When Are Your Business Taxes Are Due?Brian Jang ON June 7, 2019
When thinking about tax time, most people think instantly about April, but if you are running a business, you have different deadlines for filing, depending on how exactly you set your business up, and possibly the fiscal year as well. So, when exactly are your Canadian business taxes due?
Partnerships and Sole Proprietorships
For those with partnerships or sole proprietorships, you will be declaring your income on Form T2125, which is part of your T1 personal tax return.
Your deadline for filing your Canadian income tax return is June 15. Despite having a later deadline, however, be aware that any income tax that you are required to pay will still be due no later than April 30. Payments made past this date will be subject to penalties.
Alternate Fiscal Year Ends
As a sole proprietor or a partner, it is possible for you to choose a different fiscal year for your business, rather than following the calendar. This may prove advantageous in certain situations, such as when dealing with a seasonal business.
To do so, you must first submit an application to the Canadian Revenue Agency (CRA), and approval is not automatic. Depending on the circumstances, the CRA may not consider your request to have adequate reason to make the change and will reject the application. You must also have all partners in agreement on the change, choosing the same fiscal year end date. Further, if one of the partners is a corporation, or in another partnership, you will not be able to make the change.
By changing the fiscal year end date, you are also making your taxes more complicated; no matter what date you choose, your personal tax return continues to be due by June 15, with any payment due still being required by April 30.
Should you choose a date other than December 31 for your business fiscal year end, you will be combining parts of two fiscal years. This may necessitate estimating your income during the period between your chosen date through December 31. This is the main reason that most sole proprietorships and partnerships continue to use December 31 as their fiscal year end.
As a corporation, you may still choose any date for your fiscal year end, however any income tax balance owed by your corporation needs to be paid within two months of the fiscal year end. The exception to this rule is Canadian-controlled private corporations, which have three months to pay their taxes under certain conditions.
Provincial Corporate Taxes
Corporations are responsible for paying their provincial taxes in the appropriate province or territory in addition to their federal business taxes. Provincial corporate taxes are administered by the CRA, except in the provinces of Quebec and Alberta. They are included on the federal tax return.
If your place of business is located in Alberta, you may find the forms necessary for your taxes in the Corporate Income Tax section of the Treasure Board and Finance website, while those in Quebec can visit the Corporate Income Tax Return section of the Revenue Quebec site.
Deadlines for filing and tax payments are similar to those of the CRA.
In the Event That Your Business Didn’t Make Money
If your business did not make any money, you are still required to file a T2 tax return each year. This must be done whether you owe any tax or not. Both sole proprietorships and partnerships must file their individual returns despite any lack of income.
Having an active business means that you should be filling in form T2125 with your personal tax return. If you had business expenses and little to no income, you might have generated a business loss that can be written off against your personal income. This can often be the case in the first few years of a new business.
- When Are Your Business Taxes Are Due?
- What You Need to Know About Paying Taxes by Installments
- How to Charge Provincial Sales Tax on Online Sales
- Everything You Need to Know About the Tax-Free Savings Account
- What to Watch Out for When Filling Out Your Return