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Your Master Guide to Tax Years, Important Deadlines and Payment Info

Do you know the deadline for your business taxes? If you’re an unincorporated small business, it’s the same every year. But incorporated businesses have the option to decide on a fiscal year end date, which can result in varying deadlines. Marking that date, whatever it is, on the calendar, well in advance ensures you don’t miss the deadline and face potential penalties. It also gives you plenty of time to get your tax documents in order to make prep faster and easier.

What Is a Tax Year?

Under the Income Tax Act, businesses have to prepare and file tax returns and financial statements on an annual basis. Your annual accounting period during which you report your income and expenses is your tax year. But if you run a small business, the tax year may not necessarily align with the calendar year. Your “tax year end” or “fiscal year end” is the date on which you prepare your annual accounts. For individuals and unincorporated partnerships, the tax year ends on December 31, with very few exceptions. For corporations, the tax year can end on any day of the year. The day you choose as the end of your fiscal year or tax year determines the deadline for your taxes.

When you create and organize your incorporated company, you choose a year-end. It can be any day that’s convenient for your business. Seasonal businesses may choose a date that matches the end of their operations. For example, a seasonal landscaping business might choose a year end in late fall or early winter. Or a snow ski resort might end the fiscal year in late spring or early summer. Likewise, affiliates often choose the same year-end date as their parent company. Once you choose a date, you usually keep it for the entire life of the company. However, you can change your tax year end date if you have legitimate business reasons to do so. To make the change, the company must ask for the Canada Revenue Agency’s (CRA) approval. There's no set form for this permission, but the request must be made in writing in a letter that details the reasons for the change.

Tax Deadlines for Incorporated Businesses

Because incorporated businesses can choose any year-end date that works for them, their tax deadlines also vary. If you’re running an incorporated business, you need to file your taxes no later than six months after your tax year end. If your fiscal year ends on the last day of any month, it’s easy to calculate your tax deadline. You need to file your taxes by the last day of the month no more than six months later. For example, if your tax year ends on July 31, your tax deadline is January 31. For an August 31 year-end, your tax due date is February 28. If you choose a fiscal year-end that doesn’t fall on the last day of the month, your filing due date falls on that same date six months later. A year end of May 15 means your business taxes are due on November 15. To calculate your tax filing deadline, determine your fiscal year-end date, then look ahead six months.

Tax Deadlines for Unincorporated Small Businesses

Since unincorporated small businesses run on a tax year based on the calendar year, the tax filing deadline is a set date. Sole proprietors, partners, self-employed – basically anyone engaged in a business that isn’t an incorporated business – have to file their income taxes by June 15th each year. When a tax due date falls on a Saturday, a Sunday, or a holiday recognized by the CRA, you have until the next business day to submit your taxes. Even though you have until June 15 to complete your taxes, you shouldn’t completely ignore them until then. That’s because any taxes owing must still be paid by April 30 for the previous tax year. So if you need to get square with the CRA, then you need to do it well before the June filing deadline to avoid paying some interest. Keeping track of taxes using accounting software such as QuickBooks Online helps you determine whether or not you owe taxes and how much. If your records show that you need to pay the CRA, go ahead and submit that payment by April 30 to minimize what you owe.

Other Key Tax Dates

Remembering your tax filing date is the biggest part of figuring out when to file. But you may need to remember other tax-related dates depending on your business and your specific tax situation. Those dates include:

  • March 31: Most partnerships with individuals as partners are required to file a partnership information return by this date.
  • June 30 or the period end date plus six months: If your business is involved in the construction industry and hires subcontractors, you may have to file a T5018 information return as well as some other forms.

Filing Taxes Late

Wondering how important the tax return deadline really is? The CRA enforces penalties for anyone who files late, and that can add up to extra money out of your pocket. You may have to pay an extra 5% on the balance owing, plus 1% of the balance owing for each full month that your return is late to a maximum of 12 months. For example, if you owe $2,000 and your taxes are 3 months late, you must pay an additional 8%, or $160, in penalties. If you incurred late-filing penalties in any of the three preceding taxation years, your late filing penalties are doubled. It pays to file your taxes on time.

Self-Service Online Services

Online services through the CRA offer a fast, easy, and secure way to handle your taxes. Once you register for an account, you can manage your tax matters online. Not only can you file your income tax and benefit return electronically, but you can make a payment and track the status of your return. If you run an incorporated business and want to streamline the process, you can authorize the CRA to withdraw an amount from your bank account on a specific date or dates, enroll for direct deposit, or update banking information, and view capital gains and losses. It’s a quick, easy way to stay on top of your tax situation with the CRA.

Your Filing Options

The CRA doesn’t send out paper income tax packages, but you can still do your taxes on paper if you want. Just pick up paper T1 income tax returns from income tax centres or post offices, fill them out, and mail them in if you wish. You may also take your completed T1 tax return directly to a CRA tax centre.

The fast and easy option, though, is to NETFILE your tax return. When you’re using CRA-certified tax software such as TurboTax, sending your completed tax return directly to the CRA is quick and secure – and the fastest way to get your tax refund. You can expect it in about eight days, according to the CRA.

Auto-Fill My Return Service

Alleviate some of the time-consuming tasks at tax time by using the Auto-fill my return service. This option automatically fills in parts of your income tax and benefit return, making the tax filing process faster and simpler. You need to use a CRA-certified NETFILE software product to use this autofill option. And it’s important to review the return to make sure all information is accurate and complete before you submit your taxes.

What if You Discover You Owe Tax You Didn’t Know About?

If you find out you owe taxes you didn’t know about, you want to pay off your outstanding balance as soon as possible. If you owe money, you also owe interest for every day after the taxes were due. That includes the late-filing penalty of 5% of your balance owing plus 1% of your balance owing for each month your tax return is late for a maximum of 12 months, so the sooner you get it paid, the less expensive it is for you. If you can’t pay off what you owe, contact the CRA to work out a payment plan.

Put TurboTax to Work for You

Feeling overwhelmed and wondering how to get your income tax done by your filing deadline? Speed up the process by putting TurboTax to work for you. TurboTax Home & Business simplifies completing your business income tax by using an enhanced business interview that guides you through the self-employment section of the tax return and lets you NETFILE your completed return from directly within the program. Best of all, using TurboTax ensures that you get all the business tax deductions you’re entitled to. And if the thought of being audited worries you, add the security of the Audit Defence service.

When your tax deadline arrives, you’re able to just shrug your shoulders and congratulate yourself on having your tax return already done and filed. Pair TurboTax with QuickBooks Online to get your books in order ahead of tax time. QuickBooks Online can help you maximize your tax deductions. Keep more of what you earn today.

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