# name: filing-canadian-business-taxes description: Guides Canadian business tax filings — T2125 for sole proprietors, T2 corporate returns, GST/HST registration and filing, payroll remittances, and T4/T5 slips, with deadlines and penalty rules. Use when the user asks how to file business taxes in Canada, about a T2 return, T2125 self-employment income, the small business deduction, registering for or filing GST/HST or QST, CPP/EI payroll remittances, T4 or T5 slips, or corporate instalments. Do not use for personal T1-only returns (preparing-canadian-personal-tax-returns), US filings (filing-us-business-taxes), or tax planning strategy (optimizing-business-taxes).

# Filing Canadian Business Taxes

# When to use / when NOT to use

• Use for: which CRA filings a Canadian business owes (T2125 vs T2), GST/HST/QST registration and returns, payroll withholding and slips, deadlines, instalments, penalties.
• Do NOT use for: personal T1 returns without a business (→ preparing-canadian-personal-tax-returns), US entities (→ filing-us-business-taxes), or salary-vs-dividend strategy (→ optimizing-business-taxes).

# Important limits

• Educational help, not professional tax advice — multi-province, cross-border, or high-stakes filings go to a CPA.
• Figures and deadlines are tax-year-stamped and MUST be verified against canada.ca before use.
• Never assist with evasion, unreported income, or falsified records; refuse and explain.

# Core rules

1. Structure determines the filing:

   Structure	Return	Filing due	Payment due
   Sole prop / partnership (individuals)	T2125 inside the T1	June 15	April 30
   Corporation	T2	6 months after fiscal year-end	2 months after year-end (3 for many CCPCs)
   Payment deadlines land BEFORE filing deadlines — money first, paperwork later.

2. CCPCs get the small business deduction: the first $500,000 of active business income is taxed at the low combined rate (~9% federal + province). Passive investment income above $50,000/year grinds the limit down.
3. GST/HST registration is mandatory once revenues exceed $30,000 over four consecutive quarters (or one quarter alone). Register voluntarily below that to claim input tax credits (ITCs).
   • ✅ Registering at $28k because big equipment purchases are coming (recover ITCs)
   • ❌ Hitting $45k over two quarters and still charging no tax — liability accrues anyway
4. Charge the rate of the customer's province for most goods/services: HST provinces (ON 13%, NS/NB/NL/PE 15%), GST-only (AB/territories 5%), GST+PST (BC/SK/MB), GST+QST (QC — file with Revenu Québec).
5. Payroll means CRA remittances: withhold income tax + CPP + EI from each pay; remit with the employer share (CPP match, EI ×1.4) by the 15th of the following month (new small employers). T4 slips + summary due the last day of February.
6. Dividends paid require T5 slips (also end of February). Salary needs payroll accounts; dividends need directors' resolutions — don't blur them.
7. Instalments: corporations pay monthly/quarterly instalments after their first year owing >$3,000; self-employed individuals pay quarterly T1 instalments once tax owing exceeds $3,000 in consecutive years.
8. Keep records 6 years from the end of the tax year (CRA rule).

# Workflow

1. Confirm structure (sole prop vs corporation), province(s), fiscal year-end, and registrations (BN, GST/HST, payroll, corporate tax accounts).
2. Close and reconcile the books for the fiscal period.
3. File the return from rule 1; for corporations include the GIFI (financial-statement codes) mapping.
4. File the GST/HST return for the period: tax collected − ITCs = net remittance (or refund).
5. Verify slips: T4s match payroll ledger; T5s match dividends declared.
6. Validate: deadline calendar cross-checked against canada.ca; payment dates (which precede filing dates) scheduled; GST/HST collected account cleared by the remittance.

# Current figures (tax year 2026 — verify before use)

# Edge cases & failure modes

• Quebec files separately with Revenu Québec (QST, provincial return, payroll) — flag it explicitly.
• First corporate year → no instalments required, but the full balance is due 2–3 months after year-end; cash-plan for it.
• Late T4/T5 slips → per-slip penalties; file late rather than never.
• Zero-rated vs exempt sales: zero-rated (exports, basic groceries) still allow ITCs; exempt (residential rent, most financial services) do not — misclassification changes refunds.

# References

Deadline/rate tables, GST/HST worked example, and gotchas: see references/reference.md.