Quebec Corporation Accounting Cost: CO-17, QST and Year-End

How much should a Quebec accountant charge for a corporation's year-end?

There is no standard price. Neither the CRA nor Revenu Québec sets what an accountant charges, and the official sources used here give no fee comparison, so a quote follows the filings the corporation needs. In Quebec that list is longer than for a corporation whose T2 doubles as its provincial return: a federal T2, a separate Quebec CO-17, combined GST/QST returns once registered and, with employees, Quebec remittances, RL-1 slips (Quebec's employment income slips) and an RL-1 summary.

The quickest test of a quote: it should name the T2, the CO-17, the GST/QST returns if the corporation is registered and, with staff, the payroll filings. A quote that names none of them, or two quotes that differ widely, may differ in scope rather than in fee.

A Quebec year-end is not simple when the corporation has employees, few or no paid hours (the Quebec small business deduction depends on them), missed a GST/QST return, a slip or a remittance, has sales, staff or owners outside Quebec, or is changing accountants. Gather the last filed T2 and CO-17, the GST/QST filing record, payroll and RL-1 records, and the year-end statements before asking for quotes. What drives a T2 fee in any province is in T2 return cost.

What does a Quebec corporation file at year-end that other corporations do not?

A corporation with an establishment in Quebec at any time in its year files a CO-17 with Revenu Québec in addition to its T2. The CRA says the T2 serves as the provincial return everywhere except Quebec and Alberta, where a separate provincial return is required.

A corporation has a Quebec establishment under several tests, including a fixed place of business there (an office, branch, warehouse or workshop), its main place of business being there, a Quebec building it uses mainly to earn rent, an employee or agent in Quebec with authority to contract, or, with no establishment anywhere, a head office named in its articles that is in Quebec (CO-17 guide, section 3.4, French only).

The CO-17 guide tells the filer to attach complete financial statements: balance sheet, income statement, retained earnings statement, cash flow statement and notes. An inactive corporation attaches a balance sheet, and a first Quebec return attaches an opening balance sheet. A return sent online must also carry the CRA's General Index of Financial Information (GIFI) form with its notes. A box on the return (line 39) confirms that the corporation's Quebec enterprise register information is correct. If anything changed, it files the annual updating declaration separately (Québec: annual updating declaration). The annual registration fee, where one is due, is in the deadlines table.

Where do the GST/HST and QST returns go, and how often are they due?

A GST/HST and QST registrant located in Quebec files with Revenu Québec, not the CRA (CRA: GST/HST and Quebec). Because Revenu Québec administers both taxes, the corporation can file one combined return for each reporting period, even if nothing is payable or refundable.

Revenu Québec assigns a monthly, quarterly or annual frequency from the corporation's and its associates' expected taxable sales, and shows it on the registration confirmation; a registrant can also elect a frequency when it registers. Both taxes use the same fiscal year, which as a rule matches the income tax year (Filing Frequency).

Which tax goes on an invoice by province is in charging GST, HST, PST and QST. A business outside Quebec selling into it is in doing business in Quebec from another province.

If I have employees, what goes to Revenu Québec?

A Quebec employer sends the Quebec income tax, Quebec Pension Plan (QPP) contributions and Quebec parental insurance plan (QPIP) premiums it withholds, plus its own QPP, QPIP and health services fund contributions, to Revenu Québec. EI and federal income tax go to the CRA (CRA: T4001, employment in Quebec; Revenu Québec: remittances).

Revenu Québec sets the remittance frequency from the size of the corporation's remittances: annual, quarterly or monthly for smaller employers, twice monthly or weekly for larger ones.

After year-end the corporation files an RL-1 slip for each employee and one RL-1 summary, and gives employees their slips, by the last day of February of the following year. The summary also carries two further employer contributions, labour standards and, where it applies, the Workforce Skills Development and Recognition Fund, remitted by that date (RL slips; remittances). An RL-1 also reports taxable benefits a shareholder receives. The T4 slips and summary go to the CRA, and the CRA's T4 guide has separate boxes for Quebec employees. Penalties for late T4 slips are in late employee and dividend slips.

