Tax Compliance in Canada
For Small Business Owners Working From Home

by L. Kenway BComm CPB


Updated to September, 2015

Click here for current month deadlines.

Updated to September, 2015

Click here for current month deadlines.

BOOKKEEPER'S HANDY REFERENCE

BOOKKEEPER'S HANDY REFERENCE

This section of the site should help small business owners learn their tax compliance responsibilities.

So fill up your tea cup and let's start yakking. In addition to the current month federal and BC compliance deadline tables (see link above), I've also created THREE other due dates tables that will answer questions like:

Canadian tax compliance deadlines for work from home business owners and bookkeepers.

Around tax time your employees may ask  "When do 2015 T4s come out?". The links provided should ensure you meet your tax compliance responsibilities.


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INDEX - Small Business Compliance References for Canadian Bookkeepers

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 Tax filing deadlines for small business owners in Canada

✔ Tax Filing Deadlines & Notes
✔ Income Tax, Canadian Sales Tax, Payroll Tax,
✔ Director's Compliance Liabilities

Tax Filing Deadlines For Work From Home Business Owners in Canada

✔ Tax Compliance Responsibilities
✔ Due Dates For Sep, 2015
✔ Due Dates For 2015/16 Tax Season

Tax Rate of Interest to Work From Home Business Owners in Canada

✔ Tax Rates
✔ Interest Rates, GST/HST/PST, BC WCB
✔ Auto Allowance
, Mileage, CCA

GST/HST Quick Method Rates

✔ GST/HST Quick Method
✔ Current Quick Rates
✔ Historical Quick Rates



LET'S CHAT ABOUT ...

Tax Compliance and Canadian Bookkeeping

Owning and operating a business in Canada means you have some legal responsibilities. Canada Revenue Agency (CRA) requires regular reporting of Canadian sales tax, payroll taxes, and income taxes. Each province and territory has their own tax related requirements as well. These regulations are often referred to as government compliance requirements.



Tax compliance returns and payments should be filed on time. Failure to report and remit by due dates leads to costly penalties and interest charges. This site provides the Canadian bookkeeping information you need to know to put more money in your pocket and avoid these charges (i.e. stop flushing your money down the toilet!).


Be Tax Compliant This Year

Did you make a mistake on a tax return you filed with CRA ... or get some more slips after you sent in your return?

Find out why you should amend it ... and what form to use.




Mediocrity is a choice;

it’s not always made consciously, but it is still a choice.


-- Gary Ryan Blair --



                               good bookkeeping practice
THE BOOKKEEPER'S|TIP    

Even if you can't pay the taxes owing, strive for tax compliance by always filing compliance returns by their due dates to avoid pricey penalty charges. Interest charges on the balance owing will still apply.

Late filing or failure to file penalties for tax returns are 5% of the tax owing plus 1% for each month your return is late to a maximum of 12 months.

If you were charged a late-filing penalty on three prior year returns, your late-filing penalty may be 10% of your current year balance owing, plus 2% for each full month your return is late to a maximum of 20 months.

Interest charges on the balance owing will still apply and are set every three months.

  • Did you miss your 2012/2013/2014 filing deadline? It is much better to file NOW  than wait for a CRA demand letter.
  • Are you more than one year behind in filing? Learn about Voluntary Disclosure.
  • Are you behind on your tax compliance responsibilities because life events were out of your control... things like a divorce, death, illness? You may qualify for taxpayer relief from interest on unpaid taxes.
  • Do you file your GST return annually? Check out this GST tip.

If possible, pay what you can when filing even if it isn't the full balance.




Small Business in Canada
2015 Reminders
T1 Schedule T2125
Annual GST Returns


Tax Filing

Monday, June 15, 2015
Late filing penalties apply
June 16, 2015



Tax Payment

Monday, April 30, 2015
Interest begins accruing
May 6, 2015

BOOKKEEPER'S HANDY REFERENCE

Late Filing Penalties for Information Returns

Effective January 1, 2012
Source: CRA website> Businesses> Payroll> General Information> Consequences> Late filing / Penalty for failure to file an inforamtion return by the due date: Legislated late filing penalty

Generally most information returns are due by the last day of February. The penalty for filing past the due date is the greater of $100 or as determined in the table below for the NR4, T4, T4A, T4E, T5 and T5018:

