Accounting in Canada

Updated on Thursday 07th May 2020

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Moving or starting a company in Canada is simple from certain points of view, such as the legal requirements. However, when considering the accounting matters, one must pay attention to two main aspects: the federal and the regional or territorial regulations. For foreign investors, especially, accounting is a sensitive matter when they must choose to start a business in Canada.

For this purpose, there are many companies and consultants offering accounting services in Canada. You can rely on our local agents for accounting and company formation services in Canada.
 

A brief overview of the Canadian taxation system

In order to know what are the accounting services one needs, it is best to find out some information on the taxation system in Canada. As mentioned earlier, taxation in Canada is imposed at a federal or provincial level, it all depends on where one resides or how a company is registered.

There are four main taxes imposed in Canada:
 

  • the income tax which levied on the income earned by individuals residing in Canada;
  • the corporate tax which is applied to the income generated by companies in Canada;
  • the sales tax which is also known as the Harmonized Sales Tax or Value Added Tax;
  • the property tax which is applied to the income derived from owning residential property.


All taxes are collected by the Canadian Revenue Agency. The federal taxes applied on income are levied at various rates based on certain thresholds of income; the taxes applied to companies in Canada are also levied at different rates.

Our company registration agents in Canada can offer information on the taxation system applicable in this country. We also remind you that you can rely on us for accounting services.
 

The main tax laws in Canada

Both foreign and local entrepreneurs and individuals residing in Canada must abide by the following laws related to taxation:
 

  1. The Income Tax Law which is the main act governing taxation at federal and regional levels;
  2. The Tax Rebate Discounting Law which provides for the refund of taxes paid in Canada;
  3. The Income Tax Conventions Interpretations Law which provides for the tax agreements signed by Canada;
  4. The Income Tax folios which is a set of regulations establishing the taxation of special categories of taxpayers.


We have also created a video with the accounting services provided in Canada:
 


Federal tax rates in Canada


The following tax rates apply at a federal level in Canada:
 
 Tax  Rate
 Income tax   15%-33%
 Corporate tax  11%-34.67%
 Value Added Tax  5%
 Property tax  Depends on the value of the property
 

Accounting services available in Canada

 
Canadian companies and residents can request various accounting services based on their needs; however, it is more common among businesses to ask for such services.
The following accounting services can be provided by our consultants in Canada:
 
  • assistance in opening the corporate bank account when opening a company in Canada;
  • drafting the monthly, quarterly and annual financial statements;
  • filing financial accounts with the Canadian Revenue Agency;
  • audit services;
  • payroll services.

We also offer tailored accounting services depending on the clients’ requests. Among these, we remind of the virtual office packages available for foreign enterprisers.

It is important to know that the accounting requirements imposed on companies in Canada depend very much on the type of business registered with the Trade Register.

Below, our company formation specialists in Canada explain the most important accounting requirements for businesses. We specialize in offering company registration and accounting services for your business in Canada.
 

Legislation on accounting requirements for companies in Canada


In order to maintain proper accounting for a Canadian company, the company’s officers and the directors are required to respect various laws and regulations. One of the most important accounting laws is the Canada Business Corporations Law which provides for the corporate financial reporting requirements imposed on businesses.

Other laws which must be respected by Canadian companies are the Regulation of Accounting Profession which stipulates that the accounting of a business must be kept by professionals registered with the Chartered Professional Accountants and with the Canadian Public Accountability Board, and the Audit Oversight Arrangements which cover the audit requirements for local companies.

All companies in Canada must respect the International Financial Reporting Standards (IFRS) and the generally accepted accounting principles (GAAP) when filing accounting documents.

Our accountants in Canada can help to respect the accounting requirements imposed at national and regional levels.
 

Corporate records of Canadian companies


All companies in Canada must comply with the regulations imposed by the Accounting Standards Board when it comes to the accounting requirements and which provide among others for business to maintain proper corporate records.

Canadian corporations must keep specific documents at its registered seat, while other documents must be kept in another location chosen by the board of directors.

The following documents must be kept by Canadian businesses:
 
  1. the company’s Memorandum and Articles of Association together with all the amendments brought to them;
  2. all the minutes of the meetings held by the shareholders or other officers in the company;
  3. a register of the directors where all the details of the company’s directors and members of the board of directors are recorded;
  4. a register of the company’s officers which must contain information on all the officers in the company;
  5. a register of the company’s members or shareholders which must provide information on all the participants in a company;
  6. the company’s accounting records which must be duly prepared, among these the financial statements.

It is important to know that the accounting records must be prepared by the directors and must be disclosed to the shareholders during the annual general meeting. In order to be filed with the Canadian Revenue Agency, the accounting records must be approved by the shareholders.

If you want to open a company in Canada and need information on the accounting requirements it must comply with, our local consultants can inform you.
 

Accounting documents to be maintained by companies in Canada


There are various accounting requirements which need to be respected by Canadian companies. Among these, a business must keep and file specific documents with the relevant authorities in Canada.

The following accounting documents must be recorded by companies in Canada:
 
  • the balance sheet of the company which must comprise information on its annual earnings;
  • the profits and loss account which must provide information on the profits and losses registered by a company in the previous financial year;
  • a statement of retained earnings and a cash flow statement must also be submitted with the Revenue Agency;
  • various tax returns, such as T2 form and the Goods and Services Tax return, depending on the business form.

If you decide to open a company in Canada, you should know that:
 
  • in May 2019, Canada’s trading balance registered as a surplus of 0.76 billion CAD;
  • the surplus came from increased exports of motor vehicles (4.6% growth);
  • Canadian imports also grew in May 2019 by 1%;
  • exports to the USA registered an all-time high of 39.3 billion CAD in May.

For full information on the accounting and company formation packages we can provide in Canada, do not hesitate to contact us.

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