Who this is for
- Owners deciding who keeps the books and who files the T2, T1 or GST/HST return
- New corporations, sole proprietors and partnerships comparing a filing service with an accountant
- Businesses asked by a lender or franchisor for reviewed or audited statements
Not covered here
- How to find and check a particular accountant
- What a bookkeeper or accountant costs, or what a T2 quote should include
- What a compilation, review and audit each involve
Bookkeeper, accountant or CPA: what is the difference in Canada?
A small business has up to three jobs to cover: monthly records, the GST/HST and payroll returns, and the year-end statements, slips (T4 for salary, T5 for dividends) and income tax return (a T1 for a sole proprietor, a T2 for a corporation). One person can do more than one of them. A bookkeeper keeps the records, an accountant turns them into statements and returns, and a CPA is an accountant who belongs to a provincial CPA body. The Government of Canada's profile for bookkeepers lists keeping books, reconciling accounts, preparing payroll cheques and tax remittance forms, and also preparing financial statements and tax returns. Its profile for accountants lists planning accounting systems and preparing financial statements and reports. The title therefore tells you little. What separates the jobs in law is which work a province reserves and who may use the CPA title. In the provinces covered below, audits, reviews and some reports others rely on, such as a lender's request, are reserved to authorized CPAs and firms; bookkeeping and ordinary return preparation are not.
If it is your first year or first T2 and you are weighing a filing service against a CPA, the jobs your business has decide the choice: which of GST/HST, payroll, year-end statements and the T2 apply, and what is monthly versus once a year.
| Job | Done by | Reserved to a licensed CPA? |
|---|---|---|
| Record sales and expenses, reconcile bank and card accounts | Bookkeeper | No. Ontario (Public Accounting Act, s. 3(3)) and British Columbia (CPA Act, s. 47(3)) exclude bookkeeping from the licensed work; Quebec reserves only public accountancy and Alberta only audit and review engagements |
| GST/HST and payroll remittance returns | Bookkeeper or accountant | Not named as reserved in the Ontario, Quebec, Alberta or British Columbia Acts |
| Year-end statements and the T1 or T2 return | Accountant, CPA or not | In Ontario, not when the statements are prepared only as part of tax returns and no independent opinion is offered (s. 3(3)). British Columbia excludes return preparation that does not purport to follow CPA Canada standards (s. 47(3)). Alberta does not name return preparation as reserved. Quebec does not either, but it reserves compilations not meant only for internal management (CPA Act, s. 4): ask the provincial CPA body whether statements prepared for your return fall within that |
| Audit, review and other assurance reports; in some provinces, compilations that others rely on | CPA holding a licence, permit or authorization; in Alberta, a professional accounting firm (a compilation in Quebec needs no permit) | Yes; see the province table below |
A case is not simple if the business:
- is a corporation, because its T2, owner pay and the owner's personal return connect;
- is registered, or must register, for GST/HST, or pays employees;
- has a lender, franchisor, investor or buyer asking for statements;
- has books months behind or returns not filed;
- is in Quebec or Alberta, which administer their own corporate income tax (see the Quebec section below);
- earns or holds anything in another country.
Gather before you call anyone: your year end and province; whether you have GST/HST and payroll accounts (account numbers and filing frequency); whether a lender, franchisor or investor wants statements; last year's return and notice of assessment; and bank and card statements since the last filed period.
Is "accountant" a protected title, and who can call themselves a CPA?
In Ontario, Quebec, Alberta and British Columbia the CPA designation is protected by provincial law, and none of those Acts names plain "accountant" as a protected title. Each province has its own Act:
- Ontario. Only members of CPA Ontario may use the CPA designation or initials, the older Chartered Accountant, Certified Management Accountant, Registered Industrial Accountant or Certified General Accountant titles, or a title implying any of them, or practise as a CPA (Chartered Professional Accountants of Ontario Act, 2017, s. 29).
- Quebec. Nobody may claim to be a chartered professional accountant without a permit and an entry on the Order's roll (Professional Code, s. 32). The Chartered Professional Accountants Act, s. 13 also bars the titles "professional accountant" and "public accountant" and the older "chartered accountant", "certified general accountant" and "certified management accountant" titles.
