Low-Cost First Corporate Tax Return for Canadian Businesses

Claim everything you are entitled to and report it in the right place. Common items are RRSP contributions, union and professional dues, child care, moving expenses, medical expenses, tuition, digital news and donations, plus credits that transfer between spouses. Self-employed filers should claim every legitimate business expense on the T2125. Keep receipts for six years from the end of the tax year they relate to. A refund is your own overpaid tax coming back, not a bonus.

The route depends on the structure. A sole proprietor or partner reports business income on Form T2125 and files it with the personal T1 return; for the 2025 year the self-employed filing deadline was 15 June 2026, while any balance owing was due 30 April 2026. An incorporated business files a separate T2 corporate return for each fiscal year, due six months after that year end, on top of whatever the owner reports personally.

Businesses are rarely exempt from income tax; what changes is the rate and the credits. A Canadian-controlled private corporation can claim the small business deduction, giving a federal rate of 9% on the first $500,000 of active business income for 2026 instead of the 15% general rate. For GST/HST you can stay unregistered as a small supplier while taxable revenue stays under $30,000, and some supplies are exempt outright. Registered charities follow separate rules.

A Canadian business can face corporate income tax federally and provincially, GST/HST or provincial sales tax on what it sells, payroll withholding with employer CPP and EI, property tax on premises it owns, and payroll or health levies in some provinces. An unincorporated business reports its profit on a T2125 with the owner's T1 instead of paying corporate tax. Which ones apply depends on structure, where you operate, and whether you have employees.

The Canada Revenue Agency is the federal body that administers income tax, GST/HST, payroll deductions and most benefit payments, including the Canada child benefit and the GST/HST credit. It processes returns, issues assessments and refunds, collects amounts owing, and runs reviews and audits. Provinces set their own rates, but the CRA collects personal and corporate tax for every province except Quebec, which administers its own returns through Revenu Quebec. You reach it by phone or through CRA My Account.

No. GST/HST you charge is tax you collect for the government, so a registrant keeps it out of revenue and reports it on the GST/HST return, claiming input tax credits against it. Report your sales net of the tax on your T2125 or T2. If you are not registered you charge no GST/HST, and the tax you pay on your own purchases is simply part of the cost of each deductible expense.

All of it, at your own marginal rate rather than a special tip rate. Tips are added to your other income, so the tax depends on the bracket that income falls into: federal rates for 2026 start at 14% and rise through 20.5%, 26% and 29% to 33%, with provincial tax on top. Controlled tips paid through payroll already have income tax, CPP and EI withheld; tips received directly you report yourself.

No. Insurance is treated as a financial service for GST/HST purposes, so the premium on an auto policy is exempt and carries no GST or HST. Some provinces charge their own tax on certain insurance premiums, which is why a policy can still show a tax line. GST/HST does apply to related taxable supplies such as repair labour, parts and a rental car, even when the insurer pays the invoice. The CRA's financial services guidance sets out the boundary.

CRA My Account shows a status for each tax year, so a year marked received, in process or assessed has reached the CRA. A notice of assessment for that year is the other proof. If a preparer filed for you, ask for the confirmation number produced when the return was transmitted. A year with nothing showing at all has not been filed and should be, even if it is late.

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.

Higher income, mainly. Canadian rates are graduated, so each dollar past a bracket threshold is taxed at the next rate, federally 14% rising through 20.5%, 26% and 29% to 33% for 2026. A second job, a bonus, self-employment or investment income, or an RRSP withdrawal can push you into a higher band, and each payer withholds as though it were your only income. Losing a credit or deduction, or a bracket you no longer share with a spouse, raises it too.

No credit exists simply for marrying. What changes is that you file as a couple. You may claim the spouse or common-law partner amount if your spouse has little income, transfer certain unused credits such as age, disability, and tuition amounts, pool medical expenses and donations on one return, and split eligible pension income. Marriage or common-law status also combines your incomes for income-tested payments, which can reduce the GST/HST credit and the child benefit.