As tax accountants, we answer tax questions from our clients everyday. You may have similar tax questions as our clients’. Therefore, we collect these frequently asked questions, and hope it will be helpful for you. If you want to ask specific questions or discuss your tax situation, please contact us, we are happy to help.
We try to use simple language, which is the same way we communicate with our clients. It may not be 100% accurate. Before making any decision, please consult your tax accountant. If you need in-deep analysis and research, we can provide you reference and links to the Canada Revenue Agency website.
General Tax Questions And Answers
What do I need to file my taxes?
We have provided comprehensive checklists for all types of taxes under the CHECKLIST tab on our website. Please bring in whichever slips or forms may apply to you.
If you have any further questions, you can send us an email at info@incomeTaxOttawa.ca
Can I file my taxes if I don’t have all my slips?
Yes, you can still file it. We recommend that you bring in as many slips as you can. We can obtain information for any missing slips such as T4s, T5s, etc. from the CRA database after an authorization form is signed.
How long will it take for me to receive my refund?
This is dependent on the CRA. Usually if you are filing taxes for the current year, you may receive your refund within 7-10 days. For electronically filed returns other than the current year, it may take a few weeks, and for paper-filed returns, it may take a month or two.
We recommend that you check your online tax account or call the CRA at 1 (800) 959-8281 * (press star after the number is dialed) for a more accurate deadline.
I know I won’t owe the CRA money. Why should I still file?
It is always beneficial to file because even if you don’t owe the CRA money, you may still be eligible to receive a refund. Depending on your income level, you may also be eligible for other tax benefits such as the Trillium Benefit, GST/HST credits, or Child Tax Benefit, which may add up to over a thousand dollars per year. If you want to apply for a mortgage or another type of loan, the bank may also ask you to provide tax returns as proof of income.
I haven’t received my monthly Child Tax Benefits/Trillium Benefit/GST credit. What’s going on?
This is most likely because your taxes for a certain year have not yet been filed. Without your tax information, the benefits department cannot accurately assess the correct amount to give you and will halt all payments related to that tax year.
How do I pay my taxes?
You can pay your taxes through several methods:
1. You may pay online through your CRA account.
2. If you do not have a CRA account, you may pay online by searching CRA My Payment.
3. You can wait for the CRA to send you a bill through the mail and pay the amount at your local bank branch.
I received an Email/Phone call from the CRA and they said I owe them $XXXX amount of dollars and will take legal action if the amount is not paid. What should I do?
Please be wary when the CRA directly contacts you for amounts owed in forms OTHER than a letter. There have been scams where individuals pretending to be the CRA threaten you for outstanding balances that you do not owe. If you are unsure whether or not it is a scam please call the CRA directly.
For individual returns: 1 (800) 959-8281 * (press star after the number is dialed)
For corporate/ registered business returns: 1 (800) 959-5525 * (press star after the number is dialed)
You can also send us an email or call us and we can check on your behalf.
How long should I keep my receipts?
The CRA suggests that you keep receipts for six years. We recommend that you keep receipts for up to 10 years just in case you would like to make adjustments or refile your taxes.
Do you offer instant refunds?
Sorry we do not offer instant refunds.
Q: I have very specific questions pertaining to my situation. How do I contact you?
A: You can email us at info@incomeTaxOttawa.ca
You can call us at (613) 421-3414 (Office)
You can call us at (613) 608-8788 (Cell)
You can refer to the CONTACT US tab on our website. Initial consultations are free.
Tax Questions Related To Corporation Tax
I am an IT consulting contractor and I need to set up a corporation for my contract job. How can I do it?
You can set up a federal corporation through Corporations Canada online. The government will charge you $200. It is quite straightforward. You can do it yourself or we can do it for you for a fee of $80 + HST.
After you incorporate your business, the Canada Revenue Agency will send you a business number. After that, you may need to contact them to get an HST account (RT), payroll account (RP) or dividend account (RZ).
What do I need to bring to incorporate my business?