Workers' compensation in Quebec is run by the CNESST (CRA: T4001). Its premium is paid in periodic payments to Revenu Québec with the payroll remittances, and the annual statement of wages goes separately to the CNESST (Revenu Québec: periodic payments). A payroll quote should say whether these are included.

Which of these filings must be sent online?

Nearly all of them. Revenu Québec requires the CO-17 and the GST/QST return online, RL slips online above a count, and larger payments electronically (Revenu Québec reminder).

The Revenu Québec amounts are on Revenu Québec's filing procedures page.

Which deadlines apply to each filing?

The T2 and the CO-17 are both due six months after year-end, but their tax balances can fall on different days. The CRA's balance is due two months after year-end, or three months for some Canadian-controlled private corporations (CRA: T2 guide). Revenu Québec's CO-17 guide gives two months for the Quebec balance and does not state a longer period, so check the Quebec date before assuming the federal one applies (Revenu Québec: impôt des sociétés, French only).

Why might a Quebec quote cover more than one for an Ontario corporation?

A Quebec year-end has more filings behind it, so a quote that lists all of them can be larger than one for a corporation whose T2 doubles as its provincial return. The work behind the second return is not a copy of the first:

• The CO-17 has its own attachments, listed in the section above.
• The small business deduction has a Quebec hours test. The deduction is a lower tax rate on the first slice of a small Canadian-controlled private corporation's business income. The full rate needs 5,500 hours or more paid to employees, counted either for the corporation's own year or for the prior year together with its associated corporations. The rate falls on a straight line below that, using the greater of the two counts, and is zero only when both counts are 5,000 hours or less. Each employee counts for at most 40 hours a week, a short year's own count is scaled up to a full year, and the hours worked by a person who holds a majority of the voting shares can be included. A primary or manufacturing sector test can also qualify a corporation (CO-17 guide, French only; CO-771-T notes). Someone has to count the hours, and a corporation near the limits should have the count checked.
• Two agencies share the payroll and sales tax filings: GST/QST and most payroll amounts go to Revenu Québec; EI, federal income tax and T4 slips go to the CRA. Employees get an RL-1 as well as a T4.
• Some guidance is in French only: the CO-17's official version and the corporation income tax page are French, with an English courtesy translation of the form.

A lower quote that leaves out the CO-17, the GST/QST returns or the payroll filings is not comparable to a higher one that includes them. Ask each firm to list what its price covers.

Can I do my own very simple Quebec corporation return?

A corporation can prepare its own CO-17, but a small corporation is not exempt from either return. The steps: register in Revenu Québec's corporation income tax file, finish the financial statements, complete the CO-17 in authorized software or through an accredited filer, attach the statements and the GIFI form, file online, and pay any balance within two months of year-end (CO-17 guide, French only). A simple filing goes wrong in these places:

1. Filing only the T2. The T2 does not file the Quebec return. A late CO-17 draws penalties and interest; the amounts are in the missed-items table below.
2. Filing on paper. Almost every corporation must file the CO-17 online.
3. Leaving out the balance sheet. An inactive corporation with no sales still attaches one to the CO-17.
4. Skipping the hours test. The small business deduction can be reduced or lost on low paid hours.
5. Missing the enterprise register update or the annual fee. The CO-17 box only confirms information that is still correct; a change needs the separate updating declaration, and the fee has its own date.

The CO-17 asks for complete financial statements, an hours count if the small business deduction is claimed and, with staff, payroll records. Each depends on the corporation's own facts, so a corporation with employees, a missed return or activity outside Quebec is where a professional's review is worth arranging. Filing the federal T2 yourself is in filing your corporate return.

What should a Quebec year-end quote list line by line?

A quote should name each filing it covers and say what is billed separately.

What to prepare before the accountant starts is in the year-end checklist for a corporation.

What if a GST/QST return or a slip was missed?

File it as soon as possible: interest and some penalties keep growing, and a nil return is still a return. Then list anything else that may have been missed. Revenu Québec charges these for late filing and non-filing (late-filing penalties; failure to file):

Interest is charged as well. Revenu Québec can cancel or waive penalties and interest in listed situations, such as an exceptional event beyond the taxpayer's control or its own error. Its waiver page lists a third party's mistake among the situations that do not justify a waiver, so a former accountant's missed filing may not be enough by itself. The same page says a taxpayer who failed to meet its obligations or filed an incomplete or inaccurate return, and is not in a waiver situation, may get relief on penalties and interest through a voluntary disclosure application; whether that fits depends on the facts.

