First of all, you have to know that the deadlines are not fixed as they are in some other cases. For example, individuals must report their taxes by the end of April, self-employed have to do that before June 15, partnerships have first three months of the year for that, while the deadline for corporate taxes is two months after the end of the fiscal year.
Also, you should check more information about the corporate tax filing deadline in 2023. Here are some important details to know about Canada Revenue Agency regulations for businesses.
Important Details To Know
The common misconception among new businesses is when they think that the deadline is the same as for tax returns, which is six months after the end of a business year. When it comes to the tax-filling due date, it is up to two months in most cases, while there is a chance that you can prolong it to three months.
You can qualify for the additional month in case that the deduction of small business was claimed, There are some other cases as well, like the one where it is a private Canadian-controlled business, or if it is connected with other business during the fiscal year.
Moreover, there is an option to pay in installments. The first payment has to start one day before the end of the first month of the business year. You can choose to pay for quarters as well. Another important thing to know is that you don’t have to pay installments for the first year after starting the business, or if the total amount is not over $3,000.
The reason why it is very important to follow the regulations issued by the CRA is to avoid penalties. There is a fixed 5% penalty for missing the deadline, and the additional 1% will be added for each month until you pay the full amount. When it comes to installments, there is a rule where up to 25% can be added if you are late with payments and the installment is higher than $1,000.
What About Tax Returns?
The most important thing is to never miss the deadline, which is six months after the end of the business year. Also, you should check the amount that you paid through installments to be sure that you did not overpay the total sum. In that case, you can file a tax return, and the easiest way for that is to choose a direct deposit provided by the Canada Revenue Agency.
If you miss reporting the returns in one year, you will still have a chance for that since there is a regulation where you can fill your tax returns for up to three years after the end of the fiscal year. Therefore, be sure to keep all your records in order. Besides that, there is a retention period where each company must keep all records for at least six years.
As you can see, the crucial part is to follow the deadlines and never miss payments so you can avoid penalties. If you don’t have a lot of experience in reporting taxes and refunds, the best solution would be to hire an expert in this area.