Pocket-Friendly Business Reorganization Tax for Canadian Businesses

Online banking is the simplest route: add the CRA as a payee, select the account and tax year precisely, and pay from your chequing account. CRA My Payment takes debit card payments, and pre-authorised debit can be scheduled in My Account or My Business Account for a single amount or a run of instalments. Corporations and GST/HST registrants use the same channels under their business number. Keep the confirmation number and allow several days for the payment to post.

Generally not. Premiums on a personal policy are not deductible, and neither are most premiums a business pays on a policy it owns and benefits from. The main exception is a policy a lender requires as collateral for a business loan, where part of the premium may be deducted while the loan is outstanding. Group life and health premiums an employer pays for staff are normally a deductible payroll cost, though some become a taxable benefit to the employee.

Pay through CRA My Business Account, your bank's online tax payment service, pre-authorised debit or a third-party payment provider, always quoting the business number and the tax year the money is for. For most provinces the CRA collects the provincial share along with the federal amount. Alberta and Quebec administer their own corporate income tax, so a corporation with a permanent establishment there files and pays that part separately to the provincial authority. Instalments use the same channels as the final balance.

No single revenue line makes a business small. Tax rules use their own tests: the federal small business rate of 9% applies to the first $500,000 of active business income of a Canadian-controlled private corporation for 2026, and GST/HST registration becomes mandatory once taxable revenue passes $30,000 over four consecutive calendar quarters or within a single quarter. Lending and grant programs set separate revenue or employee-count limits of their own.

Three sources are normally used: the split shown on your municipal assessment notice, an appraisal, or a reasonable allocation in the purchase agreement. The split matters because land is not depreciable, only the building portion can be claimed for capital cost allowance, and both parts are tracked separately when you sell. Keep the working papers supporting your allocation; the CRA can challenge a split that looks arbitrary.

Call the CRA's individual or business enquiries line, both listed on the Contact the CRA page at canada.ca. Have your social insurance number or business number, your date of birth, and a line amount from a recent return ready, because the agent verifies you before discussing anything. Lines are quietest early in the morning and outside filing season. You can also authorise someone to call on your behalf using form AUT-01.

Often no federal income tax at all. For 2026 the federal basic personal amount is $16,452, and each province sets its own, so income below those amounts attracts no income tax. CPP and EI are still withheld on employment earnings. Filing still matters at low income: the GST/HST credit, the Canada workers benefit, the Canada child benefit and provincial top-ups are all paid from an assessed return, so skipping it costs money.

Close the books for the fiscal year, prepare financial statements, then file a T2 return with the CRA for that year end within six months of it. For tax years beginning after 2023 — which covers every 2025 and 2026 year end — electronic filing is mandatory for essentially all corporations, with no gross-revenue threshold, and paper-filing a return that had to go in electronically draws a $1,000 penalty. Alberta and Quebec require their own provincial corporate return as well. A corporation with no activity still has to file. Keep the supporting records six years from the end of the last tax year they relate to.

Divide income tax expense by profit before tax to get the effective rate. It differs from the statutory rate because of permanently non-deductible items, credits and timing differences between accounting and tax treatment. Income tax payable is a current liability and income tax receivable a current asset, so a refund is recorded against that receivable rather than as revenue. Internet is normally an operating expense under utilities or office costs, and property taxes are expensed unless properly capitalised to a project under construction.

Canada has no identifier called a tax verification number. Individuals are identified by a social insurance number, or an individual tax number where a SIN is not available. Businesses use a CRA business number, with program accounts added for GST/HST, payroll and corporate tax. If you need to confirm that a supplier's GST/HST registration is real before claiming the tax they charged, use the CRA's GST/HST registry search, which validates a number on a given date.

Some are. Unused tuition, disability, age and pension income amounts can be transferred to a spouse, parent or grandparent within limits, and tuition not transferred carries forward for the student indefinitely. Most other non-refundable credits only reduce tax to zero and are then lost, because they cannot be refunded. Donations and student loan interest carry forward for a limited number of later years, and CRA's page for each credit states its transfer and carry-forward rules. Refundable credits are paid even with no tax payable.

Yes, but the rent has to be reasonable. Your corporation can pay for space it genuinely uses, at a rate comparable to what an unrelated tenant would pay; the corporation deducts the rent and you report it as rental income on your T1. Charging above market invites the CRA to deny the excess. Renting part of your home to your own company can also affect the principal residence exemption and may bring GST/HST into play, so get advice first.