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.