Number of Slips Penalty / Day Maximum Penalty
1-5 N/A $100 flat penalty
6-10 $5 $500
11-50 $10 $1000
51 to 500 $15 $1500
501-2,500 $25 $2500
2,501-10,000 $50 $5000
Greater than 10,001 $75 $7500

Effective January 1, 2010
Source: CRA website> Businesses> Payroll> General Information> Consequences> Late filing / Penalty for failure to file an inforamtion return by the due date: Legislated late filing penalty

As stated above, generally most information returns are due by the last day of February. The penalty for filing past the due date is the greater of $100 or as determined in the table below for RRSP, T10, T215, T3, T4A-NR, T4A-RCA, T4PS, T4RIF, T4RSP, T5007, T5008, TFSA:

Number of Slips Penalty / Day Maximum Penalty
50 or less $10 $1000
51 to 500 $15 $1500
501-2,500 $25 $2500
2,501-10,000 $50 $5000
Greater than 10,001 $75 $7500



GOOD TO KNOW

What is considered the "official" receipt date at the CRA?

Business compliance returns must be physically received by the CRA (not Canada Post) on or before the due date. Canada Post mailing date is not considered to be the receipt date. (The post marked date is only valid as a receipt date for individuals not businesses.) If the due date falls on a weekend or a public holiday, then you have until the next business day.

If you pay electronically, check with your financial institution to see how long from the date of your payment until the funds reach CRA. The funds have to be received by CRA (not your bank) by the due date.

Most financial institutions process overnight. In most cases you have to make your payment online before midnight on the day before the payment is due.

What is the difference between calendar year-end and fiscal year-end?

It is important to understand the distinction between a fiscal and calendar year-end when doing tax compliance.

Calendar year-end refers to the twelve month period January to December. Most sole proprietors in Canada must have a calendar year-end. Generally, CRA requirements do NOT allow sole proprietors to choose their fiscal yearend. However there is one alternate election available for a different year-end than December 31 to qualifying businesses the first time your business files a tax return.

Fiscal year-end refers to any twelve month consecutive period that has been selected (or deemed by CRA) as your "accounting" year. Normally you would choose this to be the least busiest period of activity. Any change to your fiscal yearend, once selected, must be approved by CRA. If you have more than one corporation, you may want each corporation to have different fiscal year-ends to allow for optimal tax planning.



GAAP UPDATE

Government Remittances ... and ASPE

Have you wondered if the new Accounting Standards for Private Enterprise (ASPE) that came into effect on January 1, 2011 affected how you report government remittances on your financial statements?

The June/July 2010 issue of CA Magazine (www.camagazine.com) has an article titled What's Changed?. The article explains that the disclosure requirements under ASPE have been reduced ... and simplified.

One significant disclosure has been added. There is now a requirement with respect to government remittances other than income taxes to disclose the amount payable at the end of the period.

The reasoning behind this is that lenders are the primary users of small business financial statements. Lenders view the status of government tax compliance remittances as important because they have priority status in a bankruptcy.





GOOD TO KNOW

Tax Compliance Responsibilities YOU Should Know
Source: CRA & The Knowledge Bureau Newsletters

Tax Event Moving Timeline
Correcting a Return for Errors or Omissions
10 years after the end of the adjusted taxation year


Tax Court Appeals




No later than 90 days from mailing date of Notice of Reassessment or confirmation of assessment

No earlier than 90 days following mailing date of Notice of Objection (if CRA has not responded)
Collections - Tax Owing


10 years from date of assessment

Debt collection is suspended when a Notice of Objection or an appeal has been made
Objection to a Notice of Assessment or Reassessment In general, 90 days from mailing date of notice ... individuals 1 year from due date of return

CRA Income Tax Refunds







In general, 3 years from end of relevant tax year ... EI 3 years; CPP 4 years; individuals 10 years for Federal, Ontario and Quebec

If due to loss carryback, extended to 6 years ... 7 years if the corporation is not a CCPC

A refund will be used automatically to offset other debts owing instead of being paid out
GST/HST Refunds




4 years from the end of reporting period due date if you have filed all returns for all your business accounts

A refund will be used automatically to offset other debts owing instead of being paid out

Make sure you discuss your situation with a professional who can give you advice tailored to your specific circumstances.



Tax Compliance Made Easy in Canada!
Pay Taxes Online At CRA Website

If you are trying to go paperless, CRA expanded their system in 2013 to help you out. You can now sign up to receive your notices online ... finally is all I have to say! They have also begun to accept source documents requests from audits online. Say good-bye to your fax machine if you haven't already.

