I know how to do a personal tax. But this video makes me to learn and do corporate tax now. Thank you for your video. It is very short and to the point. It shows the basic corporate tax filing. Very good.
Hi Vishnu, You should be able to as long as you meet the criteria here: - You are a Canadian controlled private corporation through the tax year with loss or a nil net income for tax purposes - You have permanent establishment in only one province - You are not claiming any refundable tax credits - You did not receive or pay out any taxable dividends - you are reporting in Canadian currency - few more Thanks
I hear different statements regarding how to report interest income received from banks for the deposits with them and also dividends received from mutual funds, if your corporation holds units with mutual funds. On Income Statement ( Financial Statement, Schedule 125 ( GIFI codes - 8096 ( Dividends from Canadian sources ), 8094 ( Interest from Canadian Sources ), 8090 ( investment revenue ), 8097 ( Dividend from foreign sources ). These correspond to the boxes on T3 and T5 slips issued to you by the banks or mutual fund companies. You can claim non-capital losses from prior years Box 42 on T3 slip ( Cost Base Adjustment ) need not have to be reported because that is return of capital. Box 21 on T3 slip ( Capital Gains ) is 50% of the amount on this box to include on T2 return. Am I correct?. But when the commercial softwares like Quick Tax, Future Tax are not putting the dividend income into Schedule 3 when calculating the tax, they are entering this amount onto Part I tax. These softwares are cCRA certified. We need to help each other esp. where incorporated individuals frequently unemployed or in losses to help each other.
Awesome video! Thank you so much for this! I am currently a co-founder of a corporation that is actually yet to proceed with any business transactions at all and has a revenue of $0 (with some eligible expenses, however), so I was hoping to work the taxes out myself, and this is super useful!
It's a very informative video. At Virtual Accountant we are a team of dedicated professionals who are passionate about helping our clients grow their business. We provide all the usual bookkeeping, corporate tax, year end services and personal tax services.
Hi Allan you are awesome can you please make one video on tax prep with practical example showing the tax payable amount after calculating deductions, expenses disallowed, amortization, rdtoh balance and it's effects on tax prep
Thanks, Allan! I still have one question- Why did you use 16,000( 15,000+1,000) on your balance sheet? In my opinion it should be $13,500 ( 16,000-2,500 depreciation). Correct me if I am wrong. Thanks in advance.
Really thanks for your informative videos, although made long time ago, but was really helpful. Thanks brother, May God bless you more courage for such nice work ahead, making other life easy. Regards, Malik
Where did you get the Federal Tax Abatement information? Also, it appears corporate tax reporting in AB and QC are done outside of this form, is that correct?
Hi Madan, Awesome video. Great clear presentation and to the point. Do you have a video on a Corporation that needs to be closed as a result of sale due to losses from previous years, but however a small capital gain arising from the sale of assets. Thanks
Did a fantastic job in this video, mate. Just a question about the BS + P&LA you start with. Is that straight from the accounting software-unadjusted or is that the accountant's post YE adjusted financial reports?
@@AllanMadanCA, Richard here. Can you believe it... I've actually got a an accounting degree (zero actual professional practice experience) but I had to watch your videos to learn how to put it all together in real time--for coy end of year accounts + tax. Kia ora from Aotearoa NZ.
I am trying to prepare corporate returns because we cannot afford to hire a CA. I have the prior year's financial statements and have completed the current year's. Love your video, very helpful. However, I need help with deferred income taxes. Not sure how they are used or reported. Thanks.
Hi Vishnu, I don't know if there are any fillable T2 forms but it appears that some of the schedules that are applicable to your situation are: 1, 4, 7, 50, 100, 125, 200, and perhaps more. Thanks
Hi Allan...Your videos are excellent! I live in Mississauga. What Accounting Software would you recommend to use with a new Corporation just starting out. I want to maintain top quality records, to bring to you for your professional sign-off each tax year.
Thank you for uploading a good video to understand corporate tax filing. Can you show how to calculate federal abatement for your given scenario? I see the amount of $11450 but i donot see the workings in the video. your help is much appreciated.
