By Grant Gilmour
A corporation has to file numerous returns each year, many related to taxes. Each filing with CRA or the provincial government has a deadline. Failure to meet these deadlines could become expensive in terms of penalties and interest as well as being a red flag for CRA helping them to identify who they should audit.
One sign of a healthy company is that all the tax returns such as corporation tax, payroll remittances, GST returns, annual reports, PST returns and T slips are all filed on time. In most cases these filing requirements are the same each year, however we often find that corporations either ignore or forget about these deadlines. Often the reason is they are busy with the day to day management of the corporation, or cash is tied up in other areas.
No matter the reason, tax filings should always be made on time. The simple reason is that if CRA or the provincial governments are getting the returns at the appropriate time they are less likely to be concerned with the status of the company. Constantly late or forgotten filings bring you up on their radar and make it more likely that you will be red flagged for an audit. In addition, some missed deadlines carry significant penalties which are multiplied on successive failures. In order to meet deadlines we have some suggestions:
• Make yourself familiar with what reporting deadlines are and block them off on your calendar. We issue a corporate calendar to all our clients which have these deadlines highlighted.
• If you are finding it difficult to find time to concentrate on regulatory paperwork, hire a bookkeeper to compile the company records and complete the returns. Your time is valuable and should be spent on the business aspects that generate revenue. Cost activities can be farmed out to those who do it for a living, are efficient at it and understand what is required.
• Always file a return even if you do not have the cash to pay the tax. Many penalties are assessed on failure to file not failure to pay the amount of tax owing at the filing deadline. An on time filing will avoid the penalty and then you only have to worry about the interest on the outstanding balance which is a lot cheaper.
• Always make sure you maintain the supporting paperwork used to calculate the taxes owing on the return and retain any filing confirmations so you can prove when you made the filing.
If you are concerned about filing deadlines then contact Gilmour Knotts Chartered Accountants for assistance.