Tax Compliance in Canada
For Small Business Owners Working From Home

by L. Kenway BComm CPB



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 2017 T4s come out?". The links provided should ensure you meet your tax compliance responsibilities.


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 Mar, 2017
✔ Due Dates For 2016/17 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


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

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
2017 Reminders
T1 Schedule T2125
Annual GST Returns

Tax Filing

Thrusday, June 15, 2017
Late filing penalties apply
June 16, 2016

Tax Payment

Monday, May 1, 2017
Interest begins accruing
May 2, 2017


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


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.


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 disclosure requirements under ASPE were 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.


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 move to paperless system, 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 when the CRA introduced the 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. No banking information is shared with CRA. Just follow the instructions and make your selections as prompted. 

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.

New in 2016 is the ability to pay with Visa Debit cards.

The institutions currently able to participate are RBC, TD, BMO (personal accounts only which should be no problem for sole proprietors), Scotiabank and various credit unions as they have INTERAC Online agreements.

This service allows you to pay:

  • payroll deductions
  • corporate income tax
  • excise duties and taxes
  • individual income tax ... and more.

Your first step is to sign into My Payment. Sounds like it should be an easy thing to do. It's very tricky to find the My Payment option on CRA's website because they have hidden the link. Here's how you get to it ... Home> Make a payment> Online payment methods ... then click on the arrow beside Debit card - Interac Online. You'll see the My Payment link there.

It just boggles my mind that CRA spent so much effort to promote the My Payment service, in effect branding it, and now hide the link so deep it's hard to find.

CRA's service gives you an alternative to paying the banks that administration fee to pay online. However, the banks' payment systems allow you to make post dated transactions which could be an important feature if your payments are significant.

Updated to March, 2017

Tax Compliance Deadlines For Bookkeeper

Federal Tax Compliance DEADLINES and DUE DATES

Click here for 2016/2017 Tax Season Due Dates.

Tax Filing Deadline Tax Type Tax Period Form to be Filed Payment Deadline
three months after yearend GST/HST Annual
yrend NOT Dec 31
-- GST34-2 E three months after yearend
Jun 15 GST/HST Annual 2016 GST34-2 E or 3 E Jun 15
May 1 GST/HST Quarterly Jan-March GST34-2 E or 3 E May 1
Mar 31 GST/HST Monthly Feb GST34-2 E or 3 E Mar 31
Mar 27 Payroll Semi-Monthly Feb
PD7A Mar 27
Mar 15 Payroll Monthly Feb PD7A Mar 15
Mar 10 Payroll Semi-Monthly Feb
PD7A Mar 10
Feb 28 GST/HST Monthly Jan GST34-2 E or 3 E Feb 28
Feb 27 Payroll Semi-Monthly Jan
PD7A Feb 27
Feb 15 Payroll Monthly Jan PD7A Feb 15
Feb 10 Payroll Semi-Monthly Jan
PD7A Feb 10

Return to Tax Filing Deadlines by Tax Type

British Columbia Tax Compliance DEADLINES

Tax Filing Deadline Tax Type Tax Period Form to be Filed Payment Deadline
Mar 7, 2017 WCB Annual Report Jan-Dec 2016 Employer Payroll and Contract Labour Report 1810 Mar 7
Feb 28 Monthly PST Return Jan 2017 eTaxBC Feb 28
Jan 31 Quarterly PST Return Oct-dec 2016 eTaxBC Jan 31
Jan 20 WCB Quarterly Filer Oct-Dec 2016 Employer's Remittance Form 1820 Jan 20
Jan 3 Monthly PST Return Nov 2016 eTaxBC Jan 3
April 1, 2012
BC HST-PST Transitional Rules Relating To New Home Sales Began
May 1, 2010
BC (& Ontario) PST-HST Transitional Rules Began

You should  receive your base rate and classification unit letter from WCB for 2017 in November.  If you haven't received it by the end of December, contact WCB or go online.

