Corporate Tax Services

Corporate structure
GST/ HST
EHT & Payroll taxes
Voluntary Tax Disclosure program

Corporate Structure

Corporate tax preparation often becomes once a year task for many business owners and they do not often pay any attention to the tax planning. We design a tax structure for you with due consideration to IP protection and transfer pricing. We make sure that the corporate structure provides the required flexibility for the changing needs of both the business and the client.

GST/ HST

These taxes affect every transaction of your company; knowledge and good management of GST/ HST will result in Cash flow planning and tax compliance. We provide a complete range of services with respect to taxes. We’ll offer valuable tax planning advice, and handle your HST returns effectively. If your annual business income exceeds $30K, you are required to register for HST and file quarterly or annual returns.

EHT & Payroll taxes

If you have employees, you are required to deduct payroll taxes and remit them to CRA. In addition, you may be subject to remit EHT to the Ministry of Finance. We will do that work for you and file the necessary returns including issuing of T4’s and filing annual payroll returns.

Voluntary Disclosure program

The Voluntary Disclosures Program (VDP) is a broad-based program administered by the Canada Revenue Agency (CRA) that is aimed at permitting taxpayers to disclose historically inaccurate or incomplete tax reporting under a variety of circumstances in exchange for potential penalty (and, in limited circumstances, interest) relief. Subject to certain qualifying conditions, individuals, trusts, and corporations can utilize the VDP to disclose previously unreported domestic or foreign income or assets including undisclosed offshore bank accounts.

The voluntary disclosure program (VDP) allows a corporation to correct their tax affairs with the Canada Revenue Agency (CRA) without penalty or prosecution.  This can include:

  • Unreported or under reported income from a business.
  • Unreported capital gains.
  • Any error made on a previously filed tax return.

These applications with the CRA can cover both income tax and GST/HST. Similarly there is a voluntary disclosure program operated by the Ministry of Finance for EHT. We can assist you with these questions below and help you through the process:

  • How do I make a voluntary disclosure and where do I send it?
  • What are the conditions for a valid disclosure?
  • What is accepted and not accepted under the VDP?
  • Can I make an anonymous disclosure?
  • What should I expect after I make my disclosure?
  • When should I pay what I owe?

US tax services for Canadians Doing Business in the U.S.

Are you carrying on a trade or business in the U.S.? If you operate a business in Canada and have dealings with U.S. customers, you may be considered to be carrying on business in the U.S. Whether or not this is the case will depend on the facts of your involvement with U.S. customers. The level of activity required for “trade or business” status in the U.S. is relatively low. The following situations could mean that you are subject to U.S. tax:

  • If you make sales into the U.S. market, you may have a U.S. trade or business. If, however, you are merely accepting unsolicited purchase orders from U.S. customers, you probably will not be considered to be carrying on business in the U.S.
  • If you ship goods to the U.S. and title to the items passes in the U.S., you will likely be considered to have a U.S. trade or business.
  • The activities of your employees or agents may cause you to have a U.S. trade or business. For example, you may be considered to have a U.S. trade or business if your employees or agents travel regularly to the U.S. to make sales calls or if your employees or agents are doing marketing, demonstrating goods, or soliciting orders in the U.S. However, you will not likely have a trade or business from passive solicitation in the U.S. through mail order catalogues, or casual or infrequent trips to the U.S. by your employees.
  • If you (or your employees and/or independent contractors) perform employment or self-employment services in the U.S., you are considered to be carrying on a U.S. trade or business. For example, if you go to the U.S. on consulting contracts and work at customer sites, you will be considered to have a U.S. trade or business. Note, certain exceptions may apply.
  • If your technicians travel to the U.S. on a regular basis to help clients with installations, training, or servicing products, you may have a U.S. trade or business. However, such staff would have to be involved in selling products or negotiating additional services (in other words, generating income for you). It’s important to recognize when you start to have business connections with the U.S. because as soon as you do, you may be subject to U.S. tax, or at least have U.S. filing.

 

US State Taxation

You may also have U.S. state income tax obligations. You could be liable for state income taxes even if you do not have a permanent establishment (PE) in the U.S. The states are not bound by the federal treaty and therefore have the power to impose income tax even when the income is otherwise exempt by virtue of a provision in the Canada-U.S. tax treaty. Most U.S. states impose income tax on companies that carry on business in their state. The basis of state taxation varies; some states base their tax calculation on U.S. federal taxable income, whereas other states impose tax on Canadian companies that simply do business in the state, even if there is no PE. Many states impose income tax using a “nexus standard”. In other words, the taxpayer has some connection to the state, which is often a more encompassing concept than a PE. For example, New York State requires a company that has nexus with the state to file tax returns and pay tax on the portion of worldwide taxable income of the company that is allocated to New York State. Although the amount of tax may be small, there are penalties for not filing the return.

In addition, sales and other state tax should not be overlooked. If you make sales into a state, you need to determine whether there is a requirement to collect and remit sales tax in that state. Other state taxes which may apply are often calculated based on activity in the state, such as the Ohio Commercial Activity Tax which is calculated primarily as a percentage of revenue. You also need to consider franchise or capital tax, city or municipal sales tax, property taxes, industry specific taxes and possibly others. In addition, a Canadian company carrying on business in a U.S. state must generally register with the state in which it carries on business. There may be a registration fee or other legal or administrative requirements. It’s also important to remember that each state has its own filing requirements and deadlines that may differ from the U.S. federal requirements and deadlines. We can help you determine whether you have any state tax liabilities and what your filing requirements might be.

 

Summary

If you have business operations in the U.S., you could be liable for a myriad of different taxes. And there are a number of considerations to make in order to determine the appropriate filing requirements. Whether you are liable for U.S. federal income taxes on income from your business operations will depend on whether you are carrying on a trade or business in the U.S. through a U.S. permanent establishment.

Even if you determine that you are not liable for U.S. federal income taxes, you may still have U.S. filing obligations. Also remember that state income taxes may be determined on a different basis, and filing requirements can vary depending on the state. If you have business dealings in the U.S. or are thinking about expanding to the U.S., contact us to discuss your U.S. tax obligations.