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Following are the documents/information required for small business corporation income tax return filing. However, this list is not complete. Please set up an appointment to discuss your tax situation to complete your corporate tax return.
Following are the documents/information required to prepare T4, T4A, T5 and T4, T4A, T5 summary return:
Employee / Shareholders’ Information
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Our expertise in tax return preparation and filing will help you get your tax returns completed on time and at a reasonable cost. Tax Accounting is based on the income tax law, and are not required to follow the Generally Accepted Accounting Principles (GAAP).
Following are the two basic methods of accounting used to determine the income from a business:
As a general rule, the accrual method of accounting is used to calculate income from the business. Under the accrual method of accounting, income is computed for the period during which it is earned regardless of whether the payment for the goods or services are received or not. Similarly, expenses incurred for the period are deducted in arriving at the net income from business regardless of whether the expenses are paid or not.
Under the cash method of accounting, income is computed based on the receipt and expenses are computed based on the payment.
After computing net income for tax purposes, various deductions from net income are allowed under the Income Tax Act. As a general rule, any reasonable expenses incurred to earn or produce income is deductible subject to certain restrictions or limitations. Some expenditures are not deductible for tax purposes, and some are capitalized, and amortized (written-off) over time. Typically, current expenditures incurred to earn income during the year are deductible; whereas, capital expenditure incurred to earn income are deductible over time.
Property income is typically earned from owning the asset (i.e., tangible or non-tangible). Typically property income includes rental income, interests, and dividends. You may deduct following expenses from the property income:
Business Meals and Entertainment Expenses
Meals and entertainment expenses are only 50% deductible at the time of computing net income for tax purposes.
If at any conference, convention, seminar, etc., food, beverages or entertainment is provided to the participants. In that case, the total amount paid for the conference is segregated for conference fees, and meals and entertainment, so that 50% of the meals and entertainment expenses to be added back to income. When the segregation is not possible for meals and entertainment, then it is deemed that $50 per day is related to meal cost and seminar fees are reduced by $50 per day.
Long-Haul Truck Drivers
Any expenses incurred for the consumption of food or beverages by a self-employed long-haul truck driver during an “eligible travel period” is 80% deductible.
If you are a member of a professional organization then, expenditures incurred for attending two conventions per year are deductible. If meals are included in the cost of a convention, then it is deemed that $50 per day is spent on meals and entertainment; hence only 50% of the meals and entertainment expenses will be deductible.
Expenses for Attending Courses
Training to Employees
Any training expenses incurred to train an employee, who train to other employees are deductible. But if the training is solely for the benefit of an employee, then it is considered taxable benefit for the employee and must be included in his/her T4.
Club Dues and Fees
Membership fees and club dues are not deductible. But any expenses incurred for meals and entertainment at the club is deductible if it has a business purpose subject to the limitation of meals and entertainment, i.e., 50%).
Interest or Penalties
Any interest or penalties paid for unpaid taxes or the delay in payment of taxes including installments are not deductible.
Safety Deposit Box
Safety deposit box rental fees are not deductible on or after March 21, 2013.
Depending on its size and type of investments, a company may be legally required to get an investment tax credit from the Canada Revenue Agency (CRA) which reduces the overall taxable amount payable to CRA.