Canada legal and accounting and tax considerations in 2023
Since 2003, Healy Consultants Group PLC assists multi-national Clients timely accurately and completely discharge their Canadian legal, accounting, audit and tax obligations. Canada’s tax system comprises federal and provincial tax laws, which vary from province to province.
Our Clients appoint us to assist with i) communicating with the Canada Revenue Agency (CRA) ii) completing financial statements and corporate tax returns iii) supervising independent auditors iv) monthly and quarterly Government reporting including sales tax and payroll and v) legally minimising local and international tax.
- Corporate tax in Canada is levied at i) federal (15%) and ii) provincial (11.5% to 16%) level. Corporate tax returns must be e-filed no later than six months after the company’s fiscal year-end.
- Branch offices pay an additional remittance tax of 25%.
- Companies incorporated in the provinces of Manitoba, Newfoundland, Ontario and Quebec impose a formal employee payroll tax (known by different names in different provinces), with the top rate ranging from 1.95% to 4.26% of annual gross wages, salary and other remuneration paid by an employer.
- Dividend payments, interest payments and royalty payments are subject to 25% withholding tax in Canada. Through double tax treaties, withholding tax is significantly reduced.
- Personal federal tax rates are progressive up to 33% (27.56% for Quebec residents). Personal provincial tax rates are also progressive up to 25.75%.
- Each entity must register for corporate tax and Goods and Services Tax/Harmonized Sales Tax (GST/HST) at the Canada Revenue Agency (CRA). However, registration for GST/QST is not normally required for small suppliers (persons who have worldwide taxable sales under CAD$30,000) or non-residents of Canada who do not “carry on business” in Canada.
- GST/HST and QST filings can be completed on a monthly, quarterly or annual basis, depending on the province in which the business is incorporated.
- There are three types of sales taxes in Canada: i) PST (Provincial Sales Tax) ii) GST (Goods and Services Tax) and iii) HST (Harmonized Sales Tax). See table below on sale tax rates according to each province.
Province Type PST GST HST Total tax rate Alberta GST - 5% - 5% British Columbia GST & PST 7% 5% - 12% Manitoba GST & PST 7% 5% - 12% New Brunswick HST - - 15% 15% Newfoundland and Labrador HST - - 15% 15% Northwest Territories GST - 5% - 5% Nova Scotia HST - - 15% 15% Nunavut GST - 5% - 5% Ontario HST - - 13% 13% Prince Edward Island HST - - 15% 15% Quebec GST & QST (Quebec Sales Tax) 9.975% 5% - 14.975% Saskatchewan GST & PST 6% 5% - 11% Yukon GST - 5% - 5%
British Columbia sales taxes
- British Columbia (BC) has one of Canada’s lowest sales taxes, levied when a company is i) incorporated in BC ii) has customers in Canada and iii) has revenue exceeding CAD$30,000.
- In such cases, a company must register to collect the PST of another province if the company has a business presence in that province. If not, it is usually the responsibility of the buyer to remit the PST.
- A company must collect HST based on the tax rate of the location of the customer where the goods are delivered. This is known as the place of supply rule.
- If the buyer arranges delivery, then physical delivery is deemed to occur in the province where the buyer resides.
- A company must collect BC PST if i) it has customers in BC ii) it solicits orders and accepts purchase orders from customers located in BC and iii) it delivers the goods to a location in BC.
- The following rules apply for shipping goods to Canadian customers outside BC:
- A company, selling to customers in Manitoba and Saskatchewan with no business presence there, is required to charge 5% GST.
- A company, selling to customers in Alberta with no business presence there, is not required to charge PST as Alberta is a sales tax-exempt province.
- A company, selling goods to Quebec, must register and collect the 9.975% sales tax even if the company has no presence in Quebec.
- A company selling to customers in the remaining provinces must collect HST under their GST account.
Other accounting and tax considerations
- For late filing and an unpaid balance on or before April 30, a 5% late-filing penalty will be charged, plus an additional 1% for each month after the deadline (up to a maximum of 12 months).
- Canada has signed Double Taxation Agreements (DTAs) with 93 countries including Australia, China, Singapore, South Africa, United Kingdom and United States to reduce withholding tax on payments abroad.
- Trading and capital losses can both be carried back for 3 years. However, while trading losses can only be carried forward for 20 years, capital losses can be carried forward indefinitely.
- Monthly and quarterly government tax obligations include i) monthly payroll reporting and ii) monthly or quarterly GST and corporation tax return filing.
- As per the Canadian Business Corporations Act, if the gross annual turnover of the soliciting company exceeds CAD$250,000, it is required to conduct an audit for its financial review, whereas for the non-soliciting company, the limit is more than CAD$1 million.
- It is important our Clients are aware of their personal and corporate tax obligations in their country of residence and domicile, and that they fulfil those obligations annually. Let us know if you need Healy Consultants Group PLC’s assistance to clarify your annual reporting obligations.
Healy Consultants Group PLC fees for accounting & tax support
Canada accounting and tax task US$ Canada active company unaudited annual tax and accounting * 2,300 Canada dormant company unaudited annual tax and accounting 950 Canada active company audited annual tax and accounting * 4,950 Canada annual personal tax return 1,500 Average monthly bookkeeping services 860 Monthly GST/HST, PST and Payroll reporting services (active entity) 1,500 Monthly GST/HST, PST and Payroll reporting services (dormant entity) 650
- Our in-house accountants will be happy to assist you with corporation tax and GST registration for a one-time fee of US$1,250.
- Our tax specialists can complete monthly government reporting for a monthly fee of US$860. Our monthly support will include i) receiving monthly invoices from our Client via Dropbox ii) labelling monthly bank statement transactions iii) preparation and submission of monthly VAT returns iv) monitoring monthly profit levels to minimise annual tax and v) submission of monthly employee payroll reporting.
- Our compliance department will assist our Clients with i) documenting and implementing accounting procedures, ii) implementing financial accounting software, iii) preparation of financial accounting records and iv) preparing forecasts, budgets and sensitivity analysis.
- Our fees to submit annual accounting, audit and tax reports (all three combined) is US$4,950.
- For an active trading company, the accounting and tax fees are an estimate of our fees to efficiently and effectively discharge your annual company accounting, auditing and tax obligations. Following receipt of a set of draft accounting numbers from your company, Healy Consultants Group PLC will more accurately advise accounting and tax fees. For a dormant company, our fee is only US$950.
- Healy Consultants Group PLC will be happy to provide a monthly book-keeping service for your Canadian company. Typically, our Accounting & Tax Department (ATD) team will receive a Dropbox of data from our Client and will immediately thereafter timely supply our Client with i) a general ledger ii) trial balance iii) monthly and quarterly management accounts and iv) monthly and quarterly government reporting, including sales tax and payroll. For further details of our book keeping service and our fees, visit this page.
Legal and compliance
- Every Canadian company must have at least one director and one shareholder. At least one director must be resident in Canada for companies registered under the federal law and those registered with the states of i) Alberta, ii) Ontario, iii) Manitoba, iv) Saskatchewan and v) Labrador;
- Canada company incorporation can be done online if the shareholders and directors already have a Canada social security number;
- Every Canada company must obtain Corporation Income tax Account immediately.
Through the contact details below, communicate with Healy Consultants Group PLC to timely, accurately and completely discharge your Canadian entity legal, accounting, audit and tax obligations.