To the casual observer, our friends over at the Canada Revenue Agency (CRA) sometimes make head-scratching policy decisions. Just one example of CRA’s puzzling policy deals with deadlines for small business corporations. Were one to look it up, one would discover that a small corporation has six months from fiscal year-end to file a corporate tax return. So you’d probably understand how a business owner would automatically put that year-end task on the back-burner. And you’d also excuse her or him for thinking that they’ve got CRA covered, as long as the tax return is filed within six months.
Imagine their surprise then when CRA’s assessment includes an interest charge. Why is there interest if the tax return is filed on time? Because there’s a second component to that “six-month” rule. An important clause that says; even though the return is due six months after year-end, the actual tax is payable within no more than three months. So, our fictitious business owner isn’t onside at all. Yes, the tax return was filed on time, but the tax payment was late. Hence the interest charge.
Yeah, I know head-scratching.
To make matters worse, if that same business owner owes more than $3,000 in income tax (or HST for that matter), then CRA further requires the corporation to estimate and remit, every three months, an amount owing for next year’s tax too. Those prepayments are called quarterly instalments and if the business owner forgets to pay up, and if there is tax due next year, then CRA will once again assess an interest charge.
And what’s even more head-scratching for most business owners is that CRA won’t automatically send out a notice, or a reminder, that those instalments are due. In other words, the onus is on the business owner to verify, calculate and remit payments as required, and at the right time.
And, given that most business owners are much too busy thinking about other things; sales & marketing, product development, staffing, overhead and expenses (you know, the not-so-mundane stuff), it’s not uncommon to see an HST or income tax instalment go unpaid. Or sometimes get overpaid.
What this all mean is, in today’s increasingly complex world, business owners need more than a once-a-year-accountant. They need someone who will keep track of these things. Someone who will keep them onside, and on the right side of the tax and instalment game. In today’s world, business owners need an on-going relationship and a reliable service from a trusted advisor.
And we’ve got just such a service. One that we’re calling Concierge. And with our concierge offering, among all the other services it offers, it also makes sure that you pay CRA the right amount right now. Rather than a whole bunch more later.