Annual Tax Return for Businesses in Canada

Updated on Thursday 27th June 2019

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All companies registered in Canada, no matter the business form, are required to comply with various requirements, among which filing their annual tax returns. There are several aspects to consider when meeting the annual tax returns for Canadian businesses, as these depend on the structure of the company, whether it is registered at a federal or provincial level and the end of the financial year.

Below, our local specialists explain the main requirements related to filing annual tax returns for businesses in Canada. We have a team of accountants who can offer services related to the reporting and filing of financial documents for your company in Canada. You can also rely on us for company formation services in Canada.
 

What businesses are required to file annual tax returns in Canada?


Almost every business in Canada is required to file annual tax returns with the Revenue Agency, however, it is important to understand that under the Canadian Company Law, the following are considered liable for taxation:
 
  1. sole proprietorships, even if they are subject to simpler reporting requirements, they still need to file annual returns;
  2. corporations must file annual tax returns at a federal level, but also at the provincial level, if required;
  3. non-profit organizations must also file annual tax returns, even if they do not complete commercial activities;
  4. tax-exempt companies must also file annual tax returns in accordance with the tax regulations;
  5. inactive companies, such as shelf companies, must also file annual tax returns in Canada;
  6. companies who have not registered any taxable income during a financial year are also required to file tax returns.

Most of the times, the annual tax returns can be filed electronically by companies, however, this is a requirement for companies with annual revenue of more than 1 million CAD.

Non-resident companies must also file annual tax returns in Canada under certain circumstances.

For complete information on the requirements imposed on companies for filing annual tax returns, you can address our company registration agents in Canada.
 

Forms to be filed by Canadian companies with the tax authorities


The forms to be filed by a business in Canada in order to report its financial activities for the previous year depending on the type of structure. Sole proprietorships and partnerships must file Form T1, while corporations must file Form T2.

These forms must also be filed by sole traders and partnerships even if they have registered no income in the previous year, respectively by corporations in the same situation.

Another important aspect to consider in the case of Canadian corporations is that they also need to file tax returns with the federal office and the provincial office of the Canadian Revenue Agency. In the case of some provinces, the local office will handle the distribution of the amount of money due at a local and federal level, while in other that is not possible.

In order to avoid any misunderstandings related to the filing of the annual tax returns for your business in Canada, we invite you to use our accounting services.
 

Information to be filed by Canadian companies with the tax authorities


The annual tax returns which are filed by all Canadian businesses must contain specific information which helps the Revenue Agency to acknowledge the company and determine the amount of money it has to pay.

The following information must be submitted with the tax authorities when filing annual tax returns in Canada:
 
  • the company’s business identification number which was issued upon incorporation;
  • the company’s social insurance number (the same requirement applies to sole traders);
  • the business’ records which must provide for the annual income, the sales, the costs of the goods sold;
  • the business expenses of the company which can comprise the purchase of vehicles and office supplies.

The deadline for filing tax returns in Canada is the 15th of June of the current year for sole traders and partnerships. Corporations can choose the filing date for their annual tax returns based on the end of their financial year, however, in certain cases, the tax return must be filed within 2 or 3 months after the end of the financial year.

Here is what you should know on the Canadian economy:
 
  • in 2019, Canada is expected to register a economic growth of 1.3%;
  • the second quarter is predicted to be the best in 2019, with a growth of 2.5%
  • however, 2020 should be a better year and bring a 1.5% economic increase;
  • British Columbia is the most performant Canadian region in 2019, with an annual growth of 2%.

For assistance in setting up a business in Canada or filing annual tax returns, please contact us.