Direct answers to the tax questions Canadian business owners actually ask, written and reviewed by professional tax accountants against current CRA rules. No sales pitch, no filler.
Usually yes, but only if you leave profit in the company. A CCPC pays about 9-12.2% on its first $500,000 of active business income versus personal rates up to 53.5%.
Read the full answer →Registration is mandatory once your worldwide taxable revenue exceeds $30,000 in a single calendar quarter or over four consecutive quarters. Below that you are a small supplier and registration is optional, though voluntary registration is often worthwhile..
Read the full answer →The CRA charges 5% of the balance owing plus 1% for each full month the return is late, up to 12 months. A repeat late filing within three years doubles this to 10% plus 2% per month, up to 20 months..
Read the full answer →A bookkeeper records transactions and keeps your ledger accurate month to month. An accountant interprets those records, files returns, and plans.
Read the full answer →You can deduct any reasonable expense incurred to earn business income. The recurring high-value claims are vehicle costs, home office, professional fees, capital cost allowance on equipment, and 50% of business meals and entertainment..
Read the full answer →A simple desk review of one or two items typically resolves in four to eight weeks. A full field audit of a corporation commonly runs three to twelve months, and complex or disputed files can extend beyond a year..
Read the full answer →Neither is universally better. Salary builds RRSP room and CPP, is deductible to the company, and triggers payroll remittances.
Read the full answer →A Canadian corporation pays federal and provincial income tax on its profits, collects and remits GST/HST on sales, remits payroll source deductions on wages, and may owe provincial payroll and capital taxes. Income tax is the largest, but the others carry the harshest penalties..
Read the full answer →The small business deduction lowers the federal corporate tax rate to 9% on the first $500,000 of active business income for a Canadian-controlled private corporation. Combined with provincial rates, it produces a total rate near 9% to 12.2% instead of the general 23% to 31%..
Read the full answer →A T3 trust return is due 90 days after the trust's tax year-end. Most trusts have a December 31 year-end, making the deadline March 31, or March 30 in a leap year.
Read the full answer →You do not refile the return. For most errors you adjust in a later return or request an adjustment through CRA My Business Account.
Read the full answer →Yes. Every corporation needs financial statements to file its T2 return, and the CRA requires the GIFI schedule summarising them.
Read the full answer →Yes, you can deduct the business-use portion of your vehicle costs, based on business kilometres divided by total kilometres driven in the year. A logbook is what makes the claim defensible.
Read the full answer →A shareholder loan is money moving between you and your corporation outside of salary or dividends. If you borrow from your company and do not repay within one year of its year-end, the full amount is added to your personal income.
Read the full answer →Closing a corporation means settling its debts, distributing remaining assets to shareholders, filing a final T2 return, closing CRA program accounts, and then filing articles of dissolution with the incorporating jurisdiction. Done in the wrong order, it can trigger avoidable tax or leave you personally exposed..
Read the full answer →Usually no. Most goods exported from Canada and most services provided to non-resident clients are zero-rated, meaning you charge 0% GST/HST but can still claim input tax credits on your related costs.
Read the full answer →Capital cost allowance is how you deduct the cost of business assets over time instead of all at once. Assets are grouped into classes, each with its own annual rate, and you claim a percentage of the remaining balance each year.
Read the full answer →Register for a payroll (RP) program account with the CRA, collect a TD1 form from each employee, then withhold income tax, CPP and EI from every pay and remit it by the 15th of the following month. You also issue T4 slips by the end of February..
Read the full answer →A T4 reports employment income and the CPP, EI and tax withheld from an employee. A T4A reports other income such as fees to contractors, pension income, or certain benefits, and generally has no CPP or EI.
Read the full answer →A holding company is a corporation that owns shares of your operating company rather than running the business itself. It can move surplus cash out of the operating company for creditor protection, defer personal tax, and help with estate planning.
Read the full answer →If your home is your principal place of business, or a space is used only for business and to regularly meet clients, you can deduct the business proportion of home costs like utilities, insurance, rent or mortgage interest, and property tax. The deduction cannot create a business loss but carries forward..
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