Corporate tax for Canadian incorporated owners

Corporate tax has the least forgiving calendar in an incorporated business. The return is due six months after the fiscal year end, and the balance sooner. Instalments come due whether or not anyone reminds you. And the planning that changes the number has to happen before the year closes, not in the spring.

Most owners need only the two or three pieces that match where they are now: a first year end, a first instalment notice, a first CRA letter, or a year closing with cash in the company and no plan. The hub follows roughly that order.

Start here: what the engagement covers

• Corporate tax services — what a T2 engagement actually includes, from the return and schedules through to CRA correspondence. Read this first if you are deciding what to hand over and what to keep in-house.
• What your T2 will likely cost, a rough estimate of the corporation’s tax before the books are final. Useful in the last quarter of the year, when there is still time to act on the number.
• Can an out-of-province CPA file your T2? — the short answer for owners outside British Columbia who are weighing a remote firm. Read it before you assume you need someone local.
• Tax glossary — SBD, CCA, GIFI, TOSI and the rest of the shorthand accountants use. Keep it open beside the guides below if the vocabulary is new.

Deadlines, instalments and paying the bill

• The T2 filing deadline — when the return is due, and why the payment date is not the same date. Read this the week you incorporate and again the month your year end passes.
• T2 deadline calculator — enter your fiscal year end and get the filing and payment dates back. Faster than counting months, and worth doing once per year.
• Late-filing penalties on a T2 — what a missed T2 costs and how the penalty compounds for repeat late filers. Read it if a deadline has already slipped.
• Corporate tax instalments — who has to pay them, how CRA calculates the schedule, and how the interest works. Relevant from your second profitable year onward.
• Instalment calculator — sizes the quarterly payments so cash is set aside rather than found in a panic. Use it right after the prior year is filed.
• The full CRA deadline calendar — corporate, personal, GST and payroll dates in one reference. Bookmark it; do not try to memorise it.
• When you cannot pay the balance — how payment arrangements work and why filing on time still matters when the money is not there. Read it before the deadline, not after.

The small business rate, and what quietly erodes it

• The small business deduction and passive income — how investment income inside the corporation can grind down the low rate on active income. Read it once retained earnings start getting invested.
• Associated corporations — why a second company you also control can mean sharing one small business limit rather than getting two. Read it before you incorporate anything else.
• Personal services business risk — the classification that removes the small business deduction entirely for an incorporated worker with one client. Essential reading for contractors.

The numbers behind the return

• Capital cost allowance classes — how equipment, vehicles and computers get written off over time instead of all at once. Read it before a large purchase, not after.
• Financial statement preparation — what gets produced alongside the T2 and what it is used for. Read it if a bank or a landlord has asked for statements.
• Compilation engagements (CSRS 4200) — the standard statement package a lender usually expects from a small corporation, and who is allowed to issue it.

Provincial rate tables

• British Columbia tax facts — BC corporate rates combined with the federal rate, the GST-plus-PST split and the employer health tax bands. Check it before assuming a rate.
• Alberta tax facts — the lowest general rate in Canada, no provincial sales tax, and the separate AT1 return Alberta corporations still have to file.
• Ontario tax facts — Ontario’s corporate rates, the 13% HST and the graduated employer health tax whose rate is set before the exemption is deducted.
• Manitoba tax facts, a provincial small-business rate of nil, and the payroll levy that starts above $2.5 million.

When CRA gets in touch

• What triggers a CRA look — the patterns that draw attention on a small corporate return. Read it while the year is still open and something can be fixed.
• Review versus audit — how to tell which letter you have received and how to answer it. Read it the day the envelope arrives.
• How long to keep records — the retention rules, and why the receipt you threw out is the one they ask for. Read it before a cleanout.
• Fixing past returns — the Voluntary Disclosures Program and what it can and cannot do about an error you found yourself.

Planning, not just filing

• Corporate tax planning — the decisions taken before year end that change the return. Read it if your filing has always been a reporting exercise rather than a planning one.
• Eligible vs non-eligible dividends — why the two are taxed differently in your hands, and which one a small corporation usually pays.
• Salary vs dividends calculator — models both routes side by side for your own numbers. Run it before the year closes, not with the T1 in April.
• Lifetime capital gains exemption — the shelter available on a qualifying share sale, and the conditions the shares have to meet years in advance.

If you are unsure which applies, a conversation is usually quicker than more reading. The hubs on GST/HST and corporate year end cover the two areas that most often overlap with the T2.