Very nice video Madan. It realy helps lot. There many tools for personal tax but very few for small businessman. I have inactive corporation. It has some short term investment and carry forward of losses. There is no income and just expense are like bank fee and WSIB payment (though it was technical consultation wsib took some money. What are the schedules I shall use? What about interest from money in ING Direct. Is there any fillable T2 form from CRA?
Hello Allan again, This is what I am getting when preparing my T2 Filled schedule 125 Gifi 8000 $10908 Schedule 100 shows Gifi 3600, 3620, 3640 and 3849 $10908 Filled schedule 3 line 450 $10908 according to CRA ( I called them ) Line 300 of T2 form has &10908 Balance owing $2727 By the way I issued T5 with the amount of $10908 in box 10 Is this correct, I thought there would be no tax to my Corp because it paid me the whole income, but CRA told me that the tax is calculated before the dividends are paid, Is there any thing else I can do to reduce the tax, had no expenses
Hi Allan. Thanks a lot for doing these videos. I am looking for schedule 100 (3:00) and 125 (3:20). The ones I find on the CRA website looks very different from yours.. Any idea what I can be doing wrong ? Thanks,
Hi Karl, the schedules on the CRA website contain blanks. You have to enter GIFI codes and related amounts. I suggest that you purchase tax preparation software to make it easier.
Hi Allan,Your video was pointing to Computer as Class 52 on Schedule 8. How come my CCRA Class list seems to indicate it should be Class 50. Why 52? Sorry, it's my first time preparing my Corporate Tax return... Class 50 includes:1) Electronic process control or monitor equipment2) electronic communications control equipment3) System software for equipment referred to in 1) and 2)4) Data handling equipmentAlso, the CCA rate = 55% not 100%.Got my list from the CCRA web recently. Am I looking at the wrong reference list? Thanks,RCF
Thanks again Allan for replying, what schedule my corporation should attach to T2, also do you have a vedio that show how to fill T5Thanks in advance for your help
Hi Abe, your corporation should attached the following schedules to the T2 return: 1. Schedule 100, Income Statement 2. Schedule 125, Balance Sheet 3. Schedule 1, Net Income for Tax Purposes 4. Schedule 50, Shareholder Information Please watch this video on how to prepare a T5 slip: madanca.com/blog/prepare-t5-slip/
@@AllanMadanCA Hello Allan, I was forced to start a corporation last year i drove a truck, made around $12000 income then I stopped working due to an accident, to fill schedule 125, what is the code for the revenue that my corp generated ? also I took all the money and issued T5 for myself showing the dividends in box 10, hope I did the right thing, so what is the code for the expenses on schedule 125, for the balance sheet schedule 100, what do I need to include in it, is the $12000 that my corp received considered assets ? I had no liabilities and have no idea what to include in the equity section Your help is greatly appreciated
Hi Abe, Report the revenue of $12,000 in box 8000 of GIFI Schedule 125. Also, report the business expenses incurred in the relevant box in the Operating Expenses section of Schedule 125. Furthermore, dividends paid to you in the year should be reported in box 3700 of GIFI Schedule 100.
I'd like to thank you very much for this very informative video. I'll admit I had to study the video very carefully and watch it more than a few times. With the help of some internet research and your videos I own several corporations and I will be completing all of my corporate tax returns myself. Its not as complex as people think. One question I do have is can a money losing corporation pay dividends? If so, does it need to have positive equity, or can it have negative equity. I am thinking I will lend the corporation money to pay myself dividends back. Thanks in advance
+diggerman75 Much better than feeding greedy accountants who charge from $600 to $1500 per year for these simple returns. At the most you might make a mistake and pay tax man more money, they will remember that and act favorably during audits, if I am correct.
Hi Allan, I have corporation have an income only from Foreign client for consulting service. So my income considered as a Other income for CRA? and Is income tax rate is higher than Small businnes Income tax rate? Is that correct?
