Self-preparation tips for effective corporate tax returns.

Would you like to prepare a corporate tax return for your company on your own?  If yes, then this article is for you.

Corporate Tax Return Preparation Tips

See the following steps to assist you with preparing a corporate tax return:

1.    Complete the T2

The T2 can be downloaded from the Canada Revenue Agency’s (CRA) website www.cra-arc.gc.ca  This eight page form asks for basic information about your corporation, including:

• Name of Corporation
• Address
• Business Number
• Year End

In addition, the T2 is where you will calculate the taxable income of your corporation and the tax payable by your corporation.

2.    Prepare The Balance Sheet

Next step is to complete “Schedule 100 – Balance Sheet information.”  This schedule must be filed with the T2 and is a summary of your corporation’s balance sheet.  You may download this form from the CRA’s website.

3.    Prepare The Income Statement

The third step of preparation is to complete “Schedule 125 – Income Statement Information”. Similarly, this schedule must be filed with the T2 and is a summary of your corporation’s income statement for the year.  You may also download this form from the CRA’s website.

4.    Prepare Schedule 1

The “Schedule 1 – Net Income (Loss) For Income Tax Purposes” is the heart of the Return Preparation.  This schedule calculates your corporation’s net income for income tax purposes, as shown below:

Net income per financial statements:                    $X

Add:  Non-deductible items (e.g. golf fees, 50% of meals)        $X

Subtract:  Deductible items (e.g. capital cost allowance)            ($X)

Net income for income tax purposes                    $X

5.    Prepare Schedule 8

If your corporation owns capital assets (e.g. furniture, equipment, vehicles, etc.), then “Schedule 8 – Capital Cost Allowance” must be completed and submitted with the T2.  

This schedule calculates tax depreciation, which is a deductible expense, on the capital assets owned by your corporation.  The rate of depreciation (e.g. 10%, 25%, 50%, etc.) depends on the type of capital asset owned.  CRA’s website www.cra-arc.gc.ca has a summary of the current tax depreciation (aka Capital Cost Allowance) rates.

6.    Purchase Software

Various companies sell software for Corporate Tax Return Preparation in Mississauga and the GTA (Greater Toronto Area).  Software automates much of the preparation process and has a user friendly interface.  It’s advisable to purchase software for this process instead of completing it manually.  One example of a reliable software is Taxprep. See: www.taxprep.com

7.    Send to the CRA

The completed return can be submitted in person to your local Tax Services Office (TSO) for processing by the Canada Revenue Agency.  For local submissions in Mississauga, the TSO is located at:

5800 Hurontario Street
Mississauga ON  L5R 4B4

For a listing of other TSO’s in Ontario, please see www.cra-arc.gc.ca/cntct/prv/on-eng.html

Because Corporate Tax Return Preparation can be inherently complex, especially for growing or medium-sized businesses, it’s advisable to engage the services of a Chartered Accountant for Corporate Tax Return Preparation in Mississauga.

ABOUT THE AUTHOR

ALLAN MADAN

CPA, CA

Allan Madan is a CPA, CA and the founder of Madan Chartered Accountant Professional Corporation. Allan provides valuable tax planning, accounting and income tax preparation services in the Greater Toronto Area.

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