When running a small business, it is essential to know all the CRA deadlines, such as the Corporate tax deadline, HST deadline, and Payroll remittance deadline. CRA may apply costly interest and penalty to the owing amount when you miss the payment deadline, so it is crucial to stay on top of all deadlines or hire a business accountant who will notify you of any important dates.
Usually, the tax filing deadline for corporations is no later than six months after the end of your corporate tax year.
That means that the due date is different for corporations with different year-end. When you have your tax year-end on the last day of a month, you need to file the corporate tax return no later than the last day of the sixth month after that date.
For example, if your tax year-end ends on November 30th, you have until May 31st to file your corporate income tax return. If the tax year ends August 31st, your filing due date is February 28th.
If your corporate year ends in the middle of the month, you have to file the return by the same day of the sixth month after the tax year ends.
For example, if your tax year-end on May 13th, you have to file your tax return before November 13th.
In some cases, the tax filing deadline falls on the weekend (Saturday or Sunday) or a public holiday. In that case, you can file it the first business day following the filing deadline, and CRA still considers it filed on time.
Corporate taxes payment due date
While you have six months to file your corporate tax return, you do not have much time to pay the taxes. Typically your owing balance due day is two months after the end of your tax year. By that day, you have to pay the remainder(if you paid installments) or full amount (if it is your first tax year or your total tax amount is less than $3,000) of the tax you owe for the tax year.
However, some corporations have three months to pay their taxes in some cases. Click on the link below to see if you are qualified.
Check if you qualify.
The balance of tax is due three months after the end of the tax year if conditions 1 and 2 that follow are met, as well as condition 3 or 4:
- the corporation is a Canadian-controlled private corporation during the tax year
- the small business deduction was claimed by the corporation for the current or previous tax year
- if the corporation is associated with any other corporation during the tax year, the total of the taxable incomes of all the associated corporations for their last tax year ending in the previous calendar year does not exceed the total of their business limits for those tax years
- if the corporation is not associated with any other corporation during the tax year, the corporation’s taxable income for the previous tax year does not exceed its business limit for that tax year
Generally, corporations have to pay monthly or quarterly installments. An instalment is a partial payment of the total amount of tax payable for the year. Instalments are calculated based on the parts of the federal Income tax, as well as your provincial and territorial tax.
Instalment payments are due on the last day of every full month of your tax year or every complete quarter if you are an eligible small Canadian-controlled private corporation.
The first payment is due one month or one quarter less a day from the starting day of your tax year.
The rest of the payments are due on the same day of each month or each quarter that follows.
You can view your instalment due dates by using the “Calculate instalment payments” service at My Business Account.
Start of the tax year: January 1st, 2022
End of the tax year: December 31st, 2022
Each of the monthly instalment payments is due by the last day of each month during the tax year. The first payment is due by January 31st, 2022. The final payment is due by December 31st, 2022.
If the corporation is paying installments quarterly, the payments are due on March 31st, June 30th, September 30th, and December 31st, 2022.
First day of the tax year: May 10th, 2021
End of the tax year: May 9th, 2022
The first monthly instalment payment is due by June 9th, 2021. The last payment is due by May 9th, 2022.
If the corporation is paying installments quarterly, the payments are due on August 9th, November 9th, February 9th, and May 9th, 2022.
In some cases, you do not have to pay instalments
In some cases, corporations do not have to pay installments. You do not have to pay installments if one of the following applies to your corporation:
- New corporations: New corporations do not have to pay installments until you have started the second year of operation. However, you have to pay any tax you owe on or before your balance-due day for that tax year for your first year of operation.
- Total tax payable amount if less or equal to $3,000: If your corporation does not have much income and the total amount of taxes is $3,000 or less, you do not have to pay installments but have to pay the full amount before the tax payment deadline.
- Short tax year: If the tax year is shorter than one month or, in the case of a small Canadian-controlled private corporation, shorter than one quarter, you do not have to pay installments for a tax year. A situation like this may happen if you decide to change your year-end tax date, and as a result of the change, the corporate tax year is reduced to 1-3 months. For example, if your corporate tax year is September 30th and on October 1st you decided to change it to December 31st, your next tax year will be less than three months, and you do not have to pay installments during that period.
Penalties and interest
A penalty applies for filing your tax return late. The 5% penalty is calculated for the unpaid tax on the day when taxes are due. In addition, 1% for each full month until the taxes are paid in full.
If you miss the installments payment deadline, the CRA will charge you installment interest. If the installment interest goes over $1000, they may charge an installment penalty, 25% of the instalment interest.
What is the current interest rate for overdue payments?
The interest rate for overdue payments is different for each quarter of the year. The interest in the 1st quarter of 2021 is 5%. You can find the latest interest rates on the Prescribed interest rates page.
As you see, paying taxes on time is very important, because the interest and penalties may cost a lot.
How to minimize delays in processing the tax return
As a small corporation, you have an option to file your tax return in paper format, unlike the large companies which have to file electronically. However, it is your responsibility to make sure CRA receives your tax return in time, so you better avoid filing your return in paper format but instead file it digitally.
The same recommendation goes to the payments. You are responsible for payments received by CRA on time. For example, if you are sending a post-dated cheque after your payment due date, the CRA will add a late payment fee to your payment.
To avoid this, you better use your bank tax payment system or enroll in the pre-authorized debit. To manage your business tax affairs on the CRA website, you need to register for My Business Account. One of the benefits of using your CRA account is that you get an electronic copy of your Notice of Assessment (NOA) and reassessment and statements of accounts.
Fastest way of receiving your Corporate tax refund
Once you submit your tax return and get a Notice of Assessment, you will see if the tax amount you paid in installments is greater than the amount you owe. In that case, CRA will send you a tax refund. The best and fastest way to receive your tax refund is to sign up for a direct deposit on the CRA website. Currently, CRA support the direct deposit for the following accounts
- RC – Corporate Income Tax
- RT – Goods and Services Tax/Harmonized Sales Tax
- RP – Payroll
Frequently Asked Questions
Corporation tax return & deadlines FAQ
I overpaid my corporate taxes but did not file a tax return for the last two years. Can I get a tax refund?
You must file a return no later than three years after the end of a tax year to receive a tax refund.
What is the difference between installment payment and interim payment?
The terms instalment payment and interim payment are interchangeable.
How long should I keep all business records?
The period in which you have to keep all your business records and supporting documents is called the retention period. For the corporations, the retention period is six years from the last tax year-end.
Hire a professional accountant to prepare your corporate taxes!
We suggest hiring a professional accountant with both knowledge and experience in filing corporate taxes. Feel free to reach out to our company. We will be happy to answer your questions and help you with corporate taxes and your personal income tax return.
Anna Grigoryan is a public accountant specializing in providing accounting, bookkeeping and tax services to Small Business owners and individuals. She has more than ten years of professional experience in public accounting fields and a bachelor’s degree in Business Accounting. Anna is the founder and CEO of Taxory, an accounting firm located in Ontario, Canada.