Canadian bookkeeping was made a little easier in October of 2009 too when the CRA introduced My Payment service. You can pay your business (and individual) taxes online instantly from your bank account through a secure link with approved Canadian financial institutions.

The institutions currently able to participate are RBC, TD, BMO and Scotiabank as they have INTERAC Online agreements.

This service allows you to pay GST/HST, payroll deductions, corporate income tax, excise duties and taxes, individual income tax ... and more. You don't have now have an alternative to paying the banks that administration fee to pay online anymore ... except CRA's system doesn't allow postdated transactions.

If you pay after hours, or on the weekend or a holiday, the online payment will be credited the following business day. This service will not allow post dated transactions.

It works by signing onto My Payment located on the home page of the CRA website. Once in My Payment, a set of instructions comes up. Just follow the instructions and make your selections as prompted. No banking information is shared with CRA.




Updated to September 2015

Tax Compliance Deadlines For Bookkeeper


Federal Tax Compliance DEADLINES and DUE DATES

Click here for 2014/2015 Tax Season Due Dates.

Tax Filing Deadline Week Day Tax Type Tax Period Form to be Filed Payment Deadline
August 25 Tuesday Payroll Semi-Monthly Aug
1-15
PD7A Aug 25
August 31 Monday GST/HST Monthly July GST34-2 E or 3 E Aug 31
September 10 Thursday Payroll Semi-Monthly Aug
16-31
PD7A Sep 10
September 15 Tuesday Payroll Monthly August PD7A Sep 15
September 25 Friday Payroll Semi-Monthly Sep
1-15
PD7A Sep 25
September 30 Wednesday GST/HST Monthly August GST34-2 E or 3 E Sep 30
October 15 Thursday Payroll Quarterly Jul-Sep PD7A Oct 15
November 2 Monday GST/HST Quarterly Jul-Sep GST34-2 E or 3 E Nov 2
three months after yearend -- GST/HST Annual
yrend NOT Dec 31
-- GST34-2 E three months after yearend

Return to Tax Filing Deadlines by Tax Type


British Columbia Tax Compliance DEADLINES

Tax Filing Deadline Week Day Tax Type Tax Period Form to be Filed Payment Deadline
November 2 Monday Quarterly PST Return Jul-Sep eTaxBC Nov 2
October 20 Tuesday WCB Quarterly Filer Jul-Sep Employer's Remittance Form 1820 Oct 20
September 30 Wednesday Monthly PST Return Aug 2015 eTaxBC Sep 20
August 31 Monday Monthly PST Return July 2015 eTaxBC Aug 31
March 5 Thursday WCB Annual Report Jan-Dec 2014 Employer Payroll and Contract Labour Report 1810 Mar 5
BACKWORK REMINDER
April 1, 2012
Sunday BC HST-PST Transitional Rules Relating To New Home Sales Began
BACKWORK REMINDER
May 1, 2010
Saturday BC (& Ontario) PST-HST Transitional Rules Began

You should have received your base rate and classification unit letter from WCB for 2015 by December 2014. If you didn't, contact WCB or go online.

PST Tax Compliance Notes - Due to the 2011 referendum held in BC, PST returned to BC in April 2013 ... awesome twice the paperwork, twice the fun as the B.C. tax compliance rules change again! :0( Remember, there is a whole bunch of stuff you have to self assess when shopping/purchasing online for your business.

Background Information (for Backwork)- PST was eliminated in BC on June 30, 2010. HST was effective in BC between July 1, 2010 to March 31, 2013. The final due date for supplemental PST returns (July to December, 2010) was January 23, 2011. A return should have been filed each month following tax collection. Vendors were permitted to only refund PST to their customers up to October 31, 2010.

Ernst & Young published an excellent article on PST wind-up points for Ontario and BC that was/is a must read. It was located at www.ey.com> Services> Tax> Tax Alert> PST wind-up points for Ontario and BC but you may have to do a Bing/Google search now for their 2010 Issue No. 36 20 October 2010 Tax Alert. I have a copy if you need information on this and can't find it as I think Ernst & Young only publish the prior two years of Tax Alerts on their site.

