Canada Business Corporations Act: Annual Returns Explained
If you are the owner of an active federal corporation, you have an extra filing to make aside from just your income tax return. Here’s what you need to know about your annual return and why it’s important for you to file it diligently every year.
What is an Annual Return?
An annual return is a legal document all active corporations are required to file with Corporations Canada every year under federal legislation. Whether your company is big or small, you are legally obligated to file your annual return.
An annual return is not your income tax return and is in no way related to it. An annual return is a corporate legal requirement and is completely separate from any filing obligations you may have with the Canada Revenue Agency (CRA). The annual return is basically just your way of notifying Corporations Canada that your company is still active.
Filing is easy, and you can do it online. The cost of filing an annual return is $12 via online filing or $40 via email or regular mail.
What is an Active Corporation and its Anniversary Date?
An “active” corporation is a corporation that is not dissolved, amalgamated with another corporation, or continues into another jurisdiction. An annual return must be filed within 60 days of the anniversary date of the corporation. This is the date on which the corporation was incorporated, amalgamated with another corporation, or continued into an act administered by Corporations Canada.
Is it Possible to File Early?
The answer is no. You can only file your annual return within 60 days after your anniversary date. For example, if your corporation was incorporated on August 12th, the annual return is due within 60 days of August 12th the following year and every year after that.
What Happens if a Company Fails to File Its Annual Return?
Corporations Canada has the power to dissolve