The income is not considered as foreign so long as you generated it while working from an office / physical location in Canada. Your corporation, in this case, can continue to claim the small business deduction.
Great video, thanks a lotI am a truck driver and the company that hired me forced me to incorporate ( I did not think that I needed it but I did because I needed the job ), they pay the corporation with a Cheque and I deposit the money into the corporation account and then I take the money, do I consider myself a subcontractor and pay my cpp when I am doing my personal taxes or should the corporation deduct CPP, EI and taxes and remit it every monthWhat schedules ( if any ) do I need to fill and attach to the T2 form ?Your reply is much appreciated
Hi Abe, for simplicity, record the payments that the corporation made to you as 'dividends'. This way you can avoid paying payroll taxes on the payments you received. A T5 Slip should be prepared to report the dividends paid to you from your corporation in the calendar year. Note that the dividends paid to you are taxable to you, and must be included on your Canadian personal tax return (T1).
Keep in mind that if you pay yourself dividends, then you do not accumulate your RRSP contribution room each year and also you won't get any CPP pension later (as you don't pay it now).
Can you please reply to my email. Last two years I was taking dividends instead of payroll. I am the owner of the trucking business in Alberta. I was taking 40,000 dividends, taxable $46,800 and every year I was paying approx $2,180 tax. As per your comment, I shouldn't pay these taxes. Am I right? Can you please explain because this year I am planing again take a $40,000 dividend. Do I have to pay tax from dividends of $40,000 ?
Hi Lilian, The topic of deferred income taxes is not an easy matter. Also, it may pose a higher risk audit by the CRA. Since I will need more information to assist you, if you wish, please do not hesitate to contact me at (905) 268-0150 or at amadan@madanca.com
Amazing help !
Thank you so much for this video. My accountant was costing me more than I was making. I will now be able to do this myself !
This video although not nearly as descriptive as I'd like has helped me immensely, far FAR more useful then anything on cra's website.
That was super helpful -- thank you so much! Wish I'd seen this last year. Really appreciate the clear, simple (and free!) instructions.
Using IE on Windows2000, I applaud you sir.
I know how to do a personal tax. But this video makes me to learn and do corporate tax now. Thank you for your video. It is very short and to the point. It shows the basic corporate tax filing. Very good.
For anyone who is doing T2 tax. This is outdated already. Half Year Rule has been replaced by AIIC rule
Allan , Thank you very much for your clear and complete instructions. it helps me a lot.
Great help for small home based business owners.
Seems really good! I'll place a further comment when I'm done preparing my T2 return (first time)
Thansk for the positive feedback!
Allan
@jrodmanyo You're welcome and thank you for watching.
Allan
Hi Vishnu,
You should be able to as long as you meet the criteria here:
- You are a Canadian controlled private corporation through the tax year with loss or a nil net income for tax purposes
- You have permanent establishment in only one province
- You are not claiming any refundable tax credits
- You did not receive or pay out any taxable dividends
- you are reporting in Canadian currency
- few more
Thanks
@CanadaCorporateTax Thank you for the positive feedback. Allan Madan, CA
Excellent video! Very clear, and it will be very useful when I do my tax return for my corporation.
This video needs to be updated.
Very helpful Thank you
The federal abatement is 10% of your taxable income, so 10% * $114,500 =$11,450 Allan
Excellent and superb. Cristal-clear as water.
Thanks dude, i know its outdated but still useful
I hear different statements regarding how to report interest income received from banks for the deposits with them and also dividends received from mutual funds, if your corporation holds units with mutual funds. On Income Statement ( Financial Statement, Schedule 125 ( GIFI codes - 8096 ( Dividends from Canadian sources ), 8094 ( Interest from Canadian Sources ), 8090 ( investment revenue ), 8097 ( Dividend from foreign sources ). These correspond to the boxes on T3 and T5 slips issued to you by the banks or mutual fund companies. You can claim non-capital losses from prior years Box 42 on T3 slip ( Cost Base Adjustment ) need not have to be reported because that is return of capital. Box 21 on T3 slip ( Capital Gains ) is 50% of the amount on this box to include on T2 return. Am I correct?. But when the commercial softwares like Quick Tax, Future Tax are not putting the dividend income into Schedule 3 when calculating the tax, they are entering this amount onto Part I tax. These softwares are cCRA certified. We need to help each other esp. where incorporated individuals frequently unemployed or in losses to help each other.
