will have to pay a penalty.

Penalties and interest Failure to deduct:

We can assess a penalty of 10% of the amount of CPP, EI, and income tax you failed to deduct. If you fail to deduct the required amount of income tax more than once in a calendar year, we may apply a 20% penalty to the second or later failures if they were made knowingly or under circumstances of gross negligence.

Director’s liability:

If a corporation (including for-profit or non-profit corporations) fails to deduct, remit, or pay amounts held in trust for the Receiver General (CPP, EI, and income tax), the directors of the corporation at the time of the failure may be held jointly and severally or “solidarily” liable along with the corporation to pay the amount due. This amount includes penalties and interest

Instalment payments are due within one month after the end of each fiscal quarters. Failure to make instalment payments would result in interest and penalties.

You have a March 31 fiscal year-end. Your instalment due dates are as follows:

Instalment Due dates

2.When to complete a T4 Slip: You have to complete T4 slips for all individuals who received remuneration from you during the year if:

you had to deduct CPP/QPP contributions, EI premiums, PPIP premiums, or income tax from the remuneration; or

the remuneration was more than $500