Good Housekeeping: Tax Tips for Businesses
Every tax season reminds us of a few Canada Revenue Agency (CRA) "must-do's." Here are several important tax tips:
Pay on Time: Making payments on time is crucial. Paying in a timely fashion eliminates non-deductible interest charges along with frequent offender penalties that can effectively double the interest rate. It also helps in case of a future "Taxpayer Relief" request, when a taxpayer requests waiver of penalties and interest.
Note that “on time” refers to the date the CRA receives the payment, not the mailing date. Also remember that installment payments can be adjusted downwards without penalty if circumstances change. For example, in a loss year, there is no need to pay installments.
File on Time: To avoid paying penalties, be sure to file by the deadline. Meeting filing due dates will also assist in speeding up refunds and reducing the risk of audits. Like paying on time, it also helps in case of a future Taxpayer Relief request.
Use CRA Online Services: Avoid mail delays, keypunch errors and lost correspondence by using CRA's "My Business Account." You can view the status, filing period, and other data for various tax and GST/HST returns. You can also view interest transactions, receive electronic notifications, transfer payments from one period to another within the same account view, update business activity and prepare and file various T slips.
Watch Family Salaries: Wages for family members must be reasonable and must be paid, not merely accrued or journalized. They should be paid periodically, subject to tax withholdings and based on some formula such as hourly rate or annual salary. It is likely that such wages or salaries are not subject to employment insurance premium deductions.
If you have any questions about these tips or would like to discuss your tax situation, please contact us.