Tax & year-end

Corporate tax returns

ARC CPA is a Halifax accounting firm. We prepare and file corporate tax returns for incorporated businesses across Atlantic Canada, most of them from books we keep ourselves, and we start the conversation months before the deadline.

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The problem

A corporate tax return should never be a surprise

For a lot of owners, the corporate return is the one time a year they hear from their accountant. The work starts close to the deadline, the numbers arrive after it is too late to change anything, and the tax bill comes with no real explanation of why it is that number.

What gets missed is harder to see. None of it shows up as a mistake. It just quietly costs you, every year.

What gets missed most often on corporate tax returns:
Tax credits never claimed, like investment tax credits, apprenticeship credits and SR&ED for research and development
Depreciation claimed too little, too late, or not at all
Losses and credits from past years, sitting unused
A truck used only for the business, but owned personally and never brought into the return
A way of paying yourself that nobody has looked at in years

What goes into it

What goes into a corporate tax return

Owners often assume that once the books are done, the tax return is a formality. For a very simple business it nearly is. For most of the businesses we work with there is a second layer of work that only happens at year end, and it is where the money is.

Depreciation

A growing company can have hundreds of assets depreciating at different rates, and the rules for claiming them have changed several times in recent years. It is easy to claim too little, or at the wrong time.

Accruals

Costs that belong to one year but get paid in the next. A payroll that straddles your year end can be worth tens of thousands of dollars in the right year.

Meals and entertainment

The books show the full cost and the return generally allows half. That adjustment, and others like it, is made on the return rather than in the books.

Tax credits

Investment tax credits, apprenticeship credits and SR&ED research credits are the ones we most often find new clients in the Maritimes never claimed.

More than one company

Related companies generally share one small business deduction on the first $500,000 of profit. For a corporate group, deciding where it is best used can be a large part of the work.

What you already have

Tax credits sitting unused and losses from past years that can still be applied. Owners rarely know they have them, so we check every year.

How we work

Know where you stand months before you pay a penny.

Most of the accounting industry is reactive. A deadline arrives, the client scrambles, and the owner finds out what they owe after it was due. We work the other way: the year end starts on our calendar, not yours, and we review the numbers with you three or four months ahead of the deadline.

Most of our clients stop thinking about deadlines altogether, because they know we will be in touch before any of them matter.

Wouldn’t it be nice to know where you stand four months before you have to send a penny to the CRA? Instead of finding out the money was due yesterday.

Clem Forest-Leblanc, partner

Talk to us about your year end

The method

How a year end runs with ARC CPA

The same five steps every year, and we are the ones who start them.

01
We reach out first
Months before your deadline, with a list of what we need. If we already keep your books that list is short, and sometimes there is nothing on it at all.
02
We work from your books
Your financial statements prepared by our CPA team, with the adjustments that only happen at tax time: depreciation, accruals, credits and the rest.
03
Corporate and personal, together
How you paid yourself and what the company owes are looked at side by side, because whichever return it lands on, it is tax your family pays.
04
We walk you through it
A video call where we share the screen and go through your statements and return line by line before you sign off. Questions welcome.
05
Filed, with a summary
We file, send you secure copies, and write out what you owe, when it is due and the instalments to make over the coming year.

We do not expect you to read a tax return. We do expect you to leave the review knowing how the business did and why the tax is what it is, and helping you get there is part of the job.

Planning

Looking three to five years ahead, not one

Some of the largest savings come from planning across several years instead of one at a time. A corporation gives you real room to decide when income is taken, and spreading it so it stays in lower brackets over three to five years usually beats anything done inside a single year.

One recent example: an investment company expecting a tax bill of around $42,000. Because we had built up a buffer the year before, we were able to bring tax credits across from the prior year and from a related company, and the bill came down to $4,800.

Another client was about to sell a building with a multi-million dollar gain. By amalgamating two of their companies before the sale, they avoided more than half a million dollars in tax that would otherwise have been owing.

One firm

Why your books and your tax return belong under one roof

A return is only as good as the books behind it. At most businesses the bookkeeper and the accountant are two separate outfits, and at year end the accountant has to fix what they find before any tax work can start. At ARC CPA they are two teams in the same firm, working from the same file.

When we keep your books, the tax team starts from numbers it already trusts, the year end moves faster and it costs you less. We still take on corporate tax clients whose books are kept elsewhere. It means more checking and more questions, and the fee reflects that.

