Canada’s tax system and government compliance is primarily based on self-reporting and self-assessment. If the required reporting and payments are made within the due dates, all will be smooth sailing.
However, there are significant penalties plus interest for late filing and/or payment.
Tax law and other regulations are varied and complex. This checklist is a summary but don’t hesitate to contact us if you have questions or have unique circumstances.
This checklist is primarily applicable for small businesses. Larger business which may have larger payrolls may have different filing and/or payment requirements.
- Compliance – fulfill or comply with a legal obligation.
- Corporation – A corporation is a legal entity that is separate from its shareholders (owners). Corporations typically have the rights and responsibilities that an individual possesses such as the ability to enter into contracts, borrow money, sue and be sued (separate from the shareholders), hire employees, own assets and pay corporate taxes (separate from personal taxes).
- CRA – Canada Revenue Agency – the Canadian federal agency that administers tax laws for the Government of Canada and for most provinces.
- eFile – Electronic filing
- Filing – An official document that is submitted to a government agency,
- Tax year – For business income tax purposes a 12-month period which is often January 1 to December 31 of each year.
Get a Business License
Complete the application form to obtain a business license for the location of your business. E.g. if your business is in Nanaimo, you will need a business license from the City of Nanaimo.
CRA – Get a Business Number (BN) to Apply for Government Programs
Complete the application form to obtain a BN and to register for selected program accounts such as payroll and GST.
Canada Revenue Agency (CRA): Payroll
- When a new employee is hired, have the employee complete a TD1 form within seven days of being hired. It is used to determine the amount of the payroll deductions for income tax, etc. There is also a TD1BC for BC businesses
- Payroll source deductions (deductions from employees pay) for income tax, CPP (Canada Pension Plan) and UI (Unemployment Insurance) on each payroll. Remit the source deductions by the 15th of the month after you pay employees. The employer also pays additional CPP and UI. E.g. the source deductions would be paid by January 15th for the December payroll.
- Annual payroll reporting – each employee gets a T4 information slip by the last day of February following the year. A T4 Summary is filed with the CRA. E.g. the 2017 payroll is due by end of February 2018.
Canada Revenue Agency (CRA): Self Employed Individuals
Individual are required to file their annual income tax returns by April 30th of the following year. E.g. 2017 tax return is due by April 30, 2018 and is likely to require to eFile. Even if all the taxes due can’t be paid, file the return on time to avoid late filing fees, then negotiate a payment plan for the balance.
For self-employed individuals, the due date to file is June 15th. E.g. the 2017 return for self employed individual is June 15, 2018. Note that the CRA charges interest on any outstanding tax owing starting on April 30th.
Canada Revenue Agency (CRA): Corporate Tax Return
Corporate Income Tax Return (i.e. the company’s annual tax return) due within 6 months of the end of each tax year. E.g. the 2017 return would be filed by June 30, 2018. However, the corporate tax due, if any, is due two to three months after the end of the year.
Canada Revenue Agency (CRA): GST
GST is a sales tax on all sales – but only sales in Canada. E.g. a sale to a USA business would not collect GST. There are different rates depending on the province as some provinces (not BC) combine the federal tax (GST) with provincial sales tax (called HST). E.g. a sale to a client in Ontario would be different than the current 5% for BC sales. The GST/HST return will show the due date at the top of the form.
It is important to record payment of GST for expenses such as office supplies as that is deducted from the sales tax owing.
BC Provincial Sales Tax (PST)
Whether an individual, partnership or corporation, you are required to register with the BC Ministry of Finance if you sell or lease taxable goods or services or have more than 4 units of accommodation.
The completed tax return and payment must be received by the last day of the month following the end of your reporting period. e.g. if you are reporting monthly, your February return and payment would be due my March 31st.
WorkSafe BC: Workers’ Compensation
This is typically annual reporting for a small business of the total annual payroll and paying of premiums.
The payroll for this return includes employee payroll, shareholders (owner) payroll for corporations and contractors (who are not self-insured) located in BC. Exclude contractors or vendors outside BC.
Annual Report Filing for Corporations: Province of BC
As an incorporated business in BC, the corporation is required to file an annual report within two months of the company’s anniversary date.
Also, a filing would be done for a change of address or a change of directors.
Reporting and payment on time is very important as there are penalties for late filing and for late payment.
Don’t hesitate to contact us if you have any questions.
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