Tax Benefits and Disadvantages of Incorporating in Canada

Tax season can be a stressful time for individuals and businesses alike. It’s important to stay organized and informed about the various tax filing deadlines in Canada to avoid penalties and ensure a smooth process. In this guide, we will provide you with all the information you need about personal and corporate income tax deadlines. After reading this guide, you will no longer have to worry about asking yourself constantly when are taxes due.

Introduction

A common question we often hear in the new year is when are taxes due in Canada? Tax deadlines are crucial for individuals and businesses to ensure compliance with the Canadian tax system. These deadlines vary based on the type of taxpayer and the nature of their income. In this guide, we will cover the deadlines for personal income tax, corporate tax, and filing information returns electronically.

Personal Income Tax Deadline Canada

Self-Employed Individuals

If you or your spouse earned business income in the previous year and are self-employed, your tax deadline for the filing of your return is June 15th of the current year. However, it’s important to note that any taxes owing must still be paid by April 30th to avoid penalties.

Non-Self-Employed Individuals

For individuals who do not earn self-employment income, the tax filing deadline in Canada for filing a personal income tax return and paying any personal tax owing is April 30th. It’s essential to ensure that both the tax return and any taxes owing are submitted by the deadline to avoid penalties.

Last Day to File Taxes 2023

If April 30th falls on a weekend or public holiday, the taxes deadline will be the next business day. For example, for tax season 2023, because April 30, 2023 fell on a Sunday, the CRA tax deadline was extended to May 1, 2023. This deadline extension allows self-employed individuals additional time to prepare their tax returns accurately.

Tax Installments

If you are required to pay tax installments, the quarterly payment deadlines are as follows:

March 15th

June 15th

September 15th

December 15th

Tax installments are a prepayment of your estimated taxes for the current year. The Canada Revenue Agency determines if you are required to make tax installments based on your previous year’s tax liability. It’s crucial to make these payments on time to avoid interest charges and penalties.

RRSP Contribution Deadline

Contributions to Registered Retirement Savings Plans (RRSPs) can provide individuals with tax benefits. The deadline for contributing to an RRSP and still having it reduce your taxes owing for the previous year is March 1st. By maximizing your RRSP contributions, you can potentially lower your taxable income and save for retirement simultaneously.

Corporate Tax Filing Deadline Canada

Corporate Tax Deadline Canada - Corporate Tax Returns

The Canada corporate tax deadline differs from personal income tax deadlines. The filing due date for filing your corporate tax returns is six months after the end of the corporation’s fiscal year. However, the specific corporation tax return deadline depends on the corporation’s tax year-end.

If your corporation’s tax year-end falls on the last day of a month, the Canadian corporate tax deadline falls on the last day of the sixth month after the year-end. For example, if a corporation’s tax year-end is December 31, 2022, the corporation tax deadline would be June 30, 2023.

On the other hand, if the last day of the tax year is not the last day of a month, the corporate tax return is due on the same day of the sixth month after the year-end. For instance, if a corporation’s tax year-end is September 15, 2022, the tax return would be due on March 15, 2023.

Corporate Income Tax Deadline Canada - Corporate Taxes Owing

The due dates for paying corporate taxes owing are earlier than the due dates for filing the tax returns. Taxes owing are due two months after the end of the corporation’s tax year. However, there is an exception for Canadian Controlled Private Corporations (CCPCs) that have claimed the small business deduction and meet certain criteria.

For CCPCs that meet the criteria, the taxes owing are due three months after the end of the tax year. The criteria include being a Canadian Controlled Private Corporation, claiming the small business deduction, and having taxable income of less than $500,000 in the previous year.

It’s important to consult with your accountant or tax professional to ensure you have the correct due dates for your corporate taxes owing.

GST/HST Filing Deadlines

The GST filing deadline varies depending on the filing frequency and the type of taxpayer. Let’s explore the different scenarios:

Monthly Filers

If you are required to file your GST/HST returns on a monthly basis, the return gst payment due date are both one month after the end of the reporting period. For example, if your reporting period is for the month of June, the return would be due by July 31st.

Quarterly Filers

For taxpayers filing their GST/HST returns on a quarterly basis, the return due date and the payment deadline both fall one month after the end of the reporting period. For instance, if your reporting period is from July 1st to September 30th, the return would be due by October 31st.

Annual Filers (Except Individuals with December 31 Year-Ends)

Annual filers, who are not individuals and have a fiscal year-end other than December 31st, the GST due dates (filing and payment) are within three months after the end of the reporting period. For example, if your reporting period is from July 1, 2022, to June 30, 2023, the return would be due by September 30, 2023.

Annual Filers (Individuals with December 31 Year-Ends)

Individuals who file their GST returns annually and have a December 31st year-end have slightly different due dates. The GST owing is due on May 1st, and the filing of the GST returns is due on June 15th. It’s crucial to adhere to these deadlines to avoid penalties and ensure compliance with the GST/HST regulations.

Filing Information Returns Electronically

In today’s digital age, filing information returns electronically offers several benefits. Let’s explore the benefits of online tax filing and understand the filing due dates and requirements for electronic filing in Canada.

Benefits of Filing Electronically

Filing your information returns electronically provides numerous advantages, including:

Confirmation within minutes: Electronic filing allows you to receive immediate confirmation that your return has been successfully submitted.

Secure filing: Electronic filing ensures the security of your sensitive information, reducing the risk of data breaches.

Flexibility for making changes: Electronic filing allows you to make changes to your return if necessary before the filing deadline.

Authorized filing: You can authorize another individual, such as a tax preparer, to file on your behalf electronically.

Previous year filing: Electronic filing systems often allow you to submit returns for the previous ten years, ensuring compliance and accuracy.

Filing Due Dates for Information Returns

The filing due dates for various information returns in Canada vary depending on the type of return. Here are some important deadlines to keep in mind:

T4, T4A, T4A(OAS), T4A(P), T4A-NR, T4E, T4RSP, T4RIF, T5, T5007, T5008, TFSA, T2202: File by the last day of February following the calendar year to which the information return applies.

T3: File no later than 90 days after the end of the trust’s tax year.

T5013: The due date for filing an annual return depends on the type of partners. For individuals, the deadline is March 31 after the fiscal period. For all partners being corporations, the deadline is five months after the fiscal period. In other cases, the deadline is the earlier of March 31 after the fiscal period or five months after the fiscal period.

T5018: The T5018 return is due six months after the end of the chosen reporting period.

NR4: File by March 31 following the calendar year to which the information return applies, or within 90 days after the end of the fiscal year for an estate or trust.

RRSP Contribution Information Return: File by May 1 of the year in which the contribution year ends. The contribution year spans from the 61st day of one year to the 60th day of the following year.

It’s important to be aware of these deadlines and ensure that you file your information returns on time to avoid penalties and maintain compliance with the Canada Revenue Agency.

Penalties for Late Filing

Failing to file your information returns by the due dates can result in penalties being assessed by the CRA. The penalties vary depending on the number of information returns (slips) you file and whether you file electronically. Here is a breakdown of the penalties:

6 to 50 information returns: $125 penalty

51 to 250 information returns: $250 penalty

251 to 500 information returns: $500 penalty

501 to 2,500 information returns: $1,500 penalty

2,501 or more information returns: $2,500 penalty

If you file more than five information returns and do not file electronically, you may be subject to these penalties. It’s crucial to prioritize electronic filing to avoid unnecessary penalties and ensure a smoother filing process.

Conclusion

Staying informed about tax filing deadlines is crucial for individuals and businesses in Canada. By understanding the deadlines for personal income tax, corporate tax, and information returns, you can ensure compliance with the Canadian tax system and avoid penalties. Remember to file your tax returns and information returns on time, consider electronic filing for its various benefits, and consult with tax professionals or accountants for personalized advice. Stay organized, stay informed, and meet your tax filing obligations with confidence.