When we first meet with a new corporate client, we will obtain the necessary information to open the accounts. We will also gather additional information to create a baseline for how we can best assist our clients.
The first question we ask is: What is the fiscal year end of the corporation? The second question we ask is: Who are the shareholders? The third question we ask is: Who does the corporate accounting work and income tax filings (i.e. preparation of the financial statements and T2 – corporate income tax return)?
It is essential that your Portfolio Manager communicates with the professionals you work with, especially your tax accountant. In the majority of situations, we already know the accountant our clients use. If we don’t know them, we will always get consent from our client to connect with them.
Tax package sent to accountant
Annually, we prepare a tax package for our clients’ accountants, sending a secure email that includes the following items. (For the purposes of this article, we will assume a Dec. 31 corporate year-end date.)
• All transactions for the period Jan. 1 to Dec. 31 (exported into a spreadsheet format)
• Copies of all monthly statements (saved as PDF)
• Copy of the realized gain (loss) report for the period Jan. 1 to Dec. 31
• Copy of the Foreign Verification Statement (T1135)
• Copy of the investment council fee statement that can be deducted as an expense
• Copy of any letters of direction the clients signed during the year (journalling funds out of the company for repayment of shareholder loans, dividend payments, etc.)
• Any additional information specifically requested
Tax package received from accountant
Once the financial statements and tax returns are completed, we request that accountants send us the following:
• Copy of the latest financial statements
• Copy of the transmittal letter that outlines key items and instructions for the client
• Details of any cash flow required to fund corporate taxes, recommended instalment payments, and shareholder loan repayments
• Plan for wages or dividend payments for the year ahead to enable us to set aside appropriate levels of cash.
Tax calendar
Often it can be a little daunting for clients with corporations to stay on top of all the different dates, which are in addition to all the important personal dates we need to remember!
Spending the time to type in the key dates into your phone, with an annual repeat, will ensure your electronic calendar has all the important details. Another option is to create a physical calendar that you can refer to annually.
Below is a list of common key dates to help you get started. Dates assume a Dec. 31 fiscal year-end.
Jan. 15 — Process letter of direction to move funds from corporate account to non-registered account previously mapped out
Jan. 31 — Instalment due date if monthly
Jan. 31 — GST filing deadline and payment deadline if monthly
Jan. 31 — GST filing deadline and payment deadline if quarterly
Feb. 28 — Due date for T4 slips to be filed and issued
Feb. 28 — Due date for T5 slips to be filed and issued
Feb. 28 — Instalment due date if monthly
Feb. 28 — GST filing deadline and payment deadline if monthly
Feb. 28 — Payment of corporate income taxes due – two months after corporate year end date - see also the March 31 — for Canadian Controlled Private Companies (CCPC)
March 1 — Portfolio Manager sends tax package to accountant as noted above
March 31 — Payment of corporate income taxes due - three months after corporate year end date for CCPC that meet the three conditions
March 31 — Instalment due date if monthly
March 31 — Instalment due date if quarterly
March 31 — GST filing deadline and payment deadline if monthly
April 30 — Instalment due date if monthly
April 30 — GST filing deadline and payment deadline if monthly
April 30 — GST filing deadline and payment deadline if quarterly
May 31 — Instalment due date if monthly
May 31 — GST filing deadline and payment deadline if monthly
June 30 — Instalment due date if monthly
June 30 — Instalment due date if quarterly
June 30 — Filing due date for corporate tax return - six months after corporate year end date
June 30 — Filing form T1135 (Foreign Verification Statement) - six months after corporate year end date
June 30 — GST filing deadline and payment deadline if monthly
July 15 — Portfolio Manager to request Tax Package from accountant as noted above
July 15 — Process any cash flow components within the transmittal letter
July 31 — Instalment due date if monthly
July 31 — GST filing deadline and payment deadline if monthly
July 31 — GST filing deadline and payment deadline if quarterly
Aug. 31 — Instalment due date if monthly
Aug. 31 — GST filing deadline and payment deadline if monthly
Sept. 30 — Instalment due date if monthly
Sept. 30 — Instalment due date if quarterly
Sept. 30 — GST filing deadline and payment deadline if monthly
Oct. 31 — Instalment due date if monthly
Oct. 31 — Filing form T1124 (Information Return Relating to Controlled and Not-Controlled Foreign Affiliates) - ten months after the corporate year end date
Oct. 31 — GST filing deadline and payment deadline if monthly
Oct. 31 — GST filing deadline and payment deadline if quarterly
Nov. 1 — Review preliminary realized gain (loss) report to assess if tax-loss selling is necessary
Nov. 1 — Monitor the adjusted aggregate investment income (AAII) and determine if it is necessary to increase to $50,000 by realizing capital gains.
Nov. 30 — Instalment due date if monthly
Nov. 30 — GST filing deadline and payment deadline if monthly
Dec. 1 — Reassess to see if any position sold for tax-loss selling needs to be repurchased after 30 days
Dec. 5 — Process any donations in-kind prior to year-end date
Dec. 31 — Instalment due date if monthly
Dec. 31 — Instalment due date if quarterly
Dec. 31 — GST filing deadline and payment deadline if monthly
TBD — Insurance payments for corporate owned policies
TBD — Diarize any external accounts to consolidate on maturity (i.e. maturing GIC investments at the bank)
TBD — Payroll remittances based on remittance type
The above is an example of some of the common dates that our corporate clients should monitor to ensure that they are being completed.
Some of the best qualities to look for in the professionals you work with is the ability for them to communicate together and provide proactive advice. They must also be organized so that tax savings opportunities are discussed and also ensure that no regulatory filing dates are missed.
Kevin Greenard CPA CA FMA CFP CIM is a Senior Wealth Advisor and Portfolio Manager, Wealth Management with The Greenard Group at Scotia Wealth Management in Victoria. His column appears every week at timescolonist.com. Call 250.389.2138, email [email protected], or visit greenardgroup.com.
