Written by Stephen Beard, Managing Director of Plyo Bookkeeping, a Vancouver-based bookkeeping firm.
As the new year unfolds, small Canadian businesses are gearing up for another tax season. There are a lot of tax filings, payments, and year-end reporting requirements that need to be completed in the first half of 2024, so this blog aims to give you an overview of the deadlines your business will need to hit, along with the potential penalties if you fail to do so. We’ll be covering payroll, corporate income tax, GST/HST, and PST.
Corporate Income Tax:
Deadline: June 30, 2024 (assuming a December 31st year-end)
There are two aspects to the corporate income tax filing deadline. One is the filing of the T2 corporate tax return, which must be filed within six months of your financial year-end. The other aspect is the actual payment of your corporate income tax for 2023, which will need to be paid two months after your financial year-end.
If the company is a Canadian-controlled private corporation (CCPC) and has less than $500k in taxable income for the year, then the payment deadline is three months after the financial year-end. The CRA will issue a notice stating when you need to pay your 2023 income tax, and CCPCs that have previously missed filing or payment deadlines will only be given two months to pay after year-end, rather than the normal three months. There are also financial penalties for both late payment and late filings of your corporate income tax.
- Late filing penalty – first-time offense: 5% of the unpaid tax plus 1% for each month the return is overdue, up to a maximum of 12 months.
- Late filing penalty – and you’ve filed late in any of the previous three tax years: 10% of the unpaid tax when the return was due, plus 2% of this unpaid tax for each complete month that the return is late, up to a maximum of 20 months.
- Installment interest: If this is not your first year of trading, and you previously had more than $3,000 in income tax in the last financial year, then the CRA will expect you to pay installments during the year. If you did not pay income tax installments in 2023, then the CRA will calculate interest on the unpaid installments at the current base interest rate plus 4%. For example, if the CRA expected you to pay quarterly corporate income tax installments in 2023 for the estimated 2023 income tax, then they will start calculating interest on the missed payment at the beginning of each quarter (April 1st, July 1st, October 1st, January 1st) using the base interest rate plus 4%.
Goods and Services Tax (GST) and Harmonized Sales Tax (HST):
Deadline: March 31st for companies who are Annual filers
If you have taxable supplies of less than $1.5 million per year, then you are only required to file a GST return annually. You have three months from the end of the reporting period to both file and pay your GST/HST return. The filing penalties for failing to pay this are:
- Late filing penalty: 1% of the outstanding balance, plus 0.25% of the outstanding balance for every month the return is overdue.
- Late payment interest: As for corporate income tax, the CRA will start accruing interest on any unpaid balances using the three-month treasury bond interest rate plus 4%.
- If you receive a demand to file a GST return and do not do so, the CRA will charge you a penalty of $250.
- If you fail to file electronically when required to do so, the CRA will charge you $100 for the first offense and $250 for every instance thereafter.
Provincial Sales Tax (PST):
Deadline: Varies by Province, you have one month after the reporting period ends in BC to file your PST return
For businesses operating in provinces with a Provincial Sales Tax, it’s crucial to be aware of the specific deadlines for filing and remitting. Deadlines vary by province, so it’s essential to check with the relevant provincial tax authority. As a Vancouver-based bookkeeping firm, we mainly deal with BC PST, which has the following penalties.
- Late filing penalty – 10% of tax amount due if not remitted on time.
Payroll Year-End Slips:
Deadline: February 29, 2024
Small businesses must provide employees with their T4 slips and contractors with T4A slips by the end of February.
- Late filing penalty: a late filing fee is charged per day late. The amount charged varies depending on the number of T4 slips missed. For a company with between 11 – 50 late filed employee T4s, it would be a fine of $10 per day, capped at $1,000 for the total value of the fine.
Staying on top of the 2024 tax deadlines for small Canadian companies is crucial for financial stability and compliance. Filing accurately and on time helps avoid penalties and ensures a smoother tax season. Your accountant will need time to prepare your various tax filings, and it’s important to remember that they can’t start their work until the books are up to date. It’s advisable to get your books closed as quickly as possible in 2024 so that you can breeze through your company’s tax filing, reporting, and payment obligations.