You will need to provide personal information (name and address). If you need a name for your corporation, please create your company name, and provide an explanation of how you came up with this name, your business activities, and the target clients of this company. If the name or a similar name is already taken by another company, you must use another name.
If name doesn’t matter to your business, the government will assign you a numbered company, which is guaranteed to get approval.
What is my obligation after I incorporate my business?
After you incorporate your business, you must file a corporation tax return every year, even for years your business is not active.
If you open an HST or payroll account with the CRA, you must file HST and payroll remittance quarterly or annually, even if your business is not active.
I want to close my corporation. How can I do it?
If your corporation has no obligation to other parties, you can choose to close it. For federal corporations, you need to get a certificate of dissolution from Corporation Canada online, file your final tax returns to the CRA, and call the CRA to close all types of accounts the company has (payroll account, HST account, etc.).
Do I need to open an HST account?
For most businesses, if your annual sales are more than $30,000, you have to open an HST account. You can do that by calling Canada Revenue Agency at 1-800-959-5525.
Once you open the HST account, you must charge your customers HST, file HST returns, and pay the HST to the CRA after you’ve claimed your company’s HST expenses.
What is the HST quick method? Should I use it?
The HST quick method gives you a fast and easy way to calculate your HST. For most IT consulting and service companies, the remittance rate is 8.8% in Ontario.
For example, the sales of your IT consulting company total $100,000 in 2018, the HST collected is $13,000 (13% of the sales), and there were no capital assets purchased in 2018. The HST your company must pay to the CRA is (100,000 + $13,000) x 8.8% – 300 = $9644.
If, like many consulting companies, you don’t have many business expenses to claim, HST may be a good choice for you.
Do I need to open a payroll account?
If you have employees or you decide to pay yourself a salary, you need to open a payroll account.
Once you open the payroll account, you must remit the CPP contribution, EI premium and tax deductions quarterly or monthly. Even you didn’t pay any salary at a certain time, you still need to make a nil remittance.
Should I pay myself dividends or a salary? Which way is better?
It’s like apples vs. oranges, so it is hard to say which is better.
When paying dividends to yourself, you get investment income. You don’t pay into Canada Pension Plan (CPP), and dividends paid cannot be deducted from your company income.
If you pay yourself a salary, the salary will be deducted from your company income and you must pay CPP (9.9% of your salary, maximum $5186).
Overall, you may pay less money to the government if you choose to pay yourself via dividends instead of a salary since you don’t pay CPP.
What is my company tax deadline?
Normally, the corporation tax filing deadline is six months after the end of the tax year. However, the deadline for payment on tax owing is three months after the end of the tax year.
If you file your HST annually, the filing deadline is three months after the end of the tax year. If you file HST monthly or quarterly, the return and the payment are due one month after the end of the reporting period.
If you are a monthly payroll remitter, the payroll remittance is the 15th day of the month. If you are a quarterly remitter, your remittance due date is the 15th of the month after the calendar quarter. (April 15, July 15, Oct. 15, Jan. 15).
T4 (salary), T5 (dividend), T4A and T5008 (subcontractor) slips filing deadline is the end of February.
I just incorporated my business. What is the corporation tax my company must pay?
For a small corporation ¬– Canadian-controlled private corporation (CCPC) – registered in Ontario, the tax rate is 13.5% (Federal 10% + Ontario 3.5% in 2018). For example, if the sales is $100,000, the business expenses are $20,000, and salary paid is $60,000, the tax owing will be (100,000 – 20,000 – 60,000) * 13.5% = 2,700.
How can I pay my corporation taxes? Do I need to pay installments?
If the tax owing is more than $3000, you need to pay installments or else the CRA will charge you interest on the tax owing. You can do it through your business online banking (contact your bank for instructions) or pay through the CRA My Payment page (Google My Payment – Canada).
If I invest money into my company, and I take the money back later, do I need to pay tax on the money I take back?
No, you don’t need to pay taxes on the money you take back from your company. It is just like you’re getting back the money which you lent to another person, which is not taxable income.
On the other hand, your company can’t claim this money as business expenses. Only interest, if any, can be claimed as business expenses.