- Alberta. Only a registrant authorized by the regulations, or an individual authorized by the bylaws, may use titles such as "chartered professional accountant", "CPA", "professional accountant" or "chartered accountant" in a way that states or implies they are authorized (CPA Act, s. 7(3)).
- British Columbia. Members in good standing may use "Chartered Professional Accountant", "CPA" and "professional accountant"; others may not use them or hold themselves out as CPAs (CPA Act, ss. 44 and 45). The Act does not affect a non-member's right to practise as an accountant or auditor, subject to the reserved services in s. 47 (s. 46).
A person who calls themselves only an "accountant" may hold no designation. Whether a particular use of the word implies a CPA designation depends on the wording of that province's Act; the provincial CPA body can say how it applies it. This guide covers Ontario, Quebec, Alberta and British Columbia. Other provinces and territories have their own Acts: check yours with its CPA body. To check a person's standing, see choosing an accountant.
Who can file my T2 and GST/HST return, and what does the CRA need from me?
Someone you authorize can file both returns, but the business stays the person required to file, and a representative needs your authorization before acting on your CRA accounts. Authorization can be given in My Business Account, or your representative can request it through EFILE software (after you sign a signature page the representative keeps for six years) or in Represent a Client. For those two requests, you confirm or deny in My Business Account (not available for all businesses). Form AUT-01 sent by mail gives offline access only.
The level you give decides what the representative can do:
| CRA authorization level | What the representative can do |
|---|---|
| Level 1 | View information only; no filing |
| Level 2 | View and update information; file GST/HST (RT), payroll (RP), information return (RZ) and corporation income tax (RC) returns |
| Level 3 | Delegated authority: view and update information; also files returns and can authorize another representative |
You can limit the authorization to the whole business number, to certain program accounts, or to one program account (CRA). To remove a representative, see switching accountants; for My Business Account on a new corporation, see after you incorporate.
T2. A corporation files a T2 for every tax year, even if no tax is payable, within six months after the tax year ends, and must file it electronically unless an exception applies, such as an insurance or non-resident corporation. The tax balance is due earlier than the return: two months after the tax year ends, or three months for a qualifying Canadian-controlled private corporation (CRA). A corporation required to file electronically that does not is charged a $1,000 penalty (Income Tax Act, s. 162(7.2)). When a transmitter files for the corporation, an authorized signing officer of the corporation must complete and sign Form T183CORP before transmission. Its amounts must match the filed return. The Income Tax Act (s. 150.1(4)) puts that information return on the person required to file, not on the filer.
Sole proprietor. The return is a T1 with the business statement (Form T2125). A paid preparer generally files it electronically and the taxpayer signs Form T183, which must match the electronic return. Self-employed filers have until June 15 to file, but April 30 is still the date to pay. A Quebec resident may also have to file a separate Quebec return with Revenu Québec.
GST/HST. A registrant files for the reporting period the CRA generally assigns; a business located in Quebec files with Revenu Québec instead (see the Quebec section below). Whether you must register depends on your sales: see when to register for GST/HST. An employer also has payroll deductions to calculate and remit by the due date; see running payroll.
Can a tax-preparation service handle my small-business return?
A tax-preparation service can file a business return if the books are finished and the service is set up for that form. It may cover only the return, not your books, and a corporation's return is more than a personal one. In the laws covered here, the rule on preparers is about how returns are filed, not who may prepare them:
- A person paid to prepare more than five returns of any one kind (corporations, individuals, or estates and trusts) in a year must file every return they prepare for a fee electronically, except five of each kind and a few listed exceptions (Income Tax Act, s. 150.1(2.2) to (2.4)).
- The provincial Acts covered here do not make a CPA licence a condition of preparing a return; the first table gives each province's rule. In Quebec, which reserves compilations not meant only for internal management (CPA Act, s. 4), ask the provincial CPA body whether the statements your return needs fall within that.
