- What is the corporate income tax instalment threshold?
- What is the instalment threshold for corporations proposed in the 2007 Budget?
- Are deadlines for instalment payments for corporations affected by the Budget 2007
- How will quarterly payments be calculated?
- How will corporations know what their instalment payments are?
Q.1 What is the corporate income tax instalment threshold?
A.1 Corporations are required to make monthly instalment payments unless the total amount of certain corporate taxes for the year is less than $1,000.
Q.2 What is the instalment threshold for corporations proposed in the 2007 Budget?
A.2 The 2007 Budget proposes to increase the instalment threshold to $3,000.
Q.3 Are deadlines for instalment payments for corporations affected by the Budget 2007 announcement?
A.3 The balance-due day for the final payment of corporate taxes remains unchanged.
However, starting in the 2008 tax year, it is proposed that certain eligible Canadian-controlled private corporations (CCPC) be allowed to make quarterly instalments instead of monthly ones, provided that they meet the following criteria at the time that the payment is due:
- The CCPC has a perfect compliance history;
- The CCPC has claimed a small business deduction for the current or previous taxation year; and
- The CCPC, together with any associated corporations, has taxable income of $400,000 or less and taxable capital employed in Canada of $10 million or less.
Note: For the purposes of quarterly payments eligibility, a perfect compliance history means that, throughout the preceding 12 months, a corporation has remitted, as and when required, all amounts with respect to income tax source deductions, GST/HST, Canada Pension Plan contributions and Employment Insurance premiums, and filed all tax returns as and when required.
The 2007 Budget proposes that quarterly payments would be due on the last day of each quarter of the corporation's tax year.
Q.4 How will quarterly payments be calculated?
A.4 The 2007 Budget proposes that quarterly instalments be calculated using one of the following methods:
- Four instalments each equal to 1/4 of the estimated tax payable for the current taxation year;
- Four instalments each equal to 1/4 of the tax payable for the preceding taxation year; or
- In the case of the first quarterly instalment, 1/4 of the tax payable for the second preceding tax year, and in the case of each of the remaining three instalments, 1/3 of the amount, if any, by which the tax payable for the preceding taxation year exceeds the amount determined to be the first quarterly instalment.
Q.5 How will corporations know what their instalment payments are?
A.5 Corporations will be able to consult the CRA website and the Instalment Guide to determine their instalment payment obligations.
