Corporate tax for Windsor corporations

One return, two layers of tax, two deadlines

Ontario collects its corporate income tax through the federal return, so a Windsor corporation files a single T2 with the Ontario schedules attached and there is no separate provincial corporate return. The filing deadline is six months after the fiscal year-end. The payment deadline comes first: two months after year-end in most cases, three months for a Canadian-controlled private corporation that claims the small business deduction and meets the conditions. Interest runs from the payment date, not the filing date, so a return filed on time can still carry interest if the balance was paid late. Corporations that owed tax last year generally pay instalments through the current one. The T2 deadline calculator works out both dates for your year-end, and the current Ontario rates sit on the Ontario tax facts page.

US-dollar revenue on a Canadian return

The T2 is filed in Canadian dollars, and a Windsor company that sells to Michigan does most of its invoicing in US ones. Each sale is translated when it is earned. Receivables still open at year-end are revalued, and the gain or loss on the exchange between invoice and payment is part of income. Businesses that convert everything at a single year-end rate, or record only the Canadian deposit, get the timing wrong and sometimes the amount. We reconcile US-dollar accounts in both currencies before the return is prepared, so the exchange figure on the statements can be traced. If the corporation holds US bank accounts or other foreign property above the reporting threshold, the T1135 disclosure applies too; T1135 reporting explains when.

Capital cost allowance on the equipment Windsor runs on

A machining centre, a press, a tractor and trailer, a greenhouse boiler: each is deducted over time through capital cost allowance at the rate set for its class, not written off in the year it is bought. Timing matters. An asset has to be available for use before it can be claimed, and the half-year rule generally halves the first-year claim, so a machine delivered but not commissioned by year-end may not give the deduction the owner planned on. The other end matters as much. When equipment is sold or traded in for more than its remaining undepreciated cost, the difference comes back into income as recapture. We keep the CCA schedule by asset and review planned purchases before year-end, not after. CCA classes sets out the common ones.

SR&ED for shops that improve a process

Windsor’s tool, die and mould makers solve technical problems for a living: a new tooling approach, a cycle time that has to come down, a material that will not behave. Some of that work qualifies as scientific research and experimental development. The claim is made on Form T661 with the T2, and a Canadian-controlled private corporation can earn an enhanced refundable credit rather than just a deduction. The test is technological uncertainty and a systematic attempt to resolve it, not commercial novelty. The claim stands or falls on records kept while the work happened: what was tried, what failed, who worked on it and for how long. We review whether a project fits before anyone spends time on a claim. The Windsor manufacturers page covers the shop-floor side.

Paying yourself from the corporation

The owner of a profitable Windsor company has three main ways to take money out: salary, dividends, or a loan from the company. Salary is deductible to the corporation, creates RRSP room and brings CPP; dividends are simpler to pay but carry neither. The choice changes the corporate tax, the personal tax and, above the Employer Health Tax exemption, the payroll cost. Loans are where owners get caught. A shareholder loan not repaid within one year after the end of the corporation’s year is generally taxed as the owner’s income. We track the shareholder account through the year and set the salary-and-dividend mix before year-end; the salary versus dividends calculator shows the trade-off, and shareholder loans sets out the rule.

How the county’s other sectors change the return

Each of Essex County’s main industries leaves its own mark on a T2. A contractor’s return depends on how holdbacks and work in progress are recorded, because a 10% holdback that is billed but not yet payable still raises questions about when the income is earned. A carrier’s return turns on tractor and trailer CCA and on long-haul meal claims for drivers. A Leamington or Kingsville greenhouse that is incorporated reports farming income, which can use the cash method rather than accrual, and energy is usually its largest single cost. A Windsor retailer lives or dies on its year-end inventory count, since closing stock sets the cost of goods sold. We prepare each return with the industry’s pattern in mind rather than a single checklist.

The rest of the corporate calendar

Three Ontario filings sit beside the T2 and do not appear in CRA correspondence. The annual return goes to the Ontario Business Registry within six months of year-end, and a corporation can be current with the CRA while out of good standing with the province. Employer Health Tax has its own annual return. WSIB reports and pays on its own schedule. Slips follow the federal calendar: T4, T4A and T5 by the last day of February, and T5018 for construction payments six months after the reporting period. We keep all of them on one calendar tied to your year-end, and deadline reminders can send them to you as well.

Remote corporate tax from Abbotsford

EverStone is a one-CPA firm based in Abbotsford, British Columbia, serving Windsor corporations remotely. There is no Windsor office and no local staff. You authorise EverStone through your CRA My Business Account, send records through a secure upload link and sign the return electronically. The T2 is transmitted to the CRA the same way it would be from anywhere in Ontario.