Last year, we wrote about the Canada Revenue Agency (CRA) moving more of its tax services on-line and requiring certain taxpayers and filers to file their tax information electronically in a Tax Factor 2010-01 article titled Mandatory Electronic Filing. We would like to provide a brief reminder and update on electronic filing, including requirements for certain Québec returns as well.
T2 Corporate Tax Returns: Effective for taxation years ending after 2009, corporations with annual gross revenue in excess of $1 million for a taxation year are required to file their T2 corporate tax returns over the internet (exceptions apply for certain corporations). Although electronic filing is required for corporate tax returns for taxation years ending after 2009, penalties for not filing electronically when required will begin to apply this year. The penalty will gradually increase from $250 for taxation years that end in 2011, to $500 for taxation years that end in 2012 and finally to $1,000 for taxation years that end after 2012.
Québec Corporate Tax Returns: Québec has also introduced mandatory electronic filing for their corporate tax returns. Effective for taxation years ending after May 31, 2010, certain corporations with a permanent establishment in Québec and with gross revenue in excess of $1 million will have to electronically file their CO-17 corporate tax returns. Certain corporations are excluded from mandatory electronic filing, similar to the federal exceptions. Québec will be imposing the same penalties as the federal government for not filing electronically when required, although the dates are adjusted for the later implementation date in Québec — $250 for taxation years ending after May 31, 2011, $500 for taxation years ending after May 31, 2012 and $1,000 for taxation years ending after May 31, 2013.
Information Returns: Beginning in 2010, filers of certain information returns (for example - T4s, T5s and T3s) that are submitting more than 50 information returns (i.e. slips) of one type are required to file their returns over the internet. If the number of information slips by type is less than 50, then the mandatory electronic filing requirement does not apply. Mandatory electronic filing relates to the date of filing and not the tax year of the returns being filed. Therefore, if you are filing information returns for prior years, these must also be filed over the internet. There will be a penalty for failing to comply with the mandatory internet filing requirement which will be assessed starting next year on January 1, 2012 (previously the CRA had indicated that penalties would start on January 1, 2011). The penalty will be calculated based on the number of slips that should have been filed electronically.
GST/HST and QST Returns: Effective for reporting periods beginning on or after July 1, 2010, certain registrants have to electronically file their GST/HST returns. See last year’s article for further details. Penalties for not filing electronically when required will apply. A $100 penalty will apply to an initial failure to file electronically and a $250 penalty will apply to each subsequent failure to file electronically. As well, there may be additional penalties for not reporting certain required information or for incorrectly reporting amounts. For these specific amounts, the penalties will generally be 5% of the amount plus 1% per month until the amounts are corrected (to a maximum of 10%) of the difference between what is reported and what should have been reported. Note that in Québec, the GST/HST is administered by Revenu Québec (RQ). Generally, businesses in Québec must file their GST/HST and QST returns with RQ. Similar to federal requirements, for reporting periods beginning on or after July 1, 2010, certain registrants must file their GST/HST and QST returns electronically.
If you have questions about the electronic filing requirements for any of the above noted returns, contact your BDO advisor.
Next section: Eligibility for the Disability Tax Credit and Registered Disability Savings Plan
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