This is a question often asked of me by new clients.
“I have a corporation, do I need to file a tax return? I don’t earn very much”.
The truth is, all resident corporations have to file a tax return every year, regardless of income levels or any other factors.
“But wait, we’re a non-profit organization! We don’t pay tax! So we don’t have a file a return, right?”
Wrong! Again, all resident corporations must file a return each year, including NPOs (non-profit organizations), tax-exempt corporations, and even those corporations that are inactive. Yes, even if your corporation no longer does anything, you still have to file a return. This is all part of the burden of being incorporated, and should factor into your decision on whether or not to incorporate (more on this decision in another post).
Even non-resident corporations have to file a return (if they carried on business in Canada during the tax year in question). No one can escape the CRA’s clutches. Thankfully, having a qualified professional accountant makes this process painless and easy.
Also, for NPOs and other organizations exempt from tax, the process is less complicated. The CRA has recognized that these organizations often have fewer resources than traditional for-profit corporations, and thus make the return much simpler, at only two pages long. Furthermore, if you are a traditional for-profit Canadian Controlled Private Corporation (CCPC), but had a net income of zero or a loss for tax purposes, you can also opt to use the short return.
At the end of the day, simply remember the following: if you are incorporated, there is paperwork required of you by the CRA each year. Talk to your professional accountant for help with this.
Zaid Al-Mulla, MAcc, CPA, CA
zaid.almulla@almullacas.com
