Beware of Year-End Tax Deadlines For Corporations

by Tax Guy - Burlington Accountant on November 30, 2009 Print This Post Print This Post

Over the next few weeks, I will publish a series of year-end tax planning that build on the 2009 Year End Tax Planning Strategies article posted November 19th. Here is a list all of the year-end tax planning articles.

Corporations should be aware of the following deadlines:

  • If you have shareholder loans (that is loans from a corporation to it’s shareholders) that were made in the previous tax year, be sure you repay them before the end of your company’s current tax year. Failing to do so will result in the loan being added to the shareholders income.
  • If you are going to pay a bonus, be sure they are paid within 179 days of the end of the year to be deductible in the current tax year. This is particularly important to small businesses that are just over the $500,000 small business deduction limit and need to bonus down to the limit to save income taxes.*
  • R&D claims must be filed within a year of the businesses tax-return due date.

Also note that a corporation may chose a year-end other than December 31st when they are established.

* A Canadian Controlled Private Corporation (CCPC) that has active business income (as opposed to investment income) benefits from a much lower federal tax rate on the first $500,000 of taxable income and may provinces have similar reductions. For 2009, the rate of federal tax on active business income is 11% whereas the federal rate on income above the limit is 19% and the rate on investment income is 34.67%. Therefore, a CCPC that has taxable income over $500,000 may benefit by issuing a bonus to the owners when income exceeds $500,000 to avoid potential double taxation.

About The Tax Guy...

Dean Paley CGA CFP is a Burlington accountant and financial planner who services individuals and business owners locally, nationally and internationally. Dean has appeared in the National Post, Toronto Star and Metro News.

To find out more, visit Dean's website Dean Paley CGA CFP or connect via Twitter @DeanPaleyCGACFP.

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Erick December 9, 2009 at 12:23 pm

Hi there,

“R&D claims must be filed within a year of the businesses tax-return due date.”

If you’re referring to the SR&ED program, you have 18 months after the corporate year end to file a claim.

sr&ed January 27, 2012 at 2:40 pm

You have 18 months within your fiscal year end to file for SR&ED. This means that potentially you could file for expenses incurred from the past 2 fiscal years. The provincial top-up for SRED also varies, depending on the province your business is situated in.

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