Tax filing a dreaded task all corporations have to do yearly. Every year all corporations and businesses must file their taxes or face an audit. Let’s delve into tax filings for Ontario real estate corporations.
What is Tax Filing?
You can file your taxes online by logging into a website known as Iris. Iris is an online portal in which you can easily and efficiently file your income tax returns. If it is your first time filing your taxes, registration will be required before you can file your taxes.
After you register, you can log into Iris and file your income tax return. Those individuals who have National Tax Numbers can easily gain access by clicking on E-enrollment.
All About Tax Return
Tax returns are forms filed with tax authority; these include many things such as income, expenses, and other tax information. Tax returns allow the common man to calculate their liability, request refunds, or schedule payments. Usually, tax returns are filed annually, which comprises every purchase you ever made.
Sections of a Tax Return
Tax returns have many different areas that are used to determine your overall tax returns properly. These are major areas, which help you determine deductions and the tax credits you may be eligible for.
Income
The income section of a tax return shows all the income sources you had collected this year.W-2 forms are commonly used to easily and efficiently report all your income. This form includes all your wages, dividends, royalties, and capital gains.
Deduction
Deductions are important to decrease any tax liability you may have. These deductions depend on the jurisdictions, but some common features across all jurisdictions are saving plans, retirement, and alimony. For businesses, most of the expenses directly related are also deductible. Once all these deductions have been complete, the tax rate is determined on their AGI or Adjusted Gross Income.
Tax Credits
Tax credits are those amounts that offset tax liabilities. Similar to deductions, these are varying according to the jurisdiction present in that area. Credits are often given to the care of any dependents, senior healthcare, pensions, and education.
Paying your Taxes
After reporting every single income, deduction, and credit, the amount, in the end, is the owed taxes to the government. You can either pay the tax at once or schedule many payments periodically. If you are self-employed, you have the choice to pay later if you choose to do so.
Tax Credits in Ontario
There are two main types of tax benefits that can help you with living costs:
- Non-refundable tax credits, these types of tax credits can reduce the amount of tax you owe. A way of this happening is donating or giving gifts that may provide you a tax credit.
- Refundable tax credits can also reduce how much tax you owe. In Ontario, some examples are Ontario Energy and Property Tax Credit.
These benefits help in the many expenses that happen during our life journey, such as raising children and losing income.
Paying Tax in Ontario
All taxes paid in Ontario are paid to the CRA (Canada Revenue Agency). Income tax is all the tax that is applied to your yearly income. It is taken off your pay, pension, and send to the CRA. You may have to calculate your tax in certain cases and send a certain amount to the CRA.
Every year it is important to file a tax return to report all the income you’ve made, make sure you have paid the correct taxes, and access benefits.
Taxable Income
Any Taxable income that you earn inside and outside Canada is subject to the Canada Revenue Agency. There are many ways income can be received, such as money, services, and properties. You have to report the net value of these in your tax files to the CRA. Tax is even paid on those types of income that you do not have, such as checks.
- Full-time or part-time work
- Self-work such as earning tips
- Rental income by giving a portion out for rent
- Investments and pension
Non-Taxable Income
Not all income is taxable, and those types of income do not have to be reported. These income sources will not be taxed even if you do put those types of income on your tax returns. They are deemed as non-taxable by the government.
- Allowances
- Lottery and gifts
- Scholarships by school
- Welfare Payments
- Healthcare Benefits
Tax Filing for Ontario Real Estate Corporations
Tax Filing for Ontario Real Estate Corporations also has to pay taxes like any citizen. Every year these companies must file a tax return. The corporate deadline is similar to any corporation; this is six months after the year to file their taxes and three months to pay it.
Generally, corporations of real estate have to pay 50% taxes on rental income. There is also a 25% tax rate on the profit earned due to rental property; however, this value differs in the province. This is strikingly similar to what an owner of a property would pay.
When real estate corporations rent out for income, they have to pay much of their profit in taxes. The only exception to this event is if the corporation wants to sell a property, not rent it out. The money earned due to the sale may be taxed as business income. In this scenario doing it via corporation is much better as their tax can range from 9-15%
Conclusion
Paying taxes is never fun and can often be an annoying task. However, every year you must pay taxes. Tax filing for Ontario real estate corporations is no different than the standard procedure, and they too have to pay taxes on every type of income. It is important to determine the amount of taxes you have to pay and pay them within the specified time, and Tax filing for real estate corporations isn’t different at all.
Hotay Professional Corporation
315 Traders Boulevard East, Unit #4
Mississauga, ON
L4Z 3E4
