As the name suggest, Canadian Corporation Income Tax is paid by corporations in Canada, and these are divided into two distinct groups. There are resident or non-resident corporations and then private or public corporations. The easiest way to show the difference is to explain how they pay tax. For a company based in Canada- therefore a resident corporation ? there is the need to pay tax on all income, while one based elsewhere would only pay tax relating to business they carried out in Canada.

Resident corporations can be either private, or public organisations, and a public one will be listed on the Canadian Stock Exchange but both need to pay Canadian Corporation Income Tax. A private corporation will have to be run at least 50% by Canadians and as such, may find that they will be eligible for certain tax credits such as being exempt from paying provincial tax or business tax credit. As the criteria for paying Canadian Corporation Income Tax is so complicated, it is not surprising that there will be people who are not sure whether or not they are paying the correct amount of tax. Mistakes can be costly, so it is important that they are avoided and for this reason, many people decide that they will employ someone with greater knowledge and experience than themselves to work out just what they need to pay.

One of the things that people will find confusing is the percentages that need to be paid when it comes to Canadian Corporation Income Tax. A resident corporation will pay 38% on worldwide income and non residential pay the same percentage but just on their Canadian income. It is however the percentages added that will catch out a lot of people. 4% can be added as a surtax, while there are decreases of 10% for some provinces and 7% if Canadian process were used. This is before the small business tax credit can lower federal income tax by an additional 16% for certain levels of earning. Clearly the Canadian Corporation Income Tax system will confuse and confound all who are not fully conversant with its nuances.

Once the amount to be paid in Canadian Corporation Income Tax has been determined, then there are the refundable items. Certain corporations can get back large proportions of tax that would be payable on funds received from other corporations in Canada. $1 of every $3 paid in tax can be refunded when dividends have been paid out to shareholders.

It would be incredible difficult for people who are not experts to wade through all the rules and regulations and when it comes to Canadian Corporation Income Tax and get the figures right. Fortunately there are people who have studied for years and are able to keep up to date with any changes that are made. To make sure that you do not fall foul of any of the rules regarding Canadian Corporation Income Tax, – as if you do there could suddenly be a large bill to pay, and possibly the need to answer why you made the mistake, – you will be well advised to seek help and make sure you pay what you owe ? not a cent more and not a cent less.

Once registered as corporation, all Canadian businesses except?registered charity?are required to file corporation income taxes regardless of the status of the business operation. As all corporations are distinct legal entities, they have to complete and file a T2 Canadian?Corporation Income Tax return?every year.

There are two types of returns forms to choose from: Simplified or corporation income tax short form T2 short form or regular corporation tax form or regular T2.

Simplified Corporation Income Tax applies to all corporations with a T2 Short Return Form if they are a Canadian controlled private corporation through the tax period. The corporation could have made no income or had a loss for the purpose of income tax reporting. The corporation also need to operate only in one jurisdiction, such as one single province. The corporation can not claim any refundable tax credits excluding the refund of over paid installments. For a T2 Short Return Form, it is also mandatory that the corporation does not deal with taxable dividends transaction during the tax year. ?In absence of all these conditions, a corporation has to file a regular T2 Canadian?Corporation Income Tax?Return.

Since the corporation income tax is much more complex than the T1 Personal Income Tax Return, it is recommended that the?Corporation Income Tax filings be prepared by experienced and professional tax preparers as completion of a T2?Corporation Income Tax Toronto?form will require usage of the General Index of Financial Information (GIFI).

Canadian Corporation Income Tax?has to be filed within half a year of the end of the fiscal year. If the year-end date for filing taxes is December 31, it has to be filed before June 30 of the following year.

Canadian?Corporation Income Tax?can be filed electronically through an e-file and this applies to even non-resident corporations. If a corporation has any balance outstanding due on its corporate income tax account, that balance has to be paid within a period of two months after the tax year end.

For Canadian corporations who want to claim the small business deductions when filing Canadian?corporation income tax , the net tax rate with effect from January 2012 has been 15%. The corporation is a preferred business structure form in Canadian business world. This is because the limited liability protection the corporation offers as against a sole proprietorship entity. Canadian corporations are taxed slightly differently than the other business categories when filing?Canadian?corporation income tax.

The important tax change when considering Canadian?corporation income tax?is that the corporation is a legal entity within its own rights and is taxed separately from individual proprietorship. There are different kinds of corporations in Canada. The type will determine whether or not a corporation can claim certain deductions and rates.