← Tips and tricks

What a one-person corporation actually owes, and when

Every filing, payment and deadline across a year, in the order it arrives.

Incorporating turns one tax return into roughly nine obligations across three levels of government. Nobody hands you the list. You find out what you missed when a letter arrives, and by then the interest has been running for months.

First, the two dates people confuse

Two months is the general rule. The three-month version applies to a Canadian-controlled private corporation claiming the small business deduction, which is what almost every one-person contracting corporation is, provided the conditions CRA sets out on its balance-due day page are met. Those conditions are worth reading rather than assuming: check your own situation.

The practical version: work out what you owe before the three-month mark, not before the filing deadline.

Corporate tax instalments

Above a certain amount of tax owing, CRA expects instalments through the year rather than one payment at the end. Whether you pay monthly or quarterly depends on conditions CRA sets, and the due date is the last day of the month or the last day of the quarter accordingly.

The threshold, and whether a corporation in its first year owes instalments at all, depend on your own figures and history. Check your own situation, ideally before your second year rather than during it.

GST/HST

Registration. Once your taxable supplies pass CRA’s small supplier threshold, registration stops being optional. Below it, many contractors register voluntarily anyway, because registering lets you claim back the HST on your own expenses. The threshold and how it is measured are worth confirming: check your own situation.

Filing. Under $1.5 million in annual taxable supplies you file annually by default, and the return is due three months after your fiscal year end. You can elect to file quarterly or monthly, and some people do, because one big annual bill is harder to plan for than four small ones.

Instalments. Where GST/HST instalments apply, they are due within one month after the end of each of your fiscal quarters. A different tax on a separate schedule from your corporate instalments, and easy to conflate with them.

And the election that expires. If your expenses are mostly your own time, the Quick Method is usually worth a few thousand dollars a year, and the window to elect is not open all year. That is its own article: the HST Quick Method.

If you pay yourself a salary

Source deductions are remitted through the year, and how often depends on your remitter type. CRA sets that from your average monthly withholding amount two calendar years earlier, so a one-person corporation is usually at the least frequent end. This one catches people because it is small and recurring, so it never feels like a filing. Check your own remitter type rather than assuming a date.

An owner-employee is not taxed like an ordinary employee. Depending on how much of the voting shares you control, your employment may not be EI-insurable, and CPP is payable on both the employee and the employer side, which is why a salary costs the corporation meaningfully more than the salary itself. Both turn on your own shareholding: check your own situation.

T4, T4A and related information returns are due by the last day of February following the calendar year, to CRA and to yourself.

If you pay yourself dividends

There is nothing to remit during the year, which is part of the appeal.

T5 slips are due by the last day of February for dividends paid in the previous calendar year.

Your own personal return

The one that is not a tax filing at all

Your corporate annual return. This is a corporate law requirement, not a tax one, and it is the most commonly missed obligation on this page precisely because it does not come from CRA.

A federally incorporated company files with Corporations Canada; an Ontario corporation files through the Ontario Business Registry. The deadline runs from your anniversary date rather than your year end, which is why it never lines up with anything else on this page. Check your own filing date with whichever registry you incorporated under.

It costs very little and takes a few minutes. Ignore it long enough and the corporation can be dissolved administratively, which is a genuinely bad afternoon.

The whole year, in order

Assuming a 31 December year end.

Move every date if your year end is not December, except the personal ones. Your personal tax year is always the calendar year, whatever your corporation’s year end is. That mismatch is the thing that makes this hard to hold in your head, and it is why a corporation with an August year end has two overlapping sets of deadlines running at once.

What actually goes wrong

Almost none of it is dramatic. Nobody sets out to miss a filing.

What happens is that the dates are scattered across two governments and a corporate registry, they move when your year end is not December, and nothing warns you. The corporate tax payment falls due before the return that calculates it. Instalments begin without an announcement. The annual return does not come from the tax people at all.

A date passes, and money that was yours stops being available. Nobody writes to tell you.