CRA Filing Requirements, Penalties and Interest

Question 1

Corporate filing requirements

Answer 1

o Filing deadline: 6 months after year end
o Balance due: 2 months after year end

3 months after year end for CCPC with less than 500K income (all associated companies)

Question 2

Corporate instalment requirements

Answer 2

 If tax payable is greater than 3K for the current year (estimate in advance) and prior year instalments must be paid for the current year

 Corps can choose the least of (except small CCPC):
• 1/12 of current year estimate
• 1/12 of the preceding year
• First 2: 1/12 of second preceding year; last 10: 1/10 for preceding year less first two instalments

 Eligible CCPC:
• Can opt for quarterly payments
o Due: Last day of each fiscal quarter
• Must meet requirements:
o Taxable income < 500K in either current year or previous taxation year
o TCE in Canada < 10Mil
o Claimed the SBD in either current year or previous taxation year
o 100% compliance history throughout 12 month period

• Can choose the least of:
o ¼ of current year estimate
o ¼ of the preceding year
o First pmt: ¼ of second preceding year; last three: 1/3 for preceding year less first instalment

Question 3

Individual filing requirements

Answer 3

o Filing deadline: April 30th
 June 15th if taxpayer or spouse is self employed
 Later of 6 months after date of death and normal filing deadline
o Balance due: April 30th

Question 4

Individual instalment requirements

Answer 4

 If tax payable is greater than 3K for the current year (estimate in advance) and for one of the previous 2 years instalments must be paid for the current year
 Due: March 15th, June 15th, Sept 15, Dec 15th.

 Can choose the least of:
• ¼ of current year estimate
• ¼ of the preceding year
• First 2: ¼ of second preceding year; last two: ½ for preceding year less first two instalments

Question 5

Missed payment interest

Answer 5

o Interest of (4% + prescribed rate) is charged on taxes owing + filing penalty, compounding daily (could be different daily compound for taxes owing and penalty)
o Calculation: ((taxes owed + penalty) x ((1+(rate/365))^days outstanding)) –(taxes owed + penalty)
o Note: taxes due date and filing due date may be different

Question 6

Filing penalty

Answer 6

Filing penalty is total of:
o First occurrence:
 5% x unpaid tax
 1% x unpaid tax x # of full months return is outstanding to a max of 12

o Subsequent late occurrences if first is not resolved:
 10% x unpaid tax
 2% x unpaid tax x # of full months return is outstanding to a max of 20

o Additional penalty for large corps of .0005% per month of the TCE assessed to a max period of 40 months

Question 7

Missed Instalments

Answer 7

o Interest of (4% + prescribed rate) is charged on instalments owing

o Interest applies from instalment due date to the earlier of
 Instalment payment date
 Balance due date

o Penalty
 50% of interest for amounts that exceed the greater of:
• $1,000
• 25% of interest that would have been payable if no instalments were made

Question 8

Filing Notice of Objection

Answer 8

o Corporations
 90 days after the mailing of NOA

o Individuals can file the later of
 One year after filing date
 90 days after the mailing of NOA

Can file the T400A or write a letter to chief appeals or through My Account.