Understanding Business Tax PaymentsBrian Jang ON March 13, 2021
With modern technology changing rapidly and affecting virtually every part of our daily lives, it is no surprise that the Canada Revenue Agency (CRA) should be implementing changes that make use of these advances, as they have done with CRA Business Tax Payments.
CRA payments are now being made online. Previously, a business would receive a notice in the mail which would necessitate a trip to the bank, where they would detach the payment stub and make a payment through the teller. Now, with the availability of online payment, the CRA no longer mails these notices out automatically.
Making Your Payment
You have a number of payment options available to you:
- CRA My Business Account. You can set up your account which should be confirmed within about 2 days by email or 5-10 days by regular mail. Payments are posted the day they are made, so even if you pay on the due date, you will be fine. In the event that you have multiple businesses, you can pay for the appropriate company by toggling between business numbers.
Simply go to the CRA website and select My Payment. Be sure to have your 15-digit CRA program account number on hand and follow the on-screen instructions.
- Pay Via Your Financial Institution. If you do not have a CRA My Business Account, you can pay through your financial institution. Be aware that unlike the above option, payments will be posted the following day, so be sure you pay before the deadline.
If this is your first time paying in this manner, you will need to “Add a Payee.” The appropriate option may appear as any of the following:
- Federal – Corporation Tax Payments – TXINS
- Federal – GST/HST Return – GST 34 – (GST34)
- Federal Payroll Deductions – Regular/Quarterly – EMPTX – (PD7A)
- Federal Payroll Deductions – Threshold 1 – EMPTX – (PD7A)
- Federal Payroll Deductions – Threshold 2 – EMPTX – (PD7A)
Be sure to enter your account number correctly, or the payment may be applied incorrectly.
You also have two credit card options: PaySimple and Plastiq. The drawbacks here are that you will be charged an additional 2.5% and payment will take 3 business days. Be sure to pay in advance of the due date.
- Pay in Person. You may continue to pay in person if that is your preference, but you will need to request that a voucher be mailed to you to do so. You will have to do this early to leave yourself sufficient time. A minimum of 10 days is recommended. Once you have the vouchers, you may pay at Canada Post, using a QR code, or mail a cheque, though with the latter option, it will need to arrive before the due date, or be stamped by Canada Post on or before the due date.
Be sure to follow up; the CRA may receive and cash your cheque without applying it to your account. You will then receive a call informing you that your payment is overdue and accruing interest. The burden of proving that a payment was made will be upon you. This is one reason why online payments are not only easier, but more secure.
What Are the Due Dates for Business Tax?
You will need to keep three due dates in mind:
- The most common for small businesses is the Corporate Tax for Canadian Control Private Corporations (CCPC). This is due 3 months after year-end, so if your year-end is November 31st, your tax will be due on the last day of February.
- Source Deductions are due on the 15thof the month following the month in which they are deducted. Therefore, amounts withheld in February would be due on the 15th of March.
- GST/HST. In most cases, you will make quarterly payments due one month after the end of each quarter. While the option exists to make annual payments, this may be less desirable as you will have to make the full payment in one shot.
When it comes to paying your business taxes, taking advantage of the option to pay online is a wise decision. It is quick, easy, and helps you avoid penalties due to late payments.
To help you better understand business tax payments, reach out to BCJ Group.