Awesome video! Thank you so much for this!
I am currently a co-founder of a corporation that is actually yet to proceed with any business transactions at all and has a revenue of $0 (with some eligible expenses, however), so I was hoping to work the taxes out myself, and this is super useful!
It's a very informative video. At Virtual Accountant we are a team of dedicated professionals who are passionate about helping our clients grow their business. We provide all the usual bookkeeping, corporate tax, year end services and personal tax services.
Thanks a lot Allan Madan. This video was both helpful and concise, ideal for me.
+Andrew Wright Thank You
Thanks so much Allan. Excellent video; clear and concise.
Hi Allan you are awesome can you please make one video on tax prep with practical example showing the tax payable amount after calculating deductions, expenses disallowed, amortization, rdtoh balance and it's effects on tax prep
Thank you for your positive feedback. I will do my best to create this video as per your request.
Thanks, Allan!
I still have one question- Why did you use 16,000( 15,000+1,000) on your balance sheet? In my opinion it should be $13,500 ( 16,000-2,500 depreciation). Correct me if I am wrong. Thanks in advance.
this video is very helpful. can you please let me know which schedule to use if the corporation is registered in british columbia
Thank mr. Madan.
Really thanks for your informative videos, although made long time ago, but was really helpful.
Thanks brother, May God bless you more courage for such nice work ahead, making other life easy.
Regards,
Malik
Where did you get the Federal Tax Abatement information? Also, it appears corporate tax reporting in AB and QC are done outside of this form, is that correct?
WONDERFUL!
Thanks very much, very helpful!
Hi Madan, Awesome video. Great clear presentation and to the point. Do you have a video on a Corporation that needs to be closed as a result of sale due to losses from previous years, but however a small capital gain arising from the sale of assets. Thanks
Did a fantastic job in this video, mate. Just a question about the BS + P&LA you start with. Is that straight from the accounting software-unadjusted or
is that the accountant's post YE adjusted financial reports?
Hi Richard,
The financial statements are prepared after the accounting entries for the year end have been booked.
@@AllanMadanCA, Richard here. Can you believe it... I've actually got a an accounting degree (zero actual professional practice experience) but I had to watch your videos to learn how to put it all together in real time--for coy end of year accounts + tax. Kia ora from Aotearoa NZ.
@@richardpalmer8478 Congrats on your accounting degree! I am glad my videos were able to help :)
huge help thanks
Thank you very much Allan for your help, God bless you
Thank you, Allan, for your video. Do you have any videos in regards to shareholder loan for small business?
Thank you so much Allan. This video was so helpful.
I am trying to prepare corporate returns because we cannot afford to hire a CA. I have the prior year's financial statements and have completed the current year's. Love your video, very helpful. However, I need help with deferred income taxes. Not sure how they are used or reported. Thanks.
How come your schedule 125 looks different than the one that is available online?
Thank you for sharing this info on CZcams This was very helpful.
Hi Vishnu,
I don't know if there are any fillable T2 forms but it appears that some of the schedules that are applicable to your situation are: 1, 4, 7, 50, 100, 125, 200, and perhaps more. Thanks
Where I can find fillable T2 forms? I do not want to print and calculate by hand everything.
thanks
How much would a chartered accountants service fee for keeping books for a corporation of the same size?
This is awesome! Thank you so much! You made it so straight to the point! Love it! :)
Can you show us how to file a personal tax return?
Hi Allan!
Thanks for the video!! So in conclusion how much was left after taxes for the business owner in this video's example?
Thank you for posting the video, it was very helpful.
