Deadlines and Installments for Corporations

Deadlines and Installments for Corporations

Deadlines: Filing and Payment of Tax Owing
 If Corporation is a CCPC throughout the year AND claimed the Small Business DeductionAll other corporations
Deadline for tax return (T2)6 months after year end6 months after year end
Deadline for taxes owing 3 months after year end2 months after year end
Who Needs to File a Corporate Tax Return (T2 Return)?

All Corporations other than registered charities need to file a tax return if any of the following applies:

  • Corporation was a Canadian resident during any time in the year; or
  • Corporation Carried on business in Canada; or
  • Corporation earned taxable capital gains in Canada; or
  • Corporation disposed of Taxable Canadian Property
Interest on Late Payment and Installments
  • Interest is assessed when:
    • balance owing is not paid on time; and
    • when late/insufficient installments are made
  • The interest rate on late taxes = regular prescribed rate + 4% (as of the third quarter of 2018, this is 2% + 4%= 6% total)
  • Refer to CRA’s website for prescribed interest rate
Penalties
Penalty for late filing5% of taxes owing is the penalty + 1% for each COMPLETE month you are late for a maximum of 12 monthsIf previous offence the 5% becomes 10% and the 1% becomes 2% (i.e. penalty doubles)
Penalty for late/insufficient Installments50% * [interest owing on late or insufficient installment – greater of ($1,000 and 25% of would be interest had no installments were made)]

Installments

When is a corporation required to make installments?

A corporation is required to make instalments for the current year, if the previous year’s  net taxes payable (also called “balance owing”) is greater than $3,000.

What are the dates for installment payments for corporations?

Payments need to be made by the end of the month (or quarter for those corporations that qualify).

Quarterly Installments (applicable to small Canadian Controlled Private Corporations)

If all of the following conditions are met, a corporation is allowed to make quarterly installment payments:

  1. The corporation must be a CCPC throughout the entire year; and
  2. In the current or previous year:
    • The corporation claimed the small business deduction; and
    • The corporation had Taxable income ≤ $500,000; and
    • The corporation had Taxable Capital Employed In Canada ≤ $10 Million; and
  3. The corporation has a perfect compliance history in the last 12 months

Taxable Capital Employed in Canada = Liabilities + Shareholders’ Equity less debt and equity investments in other corporations.

Monthly Installments

All other corporations make monthly installment payments

Amount of Installments: Three Options
Monthly Installments

Monthly Installments:

  1. Monthly Payments = 1/12  * estimated net taxes for the current year
  2. Monthly Payment = 1/12  * Prior year net taxes
  3. Payment for First 2 Months = 1/12 * Second Prior Year’s Net Tax

Payment for remaining 10 Months = 1/10 *(Prior Year Net Tax – 2 * 1/12 * Second Prior Year Net Tax)

Quarterly Installments:

Quarterly Installments:

  1. Quarterly Payments = 1/4  * estimated net taxes for the current year
  2. Quarterly Payment = 1/4  * Prior year net taxes
  3. Payment for 1st Quarter = 1/4* Second Prior Year’s Net Tax

Payment for 3 Quarters = 1/3 *(Prior Year Net Tax –  1/4 * Second Prior Year Net Tax)

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