A filing service may cover only the return itself. Before you hire one, ask each question below.
| Ask | Why it matters |
|---|---|
| Who keeps or fixes the books before the return? | The T2 must carry the corporation's financial statement information in the CRA's GIFI format (RC4088). Schedule 141 asks who did more than half of the work preparing that information, whether that person has a professional designation in accounting and is connected to the corporation, and whether their involvement was an audit, review, compilation, accounting or bookkeeping. A service that starts from unfinished books is doing bookkeeping first. |
| Does it file the T2 electronically, and who signs T183CORP? | See the T2 steps above. |
| Does it file GST/HST and payroll returns? | A filing service may cover only the income tax return; get its scope in writing. |
| Is it authorized at Level 2 or 3 for the accounts it will file? | Level 1 cannot file. |
| Does it file the Quebec return too? | Quebec administers its own corporate income tax, and a Quebec resident may have a separate Quebec return (see the Quebec section below). |
| What happens if the CRA writes later? | A representative can act only on the accounts and at the level you authorized. |
If the books are months behind, see catching up on overdue books.
When does the work need a CPA with a public accounting licence?
When it is an audit, a review or another assurance report, or, in some provinces, a compilation that others will rely on. Provincial law reserves that work, and the rule differs by province.
| Province | What the statute reserves | Who may do it |
|---|---|---|
| Ontario | "Public accounting": independently provided assurance engagements, including audits and reviews, and compilation services, where a third party can reasonably be expected to rely on them. A compilation carrying the prescribed notice limiting assurance is outside it (Public Accounting Act, s. 2). | A person licensed under the Act (s. 3(1)), who must be a CPA Ontario member (s. 4(1)). |
| Quebec | "Public accountancy": opinions giving assurance on a financial statement (audits and reviews), certifications on financial information not meant only for internal management, and compilations not meant only for internal management (CPA Act, s. 4). | A CPA. The assurance and certification work also needs a public accountancy permit; that compilation work does not (s. 5). Non-members are barred unless they hold a public accountancy permit, subject to rights the law expressly gives other professionals (s. 12). |
| Alberta | Audit engagements and review engagements, and representing an ability to do them (CPA Act, s. 3(1)). Section 3 names no other work. | A professional accounting firm, or a person working in one on its behalf or under the direct supervision of a member of the Chartered Professional Accountants of Alberta (s. 3(2)). Engagements relied on only by the organization's management are outside the rule. |
| British Columbia | Audits, other assurance engagements, and certifications or opinions on financial information under CPA Canada standards (CPA Act, s. 47(1)). | CPABC members authorized by CPABC, professional accounting corporations and registered firms (s. 47(2)). Bookkeeping, consulting and return preparation not purporting to follow CPA Canada standards are excluded (s. 47(3)). |
A CPA designation is not by itself the licence: Ontario's licence, Quebec's permit, Alberta's firm registration and British Columbia's authorization are each a further step. The situations that bring the rule in are a bank, franchisor, investor or buyer asking for reviewed or audited statements, or a law or contract requiring an auditor. The T2 does not itself require either: it asks for the auditor's or accountant's report only "if they were prepared". What each report level involves, and when an audit is required, is in compilation or review engagement.
Which fits a sole proprietor, a partnership and a new corporation?
The structure decides what gets filed, and so what work the business needs.
| Business | What gets filed | Common split of the work |
|---|---|---|
| Sole proprietor | A T1 with Form T2125, plus GST/HST above the small supplier threshold | A bookkeeper or good software for records; a preparer or accountant for the return. See accountant for a self-employed return. |
| Partnership | No income tax return of its own: partners report their shares on their own returns. The CRA requires a T5013 partnership information return only in some cases. | Books that show each partner's share, then an accountant or preparer. See general partnership first-year return. |
| New corporation | A T2 for every tax year, financial statement information, and the owner's own return and slips | A bookkeeper through the year; an accountant at year end. See books for a new CCPC and year-end statements. |
These are common ways to divide the work, not a rule; the right split depends on the business's size, registrations and who asks for statements.
A corporation's owner pay, shareholder loan and dividends affect both the corporation's return and the owner's return. That is the point where the job is advice, not only filing: see paying yourself from your corporation.
Do I need a bookkeeper, an accountant and a tax preparer?
