Tax guides
Business tax under Canadian federal and provincial rules.
Before signing, check the articles, agreement, share rights, value, cost base and paid-up capital. A buyer pays the selling owner for existing shares; a new subscription pays the corporation. The seller may owe capital-gains tax, while a corporate redemption can create a dividend. Family gifts can expose recipients to unpaid tax. An exiting partner reports allocated income and any gain on the interest sale.
Corporations · Partnerships
First calculate the loss on T2125, your partnership allocation, or the corporation's T2. A qualifying sole-proprietor or ordinary partnership loss can offset personal income, including T4 salary; you pay any remaining personal tax. Unused non-capital losses generally carry back three years or forward 20. A corporation pays its own tax and keeps its losses; limited partners face at-risk limits.
Self-employed · Partnerships · Corporations
List every missing T2 year, GST/HST period and payroll obligation, then match them to the corporation's CRA accounts and records. Respond at once to any demand or collection action. Rebuild the books, file the required returns, and reconcile the new assessments and payments. Resident corporations still need T2 returns for inactive years; registered GST/HST periods still need returns even when nil.
Corporations
A new Canadian corporation chooses its first T2 year-end within 53 weeks of incorporation; choose a date that fits its books and operations. December 31 is optional for most. A later voluntary change generally needs CRA approval for a business reason and usually creates a short year. The corporation files returns and pays any tax due for each period.
Corporations
You can prepare and file your corporation's T2 yourself using CRA-certified tax software if you can reconcile its financial records, choose the required schedules, and check its tax position. File within six months of year-end, but pay any balance earlier. Most corporations must file electronically. An inactive corporation may still need a T2, and Quebec or Alberta activity may require a separate provincial return.
Corporations
A Canadian resident generally must file Form T1135 if the total cost of their foreign property, such as foreign accounts, shares and rental property, is more than $100,000 at any time in the year. If they own at least 1% of a foreign company, and 10% with related people, they report that company on Form T1134, not T1135.
Individuals · Self-employed · Partnerships · Corporations
A Canadian corporation pays federal and provincial or territorial income tax. A Canadian-controlled private corporation may pay 9% federally on qualifying active business income within its business limit; income qualifying for the general rate reduction faces 15% federally. Add the applicable provincial or territorial rate. Investment income and owner dividends follow different rules.
Corporations
A Canadian sole proprietor reports business profit on a personal return, generally using Form T2125. Profit can result in federal and provincial or territorial income tax, plus self-employed CPP contributions outside Quebec or QPP and QPIP in Quebec. Set money aside from projected profit for income tax and contributions; the right amount depends on your total income and province.
Self-employed
First map establishments and check destination registration rules. Corporations pay tax where they have permanent establishments, splitting income on Schedule 5 if several; Quebec CO-17 or Alberta AT1 may apply. Sole proprietors and individual partners pay personally; income outside their year-end home province may require T2203 and a Quebec return. Payroll follows separate rules. Incorporation location does not shift income.
Corporations · Self-employed · Partnerships
Canadian tax residents generally are not taxed on a non-US company's retained active profit, but controlled-affiliate FAPI can be taxable before payment. Individuals report foreign dividends; some shareholder loans or benefits are taxable. Corporate owners may deduct dividends. Foreign-affiliate status can require T1134, except in an individual's first-ever resident year. Canadian management may affect company residence and T2 filing.
Individuals · Corporations
A late personal or corporate income tax return normally draws a penalty based on tax still unpaid when the return was due. GST/HST returns, payroll remittances and information slips have separate rules. Interest usually runs from the payment due date, even if filing is due later. The CRA can cancel penalties or interest for qualifying circumstances, but relief is discretionary and does not erase tax.
Individuals · Self-employed · Partnerships · Corporations
A corporation may have a personal services business if its worker or a related person is a specified shareholder and the worker would be the client's employee or officer without incorporation. This requires five or fewer full-time employees throughout the year and no payment for the services from an associated corporation. Its income faces higher tax and limited deductions.
Corporations
Read the letter for the tax account, years, issues, documents requested, and response date. Confirm the contact is genuine, gather the records that support the amounts questioned, and reply through the method the CRA specifies. Ask for more time before the deadline if needed. An audit already covering an omitted item can rule out voluntary disclosure for that item.
Individuals · Self-employed · Partnerships · Corporations
If you sell your corporation's shares, you generally report a personal capital gain and may claim the lifetime capital gains exemption if the shares qualify. If the corporation sells its assets, it reports income, recaptured depreciation and capital gains; taking the proceeds out can create a second personal tax event. The contract, asset history and buyer determine the result.
Corporations · Individuals
Yes. First list open filing, payment, and remittance deadlines; switching accountants does not extend them. Sole proprietors owe their own tax, partners report income shares and may owe partnership GST/HST, and corporations owe corporate tax while directors may owe missed remittances. Transfer returns, notices, and books; authorize the needed accounts, then revoke the former representative.
Self-employed · Partnerships · Corporations
Confirm authority and share value first. The deceased generally reports a death-date gain on the final T1 unless a spouse rollover applies. The estate pays tax on later taxable dividends; an estate loss election may offset the gain. The corporation pays its own tax and files T2s. Distribution before clearance can make the executor personally liable.
Corporations · Individuals
A sole proprietor reports business income on a personal T1, and partners report their shares on their own returns; some partnerships also file a T5013 information return. A resident corporation generally files a separate T2 every tax year, even when inactive. GST/HST registrants file for every reporting period, including periods with no sales. Payments can also trigger tax slips.
Self-employed · Partnerships · Corporations
Not sure which rules apply?