Income Tax forms

If you have chosen to carry on business as a proprietorship or a partnership, you do not have to file any additional income tax returns. The business income which you have earned will simply be added to your personal income tax return and you will pay personal income tax on these amounts. You will include in your personal income the amount of income earned by your proprietorship (or your share of the partnership) for the calendar year.

If you have chosen to carry on business as a corporation then you will need to file an income tax return for the corporation and the corporation will pay its own income taxes. Most corporations hire an accountant to prepare the corporate tax return.

If you have chosen to hire employees you must withhold CPP, EI and income tax from their paycheques and send it to the federal government with a matching contribution from your business.

Due Dates

Personal income tax returns are due by April 30th of the current year for the preceding calendar year.

Corporate income tax returns are due within six months of the year end of the corporation, however the income tax is due within three months. Corporations are also required to make monthly installments after their first year in operation provided they have been profitable in their first year.

Source deductions must be remitted to the Federal Government to arrive by the 15th day of the next month.

T4 summary and supplementals must be filed by February 28th of the following year (i.e. 1998 T4's are due February 28,1999).

If the corporation has paid dividends or interest it must file T5's following the same timetable as for T4's.

HST returns are due as follows, depending on the filing frequency which the organization has been assigned:

Harmonized Sales Tax (THE HST)

The HST is a 15% tax levied on consumers. Businesses collect it and remit the difference between what they collect and what they have paid out to the government. Because a business gets to deduct the HST they have paid from the HST they have collected, the HST is not an expense of doing business.

There are certain industries which are exempt from charging HST, such as education, day care and the medical professions, however they may not recover any HST that they pay either. In addition, farmers and fishermen are zero rated which means they do not charge HST, but they are allowed to recover the HST which they have paid.

A business must register for HST if their sales will exceed $30,000 in a calendar year. The business could choose to register even if its sales are below this threshold. Once a business is registered it must charge HST and file returns. It is possible to file returns monthly, quarterly or on an annual basis.