That depends on which jobs your business has. Match each job to a person, not each title to a person. One person can do two or all three jobs; what matters is that every job has an owner and that the owner holds the licence if the job is reserved. For how often to pay, see monthly or year-end only; for keeping books yourself, see doing your own books; for the monthly routine, see what a bookkeeper should do each month.
| Hand to | What to give |
|---|---|
| Bookkeeper | Bank and card statements, sales invoices, supplier bills and receipts, payroll reports, GST/HST account details |
| Accountant or CPA | The reconciled books at year end, last year's return and notice of assessment, shareholder loan and owner-pay records, GST/HST and payroll account status, any CRA letters |
| Tax preparer | The finished books or a summary of them, tax slips, last year's return |
The business remains responsible for its records and its remittances. The CRA lists protecting your records, even if you hire a third party to hold them among your responsibilities. A corporation's directors can also be personally liable, together with it, for unremitted payroll deductions (Income Tax Act, s. 227.1) and net GST/HST (Excise Tax Act, s. 323) once the conditions in those sections are met, unless the director took the care a reasonably prudent person would have taken; the time limit is two years after the person last ceased to be a director. General partners can owe a partnership's GST/HST (Excise Tax Act, s. 272.1(5)).
When should I hire an accountant, not only a bookkeeper?
The jobs that call for an accountant are decisions, not records: the first T2 or whether to incorporate (sole proprietorship or corporation); how you pay yourself (salary or dividends); a lender, investor or buyer asking for statements; a CRA letter or a missed filing; and income or property in another country. Where none of those applies, records kept by software or a bookkeeper and a return filed by a preparer may cover the work.
What changes in Quebec or another province?
The provincial Act decides who may do reserved work and who may use the CPA title, and Quebec and Alberta add their own tax administration.
- Quebec. Public accountancy and the CPA title are governed by the Acts above. In Quebec, Revenu Québec generally administers the GST/HST, and a business located there files its returns with Revenu Québec on its forms. An employer with a place of business in Quebec may also have to register with Revenu Québec for source deductions.
- Quebec and Alberta. Provinces legislate their corporate income tax, but the CRA administers it except for Quebec and Alberta. A corporation with a permanent establishment in either files a separate provincial corporation income tax return with that province as well as the T2. In Alberta, unless it is exempt, a corporation with a permanent establishment there must file an Alberta return (AT1), due within six months after the tax year ends.
- Other provinces and territories. Not covered here. Check that province's Act and CPA body before assuming the same rules.
Example
These examples are illustrative; amounts are in Canadian dollars.
An Ontario consultant
A sole-proprietor consultant earns C$80,000 and is registered for HST because sales are above the C$30,000 small supplier threshold. A bookkeeper keeps the records and prepares the HST returns. The T1 with the self-employed statement goes to a preparer or accountant, due June 15, with any tax owing due April 30. Ontario's Public Accounting Act, 2004 licenses audits, reviews and compilations a third party relies on without the prescribed notice; it excludes bookkeeping and statements prepared solely as part of tax returns (s. 3(3)).
A new Alberta corporation
A new Alberta corporation pays its owner, an Alberta resident, C$100,000 in dividends. A bookkeeper keeps the monthly books. An accountant, here a CPA, prepares the year-end statements and the T2 and advises on how the owner is paid. The corporation also gives the owner a T5 slip and files the T5 return by the last day of February after the dividend year. Unless exempt, it also files an Alberta return, because Alberta administers its own corporate income tax. How the C$100,000 is paid changes both the corporation's return and the owner's, which is where advice matters more than filing. Alberta's CPA Act, s. 3 reserves audit and review engagements to professional accounting firms and names no other work, so none of these jobs requires a CPA.
A Quebec restaurant company asked for reviewed statements
A Quebec restaurant company's bank asks for reviewed statements. A review is an assurance engagement, which Quebec's Act treats as public accountancy: only a CPA holding a public accountancy permit may do it, subject to the exceptions in the Act (ss. 4, 5 and 12). Without the permit, a bookkeeper or return-only preparer cannot do that work unless an exception applies. A company in this position can ask the bank which level it wants (compilation, review or audit) before hiring, because the answer decides who may do the work.
Different for you?