+Zenia Shah Thank You
very good presentation ..really enjoyed the video...worth sharing..thanks...
how do you calculate Current Income taxes Gifi 9990
Hi Steven, to estimate current income taxes, multiply the profit of the corporation for the year by 15%.
Hi Allan...Your videos are excellent! I live in Mississauga. What Accounting Software would you recommend to use with a new Corporation just starting out. I want to maintain top quality records, to bring to you for your professional sign-off each tax year.
Thank Allan for your help, God bless you
Hi Abe,
It's my pleasure! I am happy that the video was able to assist you.
Can I use T2 Short return with mandatory schedules specified in it.
Thank you for uploading a good video to understand corporate tax filing. Can you show how to calculate federal abatement for your given scenario? I see the amount of $11450 but i donot see the workings in the video. your help is much appreciated.
What is federal abetement?
Very nice video Madan. It realy helps lot. There many tools for personal tax but very few for small businessman. I have inactive corporation. It has some short term investment and carry forward of losses. There is no income and just expense are like bank fee and WSIB payment (though it was technical consultation wsib took some money. What are the schedules I shall use? What about interest from money in ING Direct. Is there any fillable T2 form from CRA?
Thank you very much.
Hello Allan again,
This is what I am getting when preparing my T2
Filled schedule 125 Gifi 8000 $10908
Schedule 100 shows Gifi 3600, 3620, 3640 and 3849 $10908
Filled schedule 3 line 450 $10908 according to CRA ( I called them )
Line 300 of T2 form has &10908
Balance owing $2727
By the way I issued T5 with the amount of $10908 in box 10
Is this correct, I thought there would be no tax to my Corp because it paid me the whole income, but CRA told me that the tax is calculated before the dividends are paid,
Is there any thing else I can do to reduce the tax, had no expenses
Impressive summary.
Wow that's fantastic. Thanks so much.
Hi Allan. Thanks a lot for doing these videos.
I am looking for schedule 100 (3:00) and 125 (3:20). The ones I find on the CRA website looks very different from yours.. Any idea what I can be doing wrong ?
Thanks,
Hi Karl, the schedules on the CRA website contain blanks. You have to enter GIFI codes and related amounts. I suggest that you purchase tax preparation software to make it easier.
Hi Allan,Your video was pointing to Computer as Class 52 on Schedule 8. How come my CCRA Class list seems to indicate it should be Class 50. Why 52? Sorry, it's my first time preparing my Corporate Tax return...
Class 50 includes:1) Electronic process control or monitor equipment2) electronic communications control equipment3) System software for equipment referred to in 1) and 2)4) Data handling equipmentAlso, the CCA rate = 55% not 100%.Got my list from the CCRA web recently. Am I looking at the wrong reference list?
Thanks,RCF
The CCA rate is 55% (class 50) on computer equipment.
www.cra-arc.gc.ca/tx/bsnss/tpcs/slprtnr/rprtng/cptl/dprcbl-eng.html#class50
Thank you so much for this video!
You're welcome
Thansk
Thanks again Allan for replying, what schedule my corporation should attach to T2, also do you have a vedio that show how to fill T5Thanks in advance for your help
Hi Abe, your corporation should attached the following schedules to the T2 return:
1. Schedule 100, Income Statement
2. Schedule 125, Balance Sheet
3. Schedule 1, Net Income for Tax Purposes
4. Schedule 50, Shareholder Information
Please watch this video on how to prepare a T5 slip: madanca.com/blog/prepare-t5-slip/
@@AllanMadanCA Hello Allan, I was forced to start a corporation last year i drove a truck, made around $12000 income then I stopped working due to an accident, to fill schedule 125, what is the code for the revenue that my corp generated ? also I took all the money and issued T5 for myself showing the dividends in box 10, hope I did the right thing, so what is the code for the expenses on schedule 125, for the balance sheet schedule 100, what do I need to include in it, is the $12000 that my corp received considered assets ? I had no liabilities and have no idea what to include in the equity section
Your help is greatly appreciated
Hi Abe,
Report the revenue of $12,000 in box 8000 of GIFI Schedule 125. Also, report the business expenses incurred in the relevant box in the Operating Expenses section of Schedule 125. Furthermore, dividends paid to you in the year should be reported in box 3700 of GIFI Schedule 100.
