Affordable Professional Corporation Setup for Canadian Businesses

Paper returns go to the CRA tax centre that serves your province or territory of residence, not to one national address. The correct address is printed in the paper return package and listed on canada.ca under mailing addresses for individual returns, and it differs for non-residents and for business returns. Filing electronically is much faster: for the 2025 tax year the CRA aims to issue a refund on an online return in about two weeks, against a considerably longer standard on paper.

Once the notice of assessment shows a refund, direct deposit normally follows shortly after; a cheque takes longer because it travels by mail. Most of the wait is the assessment itself, not the payment, which is why the guideline for an online return is about two weeks from filing to money in the account. If nothing arrives, confirm your banking details in CRA My Account and check whether the refund was applied to an outstanding balance.

Not quite. The business number is the root identifier for your business, and every account you register sits on it with a two-letter program identifier and a reference for that account, so GST/HST, payroll and corporate income tax all share one root. Your GST/HST number is that root plus the GST/HST program identifier. Quote the full account number on returns, remittances and invoices, not just the root, or payments can land in the wrong account.

The Canada child benefit is a monthly tax-free payment based on how many children are in your care, their ages, whether a child qualifies for the disability benefit, and your adjusted family net income. Amounts are recalculated every July from the previous year's returns, so you and your spouse or common-law partner must both file each year to keep payments flowing. Apply through birth registration or in CRA My Account, and use the CRA's online calculator to estimate the amount.

Scholarships, fellowships and bursaries are income, but a scholarship exemption usually removes the tax. A student enrolled full time in a qualifying educational program can generally exempt the whole amount received for that program, so nothing is added to taxable income. Part-time students get a narrower exemption tied to tuition and program costs. Amounts that are really payment for work, such as a stipend for research services, do not qualify and stay taxable.

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.

Residents are taxed on worldwide income, self-assessed on a return you file yourself. Add up income, subtract deductions to reach taxable income, apply the federal and provincial brackets in steps, then reduce the result by non-refundable credits and by tax already withheld or paid by instalment. The difference is your refund or balance owing, which the CRA confirms on a notice of assessment and can later review or reassess.

Rental income earned by a corporation is usually passive investment income, taxed at a high corporate rate with part of it refundable when the company pays taxable dividends out to shareholders. The small business rate generally does not apply, because a rental operation counts as active business income only once it is large enough on the full-time employee test. Significant passive income can also grind an associated group's small business limit, and taking the money out adds a second layer of tax.

Line 105 on the electronic GST/HST return is the total tax you collected or that became collectible in the period, at 5% GST, 13% in Ontario, or 15% in New Brunswick, Newfoundland and Labrador and Prince Edward Island for 2026. Remitting means sending CRA that figure less your input tax credits. Tax collected is a liability, not revenue, so show it as its own invoice line with your GST/HST number.

For account-specific questions, the CRA will discuss your own file once you have verified your identity, and its individual and business enquiry lines cover balances, slips and deadlines. For advice on what to claim or how to structure something, speak to a tax preparer. If you want the filing handled for you, taxfilings.ca agrees a fixed fee before any work starts, and you pay after the service. Call +1 (416) 619-0068.

A corporation files a T2 return for every tax year it exists, even with no revenue and no tax payable. Skipping a nil return invites an arbitrary assessment and leaves the corporation with a filing history that blocks routine requests later. For an unincorporated business there is no separate return, but reporting the nil or loss position on your personal return preserves any loss for future years and keeps your records consistent.

Your marginal rate is the tax on your next dollar. Federal brackets for 2026 run 14%, 20.5%, 26%, 29% and 33% on the highest band, with your province's brackets stacking on top. Your average or effective rate is total tax divided by total income, and it is always lower, because earlier dollars sat in lower brackets or were sheltered by credits. Use the marginal rate to judge an RRSP contribution or extra contract work, the average rate to see what the year cost.