- First year or first T2, and unsure which jobs you need done: which of GST/HST, payroll, year-end statements and the T2 apply depends on your year end, province and registrations. See setting up books for a new business and get bookkeeping help.
- Your books are behind, returns are missing or a payroll or GST/HST remittance was missed: see catching up on overdue books and catching up on unfiled corporate returns, and get bookkeeping help.
- A lender or franchisor wants reviewed or audited statements: see compilation or review engagement and get bookkeeping help.
- You own a corporation and pay yourself by salary, dividend or loan: see paying yourself from your corporation and get corporate tax help.
- You have a first employee: see running payroll.
- You or the business earn or hold anything in another country: see when a Canadian business needs a cross-border accountant and get cross-border tax help.
- You want to find or check an accountant: see choosing an accountant.
- You want to know what a T2 or monthly bookkeeping should cost: see corporate return cost and quotes and bookkeeping cost per month.
- Your accountant stopped answering or missed filings: see missed filings and switching accountants, and get bookkeeping help.
- You file your own personal return: see when you need a tax accountant.
Figures on this page
| Figure | Value | Source |
|---|---|---|
| T2 corporation income tax return filing deadline The filing due date also applies to Form T2002 elections and revocations | Six months after the tax year ends | CRA: T2 Corporation Income Tax Guide, before you start Checked |
| General corporation tax balance due Measured from the corporation tax year end. | Two months | CRA: Balance-due day Checked |
| Qualifying CCPC tax balance due Applies to specified taxes when the small business deduction and income-limit conditions are met. | Three months | CRA: Balance-due day Checked |
| T2 mandatory electronic filing penalty For a corporation required to file its return electronically under section 150.1(2.1) | $1,000 | Income Tax Act, section 162 Checked |
| Federal director liability limit after leaving office Income Tax Act subsection 227.1(4) limits when recovery proceedings may begin; Excise Tax Act subsection 323(5) limits when a GST/HST director assessment may be made. Both run from when the person last ceased to be a director. | Two years | Income Tax Act, subsection 227.1(4) Checked |
| Alberta corporate return filing period After the taxation year end under Alberta Corporate Tax Act subsection 36(1); statutory filing exceptions apply. | Six months | Alberta corporate return filing period Checked |
| T5 filing deadline T5 slips are filed and sent to recipients by this date; weekend and holiday rules may shift the CRA due date | The last day of February after the dividend year | CRA: T5 information return due date Checked |
Primary sources
- Government of Canada: NOC 12200, Accounting technicians and bookkeepers
- Government of Canada: NOC 11100, Financial auditors and accountants
- Ontario: Public Accounting Act, 2004
- Ontario: Chartered Professional Accountants of Ontario Act, 2017
- Quebec: Chartered Professional Accountants Act
- Quebec: Professional Code
- British Columbia: Chartered Professional Accountants Act
- Income Tax Act, section 150.1
- Income Tax Act, section 162
- Alberta: Chartered Professional Accountants Act
- Alberta: Corporate income tax
- CRA: Authorize a representative
- CRA: Levels and scope of authorization for a business
- CRA: Services for representatives of businesses
- CRA: T2 Corporation Income Tax Guide, before you start
- CRA: Form T183CORP
- CRA: Using a professional tax preparer
- CRA: Due dates and payment dates for personal income tax
- CRA: When to register for and start charging the GST/HST
- CRA: General Information for GST/HST Registrants (RC4022)
- CRA: Determine if you need to register for payroll
- CRA: Your responsibilities for records
- CRA: General Index of Financial Information (RC4088)
- CRA: Provincial and territorial corporation tax
- CRA: Filing a T5013 partnership information return
- CRA: Schedule 141, GIFI additional information
- CRA: T2 Corporation Income Tax Guide, chapter 8
- CRA: Quebec income tax package
- CRA: T5 information return due date
- Income Tax Act, section 227.1
- Excise Tax Act, section 323
- Excise Tax Act, section 272.1
About this guide
Published by Cloud Accounting under standing professional approval. This version has no separately recorded personal review. It explains general rules for the tax year shown. It is not advice for your situation.
Changes
- : First published.