Corporate Tax Law Information

Corporate tax is a tax that businesses have to pay on the profits they earn in their business. Even though the provinces have their own tax rates, the corporate tax will be totally managed by the Canada Revenue Agency after 2008. There are different corporate tax structures depending on the type of business you have. This means that when filing your corporate tax return, you will only have to file one return and all corporations will follow the same set of rules.

All corporations in Canada have to pay corporate tax on their annual earnings. When computing the amount of corporate tax you owe, you must include the earnings of your corporation in all parts of the world. The amount of corporate tax you pay depends on the source of your income, as some areas are taxed higher than others. For example, the income you earn from a general business venture carries a corporate tax at a lower level than that of the income earned through real estate.

If your corporation operates primarily in Canada, then you need the services of an accountant or a lawyer well versed in corporate tax laws to help you save money at the end of the year. They will help you learn about the advantages you can gain from the lower Canadian corporate tax for businesses that operate in both Canada and the United States. For both small and large businesses, the corporate tax is at least 6% lower in Canada and this rate is expected to drop in the coming years. If your company is involved in research and development activities, you can take advantage of the 20% corporate tax credit. If you don’t have an equivalent business in the US, you are entitled to a 35% reduction in your corporate tax in the form of a tax credit.

The new management of corporate tax by the CRA means that it will be easier to streamline the reporting process. You can file your corporate tax return online through the efile system as long as you are a Canadian resident and have your base of operations in Canada. You must make sure you check your corporate tax return before you file in this manner to make sure you include your business number, and your taxation year-end date. Without this essential information, you may encounter problems with the CRA regarding payment of your corporate tax.