Fiscal period for income tax purposes

You have to report your business income on an annual basis.

For sole proprietorships, professional corporations that are members of a partnership, and partnerships in which at least one member is an individual, professional corporation, or another affected partnership, your business income is generally reported on a calendar-year basis.

If you are a sole proprietor or if you are in a partnership in which all the members are individuals, you can elect to have a non-calendar-year fiscal period. To make this change, complete Form T1139, Reconciliation of Business Income for Tax Purposes. 

A corporation’s tax year is its fiscal period. A fiscal period cannot be longer than 53 weeks (371 days). A new corporation can choose any tax year-end as long as its first tax year is not more than 53 weeks from the date the corporation was incorporated or formed as a result of an amalgamation. The corporation has to file its income tax return within six months of the end of its fiscal period. When the fiscal year ends on the last day of the month, the return is due on or before the last day of the sixth month after the end of the tax year. When the fiscal year ends on a day other than the last day of the month, the return is due on or before the same day of the sixth month after the end of the tax year.

It is a good idea to become familiar with the rules of fiscal periods when planning your business. For more information, see Guide T4002, Self-employed Business, Professional, Commission, Farming, and Fishing Income.

Note

If you are a GST/HST registrant, how you set up your fiscal period-end for income tax purposes may affect your GST/HST reporting periods, filing, and remitting due dates. For more information, see Guide RC4022, General Information for GST/HST Registrants.

Source: CRA

COVID-19 Recovery Programs continue to provide support to Canadian businesses and organizations

The Government of Canada remains committed to supporting Canadian businesses and organizations in the face of the ongoing pandemic. On Friday, December 17, 2021, the targeted COVID-19 support measures received Royal Assent. These measures will ensure that the hardest-hit sectors and those who are most affected by the pandemic will continue to receive the support they need. The government will remain vigilant to ensure businesses have the tools needed to deal with the impacts of the evolving Omicron variant while also supporting a strong economic recovery.

Today, the Honourable Diane Lebouthillier, Minister of National Revenue, announced further details on these measures including current application periods:

  • Increasing the subsidy rate for the Canada Recovery Hiring Program from 20 per cent to 50 per cent. The increased rate will help organizations continue to hire back workers and create the additional jobs Canada needs for a full recovery. Applications for period 22 are now open, covering the period of October 24 to November 20, 2021.
  • The Canada Emergency Wage Subsidy (CEWS) and Canada Emergency Rent Subsidy ended on October 23, 2021, and have been replaced by targeted support to organizations that are still facing significant pandemic-related challenges. Support will be available through two streams:
    • Tourism and Hospitality Recovery Program, which will provide support through wage and rent subsidies to, for example, hotels, tour operators, travel agencies, and restaurants, with a subsidy rate of up to 75 per cent. Eligible organizations would be required to meet the following two conditions to qualify for this program:
      • An average monthly revenue reduction of at least 40 per cent over the first 13 claim periods for the CEWS (12-month revenue decline); and
      • A current-month revenue decline of at least 40 per cent.
      • Applications for period 22 are now open, covering the period of October 24 to November 20, 2021.
    • Hardest-Hit Business Recovery Program, which will provide support through wage and rent subsidies. It will support other organizations that have faced deep losses, with a subsidy rate of up to 50 per cent. Eligible organizations would be required to meet the following two conditions to qualify for this program:
      • An average monthly revenue reduction of at least 50 per cent over the first 13 claim periods for the CEWS (12-month revenue decline); and
      • A current-month revenue decline of at least 50 per cent.
      • Applications for period 22 are now open, covering the period of October 24 to November 20, 2021.
  • Increasing the monthly cap on eligible rent expenses that can be claimed. To better respond to the needs of organizations, the government is increasing the aggregate monthly cap on eligible expenses that can be claimed from $300,000 to $1 million (including amounts claimed by affiliated entities) starting on October 24, 2021.

These COVID-19 programs are extended until May 7, 2022, with the authority to further extend them, through regulation, until July 2, 2022.

The Canada Revenue Agency (CRA)’s top priority is to continue to ensure that the program application processes are simple and clear, and that subsidy payments get into the hands of those who need them, as quickly as possible. 

Source: CRA

Preparation for upcoming the 2021 tax season in Canada

Ahead of the 2021 tax season, there are steps you can take in order to get ready!

The Smart Tax Filing and Accounting CPA firm offers tax filing service to owners of small businesses and self-employed individuals to help them understand their business tax obligations. A visit from The Smart Tax Filing and Accounting CPA firm is 100% confidential; the information you choose to discuss with professional accountant will not be shared with anyone else.

How can this service help you?

There are two ways that businesses or self-employed individuals can benefit from The Smart Tax Filing and Accounting CPA firm service:

  1. personalized visits to office
  2. by phone or online (video conference)

During a personalized visit, a professional accountant will:

  • Answer your tax-related questions and address concerns
  • Discuss common tax errors and financial benchmarks in the small business community
  • Provide information on various online tools and electronic services offered by the CRA
  • Provide recommendations on how to strengthen your bookkeeping system
  • Discuss COVID-19 related measures, if needed

During a phone or online (video conference), the professional accountant will:

  • Explain common tax errors
  • Demonstrate how to use financial benchmarks for relevant industries
  • Provide information on the CRA’s services
  • Explain general bookkeeping concepts and best practices
  • Discuss COVID-19 related measures, if needed

Have you already received an invitation for a visit from The Smart Tax Filing and Accounting Firm?

  • The Smart Tax Filing and Accounting Firm regularly sends letters to eligible taxpayers inviting them to book a visit.
  • We may also call you to follow up or offer you an invitation for a visit.
  • If you received an invitation and want to learn more or book a visit, call the number provided on the bottom of the invitation.