Return to WCB Tax Filing Deadlines




BOOKKEEPER'S HANDY REFERENCE

2015/2016 Canadian Tax Season Due Dates

Tax Type Tax Period Form to be Filed Filing AND Payment Deadline Week Day
Interest payment on inter-spousal loans 2015 Bank transaction NOT journal entry Jan. 29, 2016 Friday
T4, T4A, T5 Receipts 2015 T4,T4A,T5 and TSums Feb. 29, 2016 Monday
RRSP Contribution 2015 Issued by bank/broker Feb. 29, 2016 Monday
T3 Receipts 2015 T3 and T3Sum Mar. 31, 2016 Thursday
US Tax Return 2015 Form 1040 or Form 1040NR Apr. 15, 2016 Friday
US assets - FATCA 2015 Form 9838 Apr. 15, 2016 Friday
Individual Tax Return 2015 T1 May 2, 2016 Monday
Self-Employed Tax Return (incl spouse) 2015 T1 (T2125) FILE-Jun. 15/16
PAY-May 2/16
FILE-Wed. PAY-Mon.
US citizens - FBAR 2015 Form FinCEN Form 114 (formerly TD F 90-22.1 Jun. 30, 2016 Thursday
Tax-Free Savings Account (TFSA) Return 2015 RC243 Jun. 30, 2016 Thursday
Schedule A - Excess TFSA Amounts 2015 RC243-SCH-A Jun. 30, 2016 Thursday
Non-Resident Contributions to a Tax Free Savings Account 2015 RC243-SCH-B Jun. 30, 2016 Thursday
Corporate Tax Return 2015/16 T2 Click here
for details
--
Construction Payment Reporting System (CPRS) 2015/16 T5018 & T50818 Sum 6 months after
end of reporting period
--

Click here for some tax compliance notes on installments and payment deadlines.

Click here for CRA 2015 indexation adjustment for personal income tax and benefit amounts.



BOOKKEEPER'S HANDY REFERENCE

2015/2016 Canadian Tax Installment Due Dates

Tax Type Tax Period Form to be Filed Filing AND Payment Deadline Week Day
3rd Tax Installment 2015 INNS3 E or T1162A September 15, 2015 Tuesday
4th Tax Installment 2015 INNS3 E or T1162A December 15, 2015 Tuesday
Annual Installment Farmers, Fishermen 2015 mailed in Nov December 31, 2015 Thursday
1st Tax Installment 2016 INNS3 E or T1162A March 15, 2016 Wednesday
2nd Tax Installment 2016 INNS3 E or T1162A June 15, 2016 Wednesday

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BOOKKEEPER'S HANDY REFERENCE

2015/2016 CRA Tax Date Reminders - Benefits & Interest

Tax Type Tax Period Form to be Filed Deadline
New Benefit Year Begins
(CTB, GST Credit, OAS)
2015 2014 T1 Wed. Jul.
1, 2015
Advance Payment Application
WITB
2015 RC210 Mon. Aug. 31, 2015
Self-Assessment RRSP Excess Contributions Interest Penalty 2015 T1-OVP Thu. Mar. 31, 2016
Overdue Taxes Interest Begins Accruing Daily 2015 -- Fri. May
2, 2016
Refund Interest on Late Processed Refunds due from CRA 2015 -- Wed. Jun. 15, 2016
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Here's the best way to catch up on the latest tax compliance changes / updates by CRA ...

Before you file your tax return, be sure to check out Revenue Canada's web page on "Tax Savings ... working for you!" (under About the CRA).

It provides you with information on some of the tax credits and benefits available to Canadians. If you click on Business or Individuals on the side bar, you will have access to more detailed information.

The Business side bar has been divided into categories to make it easy to find what is relevant to you:

  • Construction
  • Daycare
  • E-commerce
  • Farmers
  • Film
  • Fishers
  • International and non-resident
  • Small businesses and Self-employed

The Individuals side bar has been divided into categories (not as nice as previously but still good) to make it easy to find what is relevant to you:

  • Employees (previously the working taxpayer)
  • Students (previously the student)
  • Seniors (previously the senior)
  • Persons with disabilities (previously the disabled and their caregivers)
  • "The parent" has been moved. You will find it on the home page navigation button called Child and Family Benefits recipients
  • Tradesperson (previously the tradesperson)
  • Tax professionals
  • Other categories have been added that I won't list here.

While still a good review for any Canadian bookkeeper on the latest changes, it's not as concise an overview as in past years.



This brings my chat on Tax Compliance to an end for today. Time to water my plants with the cold tea and refresh my cup. ;0)



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