Preparing for Corporate Year-End Taxes: Part 1 – Previous Year’s Information
Preparing for Corporate Year-End Taxes: Part 2 – Bookkeeping
Preparing for Corporate Year-End Taxes: Part 3 – Payroll Records
Preparing for Corporate Year-End Taxes: Part 4 – Remittances
Preparing for Corporate Year-End Taxes: Part 5 – Other Important Documents
This article explains the information needed from 4 different remittances to prepare for corporate year-end taxes.
Tax preparation is a tedious yet necessary task that all businesses must go through as they will inevitably need to be filed at the end of each fiscal year. While it may be a daunting task, and far from exciting for most, knowing the different documents and aspects involved can help ease the process for both the business and accountant. Awareness of what will be required from the business will also allow the chance to prepare certain items throughout the year, which helps in avoiding or diminishing the stressful scramble come year-end.
In Part 4 of this series, we explain the information required come tax time for 4 different remittances that must be completed throughout the year for most businesses.
Goods and Services Tax (GST) remittances are mandatory for all businesses that have an income of over $30,000, so most businesses will need to register for a GST #. Payments are made once a GST remittance has been filed, which is done throughout the year to the Canada Revenue Agency (CRA) for most businesses. The filing deadlines will vary depending on the business’s filing period. The payment deadline also depends on the filing period and is usually due at the same time as the GST return is submitted. The acceptance is for annual remitters who pay their GST by instalments.
When the GST payments are made, there are 2 steps that are important for year-end taxes. The 1st is that the GST payments are recorded in the accounting software to properly track the business’s financials. The accounting records must also support the information provided on the GST/HST returns, meaning the goods and services must be described in enough detail to determine whether or not GST applies. The records must also allow you to calculate:
- the amount of GST/HST you collected
- the amount of GST/HST paid and payable on your eligible business purchases and expenses
- the amount of tax to be refunded, rebated, or deducted from your net tax
The 2nd is to make sure the accountant performing taxes has access to the remittance and payment records. These records provide details necessary to complete the corporate taxes, and can be accessed through the business’ CRA My Business Account. This can also be accessed by the accountant if they have been added to Represent a Client.
Businesses operating within Saskatchewan must apply for a Provincial Sales Tax (PST) number to collect and remit PST on sales or payments of goods and services. Return frequencies depend on the amount of tax reported per year. The PST return must be submitted with the payment by the due date to avoid penalties and interest charges. The easiest way to file and pay PST returns is using Saskatchewan Electronic Tax Service (SETS), which is an online service. The return can also be done by mail, and payments can be paid through online banking.
The same accounting records must be kept as explained above in the GST section. For the remittance records, they can be accessed for the accountant through the SETS account. Alternatively, for both GST and PST, paper copies of the payment receipts and remittances can be kept, although this is usually more tedious than having electronic copies straight from the government portals used when making payments or doing remittances.
3. Payroll Source Deductions
- Businesses in Canada must register for a payroll program account if they:
- pay salaries or wages
- pay tips or gratuities
- pay bonuses or vacation pay
- provide benefits or allowances to employees
- need to report, deduct, and remit amounts from other types of remuneration (such as pension or superannuation)
When salary, wages, or other taxable benefits are paid, there are source deductions taken from those payments. Source deductions in Canada include Income Tax (Provincial and Federal), Canada Pension Plan (CPP), and Employment Insurance (EI). All of the source deductions must be calculated, deducted from employees’ pay, then remitted to the CRA. The remittance frequency decides the due dates for the payroll remittances, and is based on the remitter type which is decided by the average monthly withholding amount (AMWA).
It is important that proper payroll records are kept to support the information reported for the source deductions, which we explain in Part 3 of this series. For remittance and payment records, these can be accessed through the CRA the same way as explained in the GST section above.
Under the Saskatchewan Workers’ Compensation Board (WCB) governing legislation, The Workers’ Compensation Act, 2013 (the Act), all employers operating in industries covered under Saskatchewan’s legislation who hire workers on a regular, casual or contractual basis must register and create an account with the WCB. To estimate the premiums due throughout the year, at the beginning of each year employers must provide a payroll estimate to the WCB though an Employer’s Payroll Statement (EPS). Payroll estimates must be current as the premiums are due in the coverage year they are applied to, so employers are able to revise their payroll estimate anytime during the year.
Employers will be sent a statement of account which includes the premium rates and due dates, which are due in 2 installments on April 1st and September 1st of the same year. The premiums can be paid online through the WCB account. For year-end taxes, the accountant will need the WCB statements and payment information, which can be accessed online through the WCB account. It is also important that the payroll and accounting records include the WCB premium payments. For all of the sections above, the accountant will need access to the remittance payment records as well to see if there are any penalties or interest that was paid due to late payments or remittance errors.
Year-End Remittance Requirements
As described in this article, there is a great deal of information that goes into the different government remittances, and most of that information is vital for an accountant when it comes time for year-end taxes. Being aware of the details for GST, PST, payroll source deductions, and WCB remittances will help in ensuring the records are readily available for the accountant come tax remittance time.
Part 5 in this series explains various other important documents that are valuable to maintain throughout the year to prepare for corporate year-end taxes.
Download this resource Preparing for Corporate Year-End Taxes: Part 4 – Remittances.