Important Due Dates for Canadian Taxes
Income Tax for Individuals
As a Canadian resident, you need to file a T1 tax and benefit return, according to the Income Tax Act. The definition states, "An income tax shall be paid on the taxable income for each taxation year of every person resident in Canada.”
The personal tax may be collected at different stages, such as:
Deduction at source - In this situation, the taxed amount is deducted directly from a salary and paid to the CRA.
Installment payments - The Individual pays the estimated taxes partially and does not wait until the year’s end.
Payment on filing - The general practice, in which a payment is made with the income tax return.
Due Dates
| Individuals | Self-Employed |
| April 30 | June 15 |
Penalties - Any balance owing to be paid on or before April 30 may incur interest charges.
Advance tax - Individuals whose excess tax is deducted at the source and who have overpaid will receive a refund upon filing their annual tax return with the CRA.
Sole Proprietorships and Partnerships
A sole proprietorship or partnership must declare its business income on form T2125. This is also a part of the T1 Personal ITR.
Due Dates: You can file your income tax until June 15.
Penalties: Failing to file income tax on time or provide incorrect information to the CRA may result in penalties.
You can avoid penalties by using a simple and reliable payroll solution like Checkmark Canada Cloud Payroll. This allows you to focus more on your core business and keep you hassle-free.
Taxes on Corporation
Corporate residents in Canada are subject to Canadian Corporate Income Tax (CIT) on worldwide income. A Canadian business and the income derived within, irrespective of whether it is a resident or non-resident, is taxable.
Exception: If the country has signed a treaty of double taxation, there would be some considerations given to the non-resident country, as per the provisions given in the act.
Federal Income Tax
Federal rates apply to business income attributable to a permanent establishment (PE) in Canada.
The following rates were applied after 31 December 2016.
| Calculation Criteria | Federal Rate % |
|---|---|
| Basic rate | 38.00 |
| Less: Provincial abatement | -10 |
| Federal rate | 28 |
| Less: General rate reduction or manufacturing and processing deduction | -13 |
| Net federal tax rate | 15 |
Provincial/territorial income tax
Generally, income is allocated to a province or territory by using a two-factor formula based on gross revenue and on salaries and wages. Provincial and territorial income taxes are not deductible for federal income tax purposes. The rates given applied beginning 31 December 2016.
| Province/territory | Income tax rate (%) (1, 2) |
|---|---|
| Alberta (3) | 12.0 |
| British Columbia | 11.0 |
| Manitoba | 12.0 |
| New Brunswick (4) | 13.5 |
| Newfoundland and Labrador (5) | 15 |
| Northwest Territories | 11.5 |
| Nova Scotia | 16 |
| Nunavut | 12 |
| Ontario (6) | 11.5 or 10 |
| Prince Edward Island | 16 |
| Quebec (7) | 11.9 |
| Saskatchewan (8) | 12.0 or 10.0 |
| Yukon Territory | 15.0 or 2.5 |
How to Report Business Losses to the CRA
If you are a sole proprietorship or a partner, when you are filling out form T2125, if your business expenses exceed your business income, you can report this on this form. Be reasonable when claiming business expenses. Being overly aggressive with expense claims is a sure-fire way to raise red flags with the CRA and trigger an audit.
If you had a business loss in the filing year’s end, you can deduct 50% of the loss from income. The amount of loss you can deduct from your income is called your allowable business investment loss.
For an incorporated business, you need to file a T2 tax return every year, regardless of whether your business is under the tax or not.
Online Transactions for Business in Canada
The CRA provides an online business account that helps maintain a business and view tax information. Here are the following things you can do with the online account of your small business.
- Check your account details and payment history
- Obtain information about installments pending or if you have paid more
- Edit your income tax return(s) if necessary
How to Register for an Income Tax Online Account
The following details will be handy while you create the account.
- Create a CRA log-in account
- Provide your social insurance number
- Date of birth
- Current postal or Zip code
- Current or last year’s income tax return information
After entering all the information, you can simply click on the big blue button and register.