@megamunchit2008 Thank you for the feedback. Any suggestions on how this video can be improved would be greatly appreciated :)
Thanks Madan
I'd like to thank you very much for this very informative video. I'll admit I had to study the video very carefully and watch it more than a few times. With the help of some internet research and your videos I own several corporations and I will be completing all of my corporate tax returns myself. Its not as complex as people think.
One question I do have is can a money losing corporation pay dividends? If so, does it need to have positive equity, or can it have negative equity. I am thinking I will lend the corporation money to pay myself dividends back. Thanks in advance
+diggerman75 Much better than feeding greedy accountants who charge from $600 to $1500 per year for these simple returns. At the most you might make a mistake and pay tax man more money, they will remember that and act favorably during audits, if I am correct.
How different is it now then in 2011
It is very similar. Some of the tax rates and CCA classes have changed, but otherwise it's the same.
Do corporations have a "tax registration certificate" in Canada or is it called something else?
Corporations in Canada have a Business Number (tax ID number). They also have Articles of Incorporation.
:) ty for the info :)
Hi Allan,
I have corporation have an income only from Foreign client for consulting service. So my income considered as a Other income for CRA? and Is income tax rate is higher than Small businnes Income tax rate? Is that correct?
The income is not considered as foreign so long as you generated it while working from an office / physical location in Canada. Your corporation, in this case, can continue to claim the small business deduction.
what about hst filing
To learn how to prepare a HST return, please see czcams.com/video/8NgnEltHkRA/video.html
can you suggest me any course for Canadian personal and corporate tax.
Hi Dipankar, the Knowledge bureau offers tax preparation courses (www.knowledgebureau.com/)
Great video, thanks a lotI am a truck driver and the company that hired me forced me to incorporate ( I did not think that I needed it but I did because I needed the job ), they pay the corporation with a Cheque and I deposit the money into the corporation account and then I take the money, do I consider myself a subcontractor and pay my cpp when I am doing my personal taxes or should the corporation deduct CPP, EI and taxes and remit it every monthWhat schedules ( if any ) do I need to fill and attach to the T2 form ?Your reply is much appreciated
Hi Abe, for simplicity, record the payments that the corporation made to you as 'dividends'. This way you can avoid paying payroll taxes on the payments you received. A T5 Slip should be prepared to report the dividends paid to you from your corporation in the calendar year. Note that the dividends paid to you are taxable to you, and must be included on your Canadian personal tax return (T1).
Keep in mind that if you pay yourself dividends, then you do not accumulate your RRSP contribution room each year and also you won't get any CPP pension later (as you don't pay it now).
do you have anything of how to prepare T5? if I got 2 dividends from my prof.corp do i need to submit 1 T5 with the sum or 2 T5 slips 1 for each.
I don't have a video on how to prepare a T5 slip, but I should create one. You have to attach only 1 T5 slip to the T5 Summary.
thanks
Name of filer is the name of the corporation. Round up or down to the nearest cent.
Can you please reply to my email. Last two years I was taking dividends instead of payroll. I am the owner of the trucking business in Alberta. I was taking 40,000 dividends, taxable $46,800 and every year I was paying approx $2,180 tax. As per your comment, I shouldn't pay these taxes. Am I right? Can you please explain because this year I am planing again take a $40,000 dividend. Do I have to pay tax from dividends of $40,000
?
THAAANKKKKKKKKKKKKKKKKKKKKKKKK YOUUUUUUUUUUUUUUUUUUUU SOOOOOOOOOOOOOOOOOOOO MUCHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH
you can improve things by doing more videos :)
Hi Lilian,
The topic of deferred income taxes is not an easy matter. Also, it may pose a higher risk audit by the CRA. Since I will need more information to assist you, if you wish, please do not hesitate to contact me at (905) 268-0150 or at amadan@madanca.com