If they are a bookkeeping client, a lot of the time we can do almost the entire year end without having to talk to them.

Riley Pohl, partner

Books and tax together

Want us to do the books as well?

Monthly bookkeeping with ARC CPA means your year end starts from clean numbers, closes sooner and costs less. Tell us how your books are kept today and we will show you what would change.

Ask about books and tax together

Switching

Switching your corporate tax to ARC CPA

Owners are often nervous about the handover. There is no need to be. We handle it, up to and including contacting your former accountant directly for what we need. Between CPA firms there is a short, set window for the previous firm to provide it, so it does not drag on.

To get started we need your books, your corporation’s legal documents showing what kind of company it is and who the shareholders are, access to your CRA account as your representative, and a list of the assets the business owns. Then a discovery conversation about the business, anything unusual going on, and anything you plan to do that we should keep in mind.

That asset list does more than it sounds. It is where we notice the truck that is used only for the business but registered in your own name, and bring it into the return where it should have been all along.

Not sure where you stand

Paying a tax bill nobody has explained?

If you have never had your return walked through with you, or you are still chasing last year’s, send us a note. We will tell you what we see, including if the answer is that you are already in good hands.

Have someone look at your return

The cost

What a corporate tax return costs

There is no price list, because the work behind two returns can be very different. We look at your situation and you get the number before any work starts.

What moves the number:
Whether we keep your books. It is the biggest difference to the bill: when we do, the tax work is faster and the fee is lower
The size of the business and how complex its year end is
How many corporations are involved, such as holding companies or a family trust
Corporate investments

The dates

Dates and rules to know.

Filing deadline: A T2 return is due six months after the end of your corporation’s fiscal year
Balance owing: Generally due two months after your year end, or three months for many small Canadian-controlled private corporations
Instalments: A corporation that owed more than $3,000 in the current or previous year generally has to pay its tax in instalments
Every year: A corporation has to file a T2 every year, even a year with no income and no tax to pay

General guidance only. We confirm the dates that apply to your business when we talk.

Revolution Automotive — Maxwell Henderson

Frequently asked questions

Corporate tax returns, answered.

When is a corporate tax return (T2) due in Canada?

A T2 is due six months after the end of your corporation’s fiscal year. Any balance owing is generally due earlier, two months after year end, or three months for many small Canadian-controlled private corporations. We track those dates for you and get in touch months before they arrive.

How much does an accountant charge for a corporate tax return?

It depends on the size and complexity of the business, how many corporations are involved and whether there are corporate investments. It also depends on who keeps the books: when we do, the tax work is quicker and the bill is lower. You get the number before any work starts.

Is it cheaper to have one accountant do my bookkeeping and corporate taxes?

Usually, yes. When we keep your books, the tax team starts from numbers it already trusts, so there is less checking and fewer questions at year end. That time is what you pay for, so the return costs less, and it is usually finished sooner.

What does an accountant need for a corporate tax return?

For a new client: books that are done, the corporation’s legal documents showing the company type and shareholders, access to your CRA account as your representative, and a list of the assets the business owns. For a client whose books we keep, we often need very little.

Does a corporate tax return include financial statements?

Yes. Your year end includes financial statements prepared by our CPA team, which for almost every client is a compilation engagement. They are also what banks and lenders usually ask for. A report printed from accounting software by someone who is not a CPA is not something most lenders will rely on.

How do I switch accountants for my corporation?

Tell us, and we handle the rest, including contacting your former accountant for what we need. Firms are expected to hand things over promptly, so it does not drag on.

Can an accountant do my corporate taxes if someone else does my bookkeeping?

Yes. It takes more checking and more questions than when we keep the books ourselves, and the fee reflects that, but we are glad to.

What tax credits do small businesses in Atlantic Canada often miss?

The ones we find most often are investment tax credits, apprenticeship credits and SR&ED credits for research and development. Capital cost allowance is another, because the depreciation rules have changed several times in recent years.

What is the best fiscal year end for a corporation?

Generally, anything but December 31. A fiscal year that crosses two calendar years gives flexibility in when dividends land on your personal return. The right one depends on your business, your seasons and your HST filing. Our incorporation page explains how we choose it.

Do I have to file a corporate tax return if my company had no income?

Yes. A corporation files a T2 every year, whether or not it had income or owes any tax.

Ready to hand your year end to ARC?

Send us a note about your business. A conversation is usually enough to tell whether we are a fit, and we will say so either way.

Send us a message info@arccpa.ca

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