BACKWORK NOTES - PST Tax Compliance 

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> 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


2016/2017 Canadian Tax Season Due Dates

Tax Type Tax Period Form to be Filed Filing AND Payment Deadline
Interest payment on inter-spousal loans 2016 Bank transaction NOT journal entry Jan. 29, 2017
T4, T4A, T5 Receipts 2016 T4,T4A,T5 and TSums Feb. 28, 2017
RRSP Contribution 2016 Issued by bank/broker Feb. 28, 2017
T3 Receipts 2016 T3 and T3Sum Mar. 31, 2017
US Tax Return 2016 Form 1040 or Form 1040NR Apr. 17, 2017
US assets - FATCA 2016 Form 9838 Apr. 17, 2017
US citizens - FBAR 2016 Form FinCEN Form 114 (formerly TD F 90-22.1 Apr. 17, 2017**NEW
Individual Tax Return 2016 T1 May 1, 2017
Self-Employed Tax Return (incl spouse) 2016 T1 (T2125) FILE-Jun. 15/17
PAY-May 1/17
Tax-Free Savings Account (TFSA) Return 2016 RC243 Jun. 30, 2017
Schedule A - Excess TFSA Amounts 2016 RC243-SCH-A Jun. 30, 2017
Non-Resident Contributions to a Tax Free Savings Account 2016 RC243-SCH-B Jun. 30, 2017
Corporate Tax Return 2016/17 T2 Click here
for details
Construction Payment Reporting System (CPRS) 2016/17 T5018 & T50818 Sum 6 months after
end of reporting period

**NEW Beginning in 2017, US citizens residing outside of the US, you have new FBAR deadlines. 1040 filing deadline is April 15. You are given an automatic extension time to file by June 15 (not available to US citizens living in the US) and an extended deadline of October 15 if Form 4868 is filed. See Collins Barrow for more information. 

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

Click here for CRA 2017 indexation adjustment for personal income tax and benefit amounts.


2016/17 Canadian Tax Installment Due Dates

Tax Type Tax Period Form to be Filed Filing AND Payment Deadline
Annual Installment Farmers, Fishermen 2016 mailed in Nov January 2, 2017
1st Tax Installment 2017 INNS3 E or T1162A March 15, 2017
2nd Tax Installment 2017 INNS3 E or T1162A June 15, 2017
3rd Tax Installment 2017 INNS3 E or T1162A September 15, 2017
4th Tax Installment 2017 INNS3 E or T1162A December 15, 2017

Designed for non-accountants. Click on image for more information.


2016/17 CRA Tax Date Reminders - Benefits & Interest

Tax Type Tax Period Form to be Filed Deadline
Self-Assessment RRSP Excess Contributions Interest Penalty 2016 T1-OVP Mar. 31, 2017
Overdue Taxes Interest Begins Accruing Daily 2016 -- May
1, 2017
Refund Interest on Late Processed Refunds due from CRA 2016 -- Jun. 15, 2017
New Benefit Year Begins
(CTB, GST Credit, OAS)
2017 2016 T1 Jul.
1, 2017
Advance Payment Application
2017 RC210 Aug. 31, 2017
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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 "Information for ..." (under Businesses on the home page).

It provides you with information on some of the tax credits and benefits available to specific Canadian businesses. The Information for ... link box (third box down on the left hand side)

 has been divided into categories to make it easy to find what is relevant to you:

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

If you click on Individuals from the home page, peek at Information for ... you will have access to information about:

  • International and non-residents
  • Employees (for the working taxpayer)
  • Students
  • Seniors
  • Persons with disabilities (for the disabled and their caregivers)
  • Tradesperson
  • Tax professionals
  • Other categories have that I won't list here.

Parents should look at the Benefits box with a link to Child and Family Benefits found under Home> Individuals> Popular topics.

Checking out these links provides a good review for any Canadian bookkeeper on the latest changes.

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)

It's been great chatting with you about your books today!

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