Corporate tax accountant for Cranbrook companies

For an incorporated Cranbrook trade, carrier or mine supplier, bookkeeping, payroll and the year-end T2 with statements usually come to $450–$650 a month as one bundle. Corporate tax on its own is quoted after a free consultation, once we have seen the books and the number of companies involved. Every published fee is on the pricing page.

Two BC rates and the limit between them

On the current BC tax facts, active business income that qualifies for the small business deduction is taxed at a combined 11%: 9% federal and 2% BC. Income above the limit is taxed at 27%. The limit is $500,000 a year, and it is shared by every corporation in an associated group. A company with a short taxation year, or a group with a second company, can find the limit smaller than expected.

Passive investment income kept inside the company can also grind the limit down. For most Cranbrook operating companies that is not an issue in the early years. It becomes one after several strong years, when retained cash has been invested rather than spent on equipment. We check it every year rather than waiting until it bites.

Balance-due dates matter as much as rates. The tax is payable two months after year-end, or three for a Canadian-controlled private corporation that claimed the small business deduction and meets the size conditions. Once the bill passes the threshold, monthly or quarterly instalments are expected through the following year, and interest runs on any shortfall. We set out next year’s instalments when the T2 is filed, so they are a known cost rather than a CRA letter.

Equipment purchases and the year-end

An East Kootenay company buying a truck, a loader or a baler is making a tax decision as well as an operating one. Equipment is written off through capital cost allowance (CCA), class by class, and the first-year claim depends on when the unit is available for use. Buying a week before year-end rather than a week after can bring a full year’s deduction forward.

Trade-ins work the other way. The value received for an old unit comes off its class, and if more CCA was claimed than the unit really lost, the difference comes back as income. When a class is emptied with a balance left over, a terminal loss may be available instead. Both are worth knowing before the dealer paperwork is signed, because a busy Cranbrook season is exactly when units get swapped without anyone thinking about the schedule.

Owner pay: salary, dividends and the shareholder loan

How you take money out of the company is the other big lever. A salary is deductible to the corporation, creates RRSP room and requires CPP contributions and a T4. Dividends are not deductible, carry no CPP and are reported on a T5. Most owners land on a mix, and the right mix changes with the year’s profit and the family’s other income. The salary vs dividends calculator gives a first view.

Withdrawals that are neither salary nor dividend sit in the shareholder loan account. If that balance is not repaid within one year after the corporation’s year-end, it is generally taxed as the owner’s income. That is common in a busy season, when the company card pays for a personal item and nobody records it. We clear it at year-end, before it becomes a problem.

Family groups and associated companies

Ranching, trucking and contracting families in the East Kootenay often end up with more than one company: an operating company, a company that owns the land or the yard, and sometimes a holding company above them. Those companies are usually associated, which means they share one $500,000 limit and must agree on how to split it on Schedule 23. Rent and management fees between them need to be supported and consistent. Associated corporations and the small business deduction explains the rules.

Family ownership also shows up on Schedule 50, which lists every shareholder and their percentage. When a son or daughter takes shares in the ranch or the trucking company, the change has to be reflected there and in the minute book. Dividends paid to family members who do not work in the business can fall under the tax on split income, so who holds which shares is worth deciding with a CPA before the paperwork is drawn up.

Work that crosses into Alberta

Cranbrook sits on the Crowsnest Highway corridor, and plenty of local companies send crews, trucks or equipment east. A BC corporation that simply delivers into Alberta usually stays a BC taxpayer. One that has a permanent establishment there, such as a fixed yard, a shop or an office, allocates its taxable income between the two provinces on the T2, using salaries and revenue attributable to each. We look at where the company actually operates before assuming the return is BC-only. For Alberta-based companies, see corporate tax in Calgary.

How the T2 fits Cranbrook’s main industries

• Trucking: heavy CCA on tractors and trailers, and recapture on trade-ins.
• Construction: work in progress and holdbacks at year-end, and T5018 reporting.
• Mining services: large receivables from the Elk Valley mines, equipment on contract and crew travel deductions.
• Restaurants: thin margins, leasehold improvements and liquor inventory at year-end.
• Farms and ranches: the cash method, livestock inventory choices and land held in the company.

The BC filings that sit beside the T2

The T2 is due six months after year-end. Alongside it, a BC company files an annual report with BC Registries within two months of its incorporation anniversary, PST returns if it is registered, and WorkSafeBC reports if it has workers. Once BC payroll passes $1,000,000, the employer health tax applies too. T4 and T5 slips for the owner’s pay are due by the last day of February. The T2 deadline calculator sets out your dates, and BC annual report vs the T2 explains the difference.

Fully virtual

EverStone is a one-CPA firm that works online. There is no Cranbrook office. Your books and statements come in through a secure upload link, CRA access is set up through Represent a Client in your My Business Account, and the return is signed electronically. Questions go by email first, and a video meeting is booked when a decision needs one.

If the books themselves need work first, see bookkeeping in Cranbrook. For the owner’s own return, see personal tax in Cranbrook, and for crews, payroll in Cranbrook.