A director can also be personally liable. A director in office when a GST/QST or payroll amount was due can be held liable with the corporation for the amount, interest and penalties, but only after a collection condition is met (for example an unsatisfied court judgment, or the corporation's bankruptcy or dissolution) and not if the director took reasonable care (Excise Tax Act, s. 323; Income Tax Act, s. 227.1; Revenu Québec: directors' liability). These rules stop two years after the person last served as a director.

Several missed years are covered in catching up on unfiled corporate returns. Unfiled GST/HST under federal rules is in unfiled GST/HST returns; a Quebec registrant files with Revenu Québec instead. Federal penalties and relief are in penalties, interest and relief.

What should I send the accountant to get an accurate quote?

Send what lets the firm count the filings:

• The last filed T2 and CO-17, with their notices of assessment.
• Year-end financial statements, or the trial balance and bank statements if none exist.
• The GST/QST registration confirmation showing the filing frequency, and the returns filed.
• Payroll: the number of employees and paid hours, the last RL-1 summary, the RL-1 and T4 slips, and the remittance record.
• Dividends paid, and the T5 and RL-3 slips issued.
• Any sales, staff, property or owners outside Quebec.
• Any letter from Revenu Québec or the CRA, and a list of anything you think was missed.

Example

These examples are illustrative; amounts are in Canadian dollars.

A Montreal consulting corporation with no staff

A corporation with C$150,000 of revenue, no employees and quarterly GST/QST returns should get a quote that names the T2, the CO-17 and four combined GST/QST returns. With no payroll there are no RL-1 slips or remittances; if the owner takes a salary, they appear. With no employees there may be few or no paid hours to count, so the Quebec small business deduction could be reduced or lost unless the prior year's hours, the hours of a majority voting shareholder who works in the business, or a sector test apply. The quote should say who counts the hours, including the owner's work.

A Quebec City bakery with three employees

A corporation with C$600,000 of revenue and three employees adds Quebec remittances on their own schedule, plus three RL-1 slips, the RL-1 summary and three T4 slips, all due by the end of February. Three RL-1 slips are below the more-than-five threshold for online RL filing, but the CO-17 and the GST/QST returns are online either way. Assume a full tax year, each employee paid about 1,800 hours (under the 40-hour weekly cap), no owner hours and no prior-year count of 5,500 or more. The corporation then has about 5,400 paid hours, between 5,000 and 5,500, so its Quebec small business deduction could be reduced on the straight-line scale; a higher prior-year count, an owner's hours or a manufacturing-sector test could change that.

A Laval corporation changing accountants after its first year

A new firm asks for the filed T2 and CO-17, the GST/QST filing record and the RL-1 summary before quoting. The record shows three of four quarterly GST/QST returns filed. A quote should list the missing return as its own line, and the penalties in the missed-items section show how the cost grows with delay.

Different for you?

• The first quote lists no CO-17, QST or RL filings: the scope may be incomplete. Bring the quotes to corporate tax help to settle the full list of filings and what each quote covers.
• A GST/QST return, a slip or a payroll remittance was missed: see catching up on unfiled corporate returns and missed nil returns, then get corporate tax help on what to fix first and whether a director's personal liability is in play. Bring any notice and the director records.
• Two quotes differ widely: compare them with T2 return cost and the quote line list earlier on this page, then bring both to corporate tax help to settle what each covers.
• The corporation also has sales, staff or owners outside Quebec: see operating in more than one province and non-resident owners, with corporate tax help.
• Ownership changed during the year: a change of control can end the tax year early. See adding or removing an owner, then bring the dates to corporate tax help to settle the short-year returns.
• You are changing accountants, or yours stopped answering: use switching accountants or accountant missed filings or stopped responding, then bring the filing record to corporate tax help to settle what the Quebec filings need.
• The books are behind: see catching up on overdue books and bookkeeping.