Tax Compliance in Canada
For Small Business Owners Working From Home

by L. Kenway BComm CPB Retired

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:

• What are my deadlines for Canada's 2021/2022 tax season?

• When are my tax installments due?

• When does the new CRA benefit year begin?

Around tax time your employees may ask  "When do 2021 T4s come out?". The links provided should ensure you meet your tax compliance responsibilities.

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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!).

Mediocrity is a choice;

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

-- Gary Ryan Blair --

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 information 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.

Tax Compliance Responsibilities YOU Should Know
Source: CRA

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.

2016 introduced the ability to pay with Visa Debit cards (CIBC, BNS, RBC, TD) and later MasterCard Debit cards (BMO and Servus CU).  I'm NOT a fan of this payment method as it often doesn't let you chose the account to pay from. Interac is the better option but only RBC and TD plus some credit unions offer it now.

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:

• GST/HST
• 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.

Compliance DEADLINES and DUE DATES
Updated for 2022

If the due date falls on a Saturday, Sunday or holiday, it moves to the next business day.

Federal Tax Compliance - Monthly and Quarterly

Click here for 2021/2022 Tax Season Due Dates.

Tax Type	Tax Period	Form to be Filed	Tax Filing Deadline	Payment Deadline
GST/HST Annual yrend NOT Dec 31	12 fiscal months	GST34-2 E	three months after fiscal yearend	three months after yearend
GST/HST Annual	Prior calendar year	GST34-2 E or 3 E	Jun 15	Jun 15
GST/HST Quarterly	Oct-Dec Jan-Mar Apr-Jun Jul-Sep	GST34-2 E or 3 E	Jan 31 Apr 30 Jul 31 Oct 31	Jan 31 Apr 30 Jul 31 Oct 31
GST/HST Monthly	Prior month	GST34-2 E or 3 E	Last day of month	Last day of month
Payroll Semi-Monthly	16-last day of month, 1-15	PD7A	10th every month 25th every month	10th 25th
Payroll Monthly	Prior month	PD7A	15th every month	15th

Return to Tax Filing Deadlines by Tax Type

British Columbia Tax Compliance

Tax Type	Tax Period	Form to be Filed	Tax Filing Deadline	Payment Deadline
WCB Annual Report	Jan-Dec 2021	Employer Payroll and Contract Labour Report 1810	Mar 3, 5, 7, 9, or 11	Mar 3, 5, 7, 9, or 11
Monthly PST Return	Prior month	eTaxBC	Last day of month	Last day of month
Quarterly PST Return	Oct-Dec Jan-Mar Apr-Jun Jul-Sep	eTaxBC	Jan 31 Apr 30 Jul 31 Oct 31	Jan 31 Apr 30 Jul 31 Oct 31
WCB Quarterly Filer	Oct-Dec Jan-Mar Apr-Jun Jul-Sep	Employer's Remittance Form 1820	Jan 20 Apr 20 Jul 20 Oct 20	Jan 20 Apr 20 Jul 20 Oct 20
BACKWORK REMINDER April 1, 2012		BC HST-PST Transitional Rules Relating To New Home Sales Began
BACKWORK REMINDER May 1, 2010		BC (& Ontario) PST-HST Transitional Rules Began

You should  receive your base rate and classification unit letter from WCB for 2022 in January.  If you haven't received it by the end of January, 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 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

2020/2021 Canadian Tax Season Due Dates

Tax Type	Tax Period	Form to be Filed	Filing AND Payment Deadline
Interest payment on inter-spousal loans	2021	Bank transaction NOT journal entry	Jan. 30, 2022
T4, T4A, T5 Receipts	2021	T4,T4A,T5 and TSums	Mar. 31, 2022
RRSP Contribution	2021	Issued by bank/broker	Mar. 1, 2022
T3 Receipts	2022	T3 and T3Sum	Mar. 31, 2022
US Tax Return	2021	Form 1040 or Form 1040NR	Apr. 15, 2022
US assets - FATCA	2021	Form 9838	Apr. 15, 2022
US citizens - FBAR	2021	Form FinCEN Form 114 (formerly TD F 90-22.1	Apr. 15, 2022
Individual Tax Return	2021	T1	Apr. 30, 2022
Self-Employed Tax Return (incl spouse)	2021	T1 (T2125)	FILE-Jun. 15/20 PAY-Jun 15/20
Tax-Free Savings Account (TFSA) Return	2021	RC243	Jun.30, 2022
Schedule A - Excess TFSA Amounts	2021	RC243-SCH-A	Jun.30, 2022
Non-Resident Contributions to a Tax Free Savings Account	2021	RC243-SCH-B	Jun.30, 2022
Corporate Tax Return	2021 / 2022	T2	Click here for details
Construction Payment Reporting System (CPRS)	2021/22	T5018 & T50818 Sum	6 months after end of reporting period

Beginning in 2017 (for the 2016 tax year), US citizens residing outside of the US, had 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 2022 indexation adjustment for personal income tax and benefit amounts.

2021/22 Canadian Tax Installment Due Dates

Tax Type	Tax Period	Form to be Filed	Filing AND Payment Deadline
Annual Installment Farmers, Fishermen	2021	reminder mailed in Nov	December 31, 2021
4th Tax Installment	2021	INNS3 E or T1162A	December 15, 2021
1st Tax Installment	2022	INNS3 E or T1162A	March 15, 2022
2nd Tax Installment	2022	INNS3 E or T1162A	June 15, 2022
3rd Tax Installment	2022	INNS3 E or T1162A	September 15, 2022
4th Tax Installment	2022	INNS3 E or T1162A	December 15, 2022

2020/21 CRA Tax Date Reminders - Benefits & Interest

Tax Type	Tax Period	Form to be Filed	Deadline
Self-Assessment RRSP Excess Contributions Interest Penalty	2020	T1-OVP	Mar. 31, 2021
Overdue Taxes Interest Begins Accruing Daily	2020	--	May 1, 2021
Refund Interest on Late Processed Refunds due from CRA	2020	--	Jun. 15, 2021
New Benefit Year Begins (CTB, GST Credit, OAS)	2021	2020 T1	Jul. 1, 2021
Advance Payment Application WITB	2021	RC210	Aug. 31, 2021

This is the toolkit I used to build this site.
Click on image for more information.

Here's a good way to catch up on the latest tax compliance changes / updates by CRA ...

Before CRA revamped their website and was moved to the Canadian government website, you used to be able to find information page links on some of the tax credits and benefits available to specific Canadian businesses as well as common individual taxpayer situations and or groups right from the home page. It was a great way to keep up on the latest compliance changes in these areas. Sadly, they are no longer available.

The new site has "Tax Themes" but they are very broad in topic and not as helpful as the old website design. You can find the tax themes index page here --- https://www.canada.ca/en/services/taxes.html. 

As it is very difficult to find things on the new CRA website so finding these old pages can be a challenge. To help you out, I went hunting for information links in these specialized niche / common situation areas for you. Here's what I have come up with ...  divided into categories that used to be available to make it easy to find what is relevant to you:

In summary, before you file your tax return, be sure to check out the above Revenue Canada's website topics. Checking out these links provides a good review for any Canadian bookkeeper on the latest changes. You can also type in "What's New" in the website search bar to see what comes up.

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)

See you on the next page ...
Your tutor Lake

Bookkeeping Essentials › Canadian Taxes › Tax Compliance