It is provided as a guide to taxpayers and is not intended as a substitute for the relevant legislation. This bulletin replaces portions of Information Bulletin R, originally published January These amendments parallel the calculation of instalments under the federal Income Tax Act ITA , when a corporation has been involved in an amalgamation, wind-up, rollover or has a preceding short taxation year that is less than days.
The amendments come into force for taxation years beginning on or after January 1, The requirements for instalments and other payments under the CTA vary depending on the type of corporation and its total tax liability. It is important for corporations to establish the timing and amount of their minimum instalments and payments, if any. In this way corporations will avoid being assessed for interest and penalties on late or insufficient instalments and payments.
In general the first instalment base is the previous year's tax payable and the second instalment base is the tax payable for the second preceding year. This general rule is elaborated on in paragraphs 7 to A corporation formed by an amalgamation is required to pay tax instalments beginning with its first taxation year. In calculating its instalments, the aggregate tax paid in the last taxation year by the predecessor corporations are treated as the new corporation's first instalment base.
The aggregate tax of the taxation year preceding the last taxation year of the predecessor is treated as the new corporation's second instalment base.
For taxation year's beginning on or after January 1, , when a corporation is wound up into a parent corporation and subsection 88 1 of the federal ITA applies, the parent corporation will have to include, in addition to its own instalment bases, the instalment bases of its subsidiary.
Where all or substantially all, of the property of one corporation has been transferred to a nonarm's length corporation and subsection 85 1 or 2 of the federal ITA applies, the transferee must take into account the instalment bases of the transferor. Where any of the predecessor's or transferor corporations prior taxation year is a short taxation year, the rules outlined in paragraph 7 apply.
The rules will apply to calculate the instalment bases of the successor, parent or transferee corporation. To obtain the most current version of this document, visit ontario. Introduction Generally, a corporation is required to make periodic instalments throughout a taxation year with respect to its estimated tax liability for that period.
This day is the day of receipt of the payment by the Ministry or its authorized agent i. Application of Payments Received Pursuant to subsection 78 7 , payments received by the Minister on account of amounts owing for a taxation year by a corporation are applied in the following order: tax payable penalty payable interest payable, and finally any other amount payable under the CTA.
Monthly Instalments Except for corporations eligible for the small business instalment exemption discussed in paragraphs 12 to 14 and corporations that qualify for the quarterly instalment option discussed in paragraph 15 , all corporations are required by clause 78 2 a to make monthly instalment payments.
Corporations are permitted under clause 79 8 c to select the method that results in the lowest total amount of instalments for a taxation year without being charged interest. In addition, a corporation eligible to a tax credit under sections However, pursuant to subsection 6 of Regulation , a corporation's minimum instalment requirements for a particular year are not recalculated and reduced by any loss carried back from a subsequent taxation year.
If the corporation became ineligible for quarterly instalments during a tax year, you can continue with making an instalment for the current quarter when due , and then start monthly payments thereafter. A new corporation in the first year of operation is not required to pay taxes on an instalments basis. In either scenario, you should pay your tax bill by the due date following the end of the tax year. For quarterly instalments you can divide the tax paid in the previous tax year by 4, each one-quarter of the tax is due by the last day of each quarter.
You can also use the taxes estimated for the current year in your calculation, however, if there is a shortfall at the end of the year, CRA will charge interest on the balance. This interest charge is compounded daily on outstanding amounts. The return filing date for a corporation is 6 months after the fiscal year-end. Tax instalments for individuals are due on March 15, June 15, September 15, and December Sign up now to join thousands of other visitors who receive our bi-weekly newsletter and latest personal finance tips.
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If your due date falls on a weekend or holiday, it can still be filed on time by sending it in the next business day after your deadline. Are you the forgetful type? Turns out the CRA made an app for that. The CRA Tax Reminders app is designed to help you stay on top of all of the necessary dates for filing and paying your corporate taxes.
To file a paper copy of your corporate taxes, you can also print the T2 Barcode Return to send in with your return. Corporations in Canada pay their taxes in instalments, so that payments are spread out across the year. They can be made either monthly, or quarterly. To calculate your instalment payments, the CRA has created a series of worksheets to help you through the process—one to estimate your taxes , one to calculate monthly instalments , and one to calculate quarterly instalments.
You can pay by debit, pre-authorized debit, online banking, credit card, wire transfer, a service provider, cash, or at your Canadian financial institution. Basically, everything but Bitcoin. Also, you have to pay in Canadian dollars.
Generally speaking, the balance of your corporate taxes is due two months after the tax year end. Advance payments can be made for the following reasons :. It probably seems obvious that making late payments on your taxes will incur penalties, but there are some other less obvious penalties to look out for. Failure to file your T2 taxes on time will result in penalties.
There are also penalties for false statements, omitting information from your corporate tax return, for not reporting income, or for helping or advising someone to file a false claim.
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