How To Ensure Rental Income Within Your Corporation is Active Business Income
How To Ensure Rental Income Within Your Corporation is Active Business Income May 5, 2023 Tax Question: How do you ensure your rental income within
May 5, 2023
Question:
Do I need to file a GST/HST return?
Facts:
If your company is registered for a GST/HST program account, your company is required to calculate its net tax for each GST/HST reporting period and report it on your GST/HST return. Even if your company did not make any Canadian sales, did not collect any GST/HST and did not pay any GST/HST, your company is still required to file a Nil return. Without filing a Nil return, the Canada Revenue Agency (CRA) does not know that your company did not owe anything.
In order to complete most GST/HST returns, you will need the following information:
If the amount you collected or that became collectible by you is greater than the amount you paid or that is payable by you, then you will owe the CRA the difference. If the amount you paid or that is payable by you is greater than the amount you collected or that became collectible by you, then the CRA will owe you a refund of the difference.
Any instalment payments made during the year are then deducted from the net difference of the GST/HST collected less the GST/HST paid. Generally, if the instalment payments are less than the net difference, then you will owe the CRA the difference. If the instalment payments are greater than the net difference, then the CRA will owe you a refund of the difference.
If you fail to file your GST/HST return, the CRA can send you a demand to file a letter. Failure to file the return will result in a $250 Canadian penalty that is not deductible for income tax.
There is also a penalty if you file your GST/HST late unless the amount owing is Nil or is a refund. The penalty is calculated as follows:
(a) 1% of the amount owing
+
(b) 25% of the amount of (a) x number of complete months the return is overdue (maximum 12 months)
If you would like more information on this topic, please contact a member of the Empire CPA team by filling out the contact form below.
Canadian and foreign tax laws are complex and have a tendency to change on a frequent basis. As such, the content published above is believed to be accurate as of the date of this post. Before implementing any tax planning, please seek professional advice from a qualified tax professional. Empire, Chartered Professional Accountants will not accept any liability for any tax ramifications that may result from acting based on the information contained above.
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