Corporate tax services

The BC business tax rate that applies to your corporation — the small business rate or the general rate — is settled in the return, and the current figures are on the BC tax facts page.

Corporate tax and incorporation advice: what the engagement covers

The T2 is the filing. The work is the year-end that produces it. A set of books is closed and reconciled, adjusting entries are posted for depreciation, accruals and anything the bookkeeping could not decide on its own. The trial balance that results becomes both the financial statements and Schedules 100, 125 and 141 of the return. The same numbers, presented twice for two audiences. That is why having one person do the statements and the return removes a whole category of reconciliation work, and why splitting them across two firms tends to surface differences in the week the return is due. Year-end financial statements covers the statements side of the same job.

Bookkeeping, payroll and GST filing are separate engagements, not because they are unrelated but because they run on their own cadence and are priced on their own terms. A corporation can buy the year-end alone and keep its books elsewhere; it is simply more work to close a year nobody has been maintaining.

Two dates, and the second one is the expensive one

A T2 return is due six months after the fiscal year-end. The balance owing is due sooner — generally two months after year-end, or three for a Canadian-controlled private corporation claiming the small business deduction. Owners routinely hear the six-month date and assume it covers both. It does not, and interest runs from the earlier one.

Filing late costs more than paying late. The late-filing penalty is 5% of the balance owing plus 1% for each complete month the return is late, up to twelve months. For a corporation that has already been charged the penalty in one of the three preceding years, it doubles to 10% plus 2% per month. A return with nothing owing carries no late-filing penalty on that arithmetic, which is the one piece of good news, but a nil return still has to be filed. The T2 deadline calculator works out both dates from your year-end, and the deadlines and penalties guide sets out the detail.

Instalments, and the year they begin

A corporation generally has to pay tax by instalment once its net federal tax owing exceeds $3,000 in the current year or in either of the two preceding years. Most corporations remit monthly; an eligible small CCPC with a clean compliance history may qualify to pay quarterly instead. The obligation tends to arrive without warning, because the year that triggers it is the year that went well, and the notice lands after the habit of paying once a year has set in.

Underpaying is charged instalment interest at the CRA’s prescribed rate, which is reset quarterly, and a further penalty applies where that interest exceeds $1,000 for the year. Neither is deductible. The instalment calculator shows what a quarterly schedule looks like against your own numbers.

What sets the fee

Four things, none of them a clock: transaction volume, the condition the bookkeeping arrives in, how many filings the corporation actually has, and whether there is payroll. A single-shareholder consultancy with clean books, one GST registration and no employees is a different engagement from a trades company with subcontractors, holdbacks and a payroll account. Quoting them the same way would be wrong in one direction or the other.

The number is fixed, given in writing after we review your enquiry, and agreed before any work starts. Questions through the year are part of it rather than a separate line. Published fees shows where each service starts, and the fee estimate gets you a number without a call.

The provincial layer is not the same everywhere

The federal half of a corporate return looks much the same across the country. The provincial half does not, and neither does sales tax. A British Columbia corporation charges 5% GST and, if it sells taxable goods, registers separately for 7% PST — two registrations, two returns, two governments, and PST is generally not recoverable the way GST is. An Alberta corporation has no provincial sales tax to administer at all. An Ontario or Atlantic corporation deals with a single harmonized tax instead of two.

That matters for anyone incorporated in one province and working in another, which is more common than it sounds. The sourced provincial tables are kept current for British Columbia.

When the return is not the job

Three situations come up often enough to name, and in each the return is the last step rather than the work.

Years behind. A corporation two or three years late does not need a return prepared so much as a sequence. The oldest year comes first, because each one feeds the next, along with a realistic view of what the balance and interest will be by the time the last is filed. Catching up on late filings sets out how that runs.

Listed companies. A corporation whose shares trade on the TSX Venture Exchange or the CSE is never a CCPC, so its return runs on the general rate, monthly instalments and an audited tax provision. Public company tax returns covers that work.

A letter arrived. A pre-assessment review, an information request or a full audit is not answered by filing something else. It is answered by working out what is actually being asked, assembling the records that answer it, and responding inside the deadline. CRA review and audit support covers that.

The structure is the question. Whether to pay salary or dividends, whether a holding company earns its keep, whether the business limit is being ground down by investment income — these are decided before the year closes, not at filing. Tax planning is where that conversation belongs, and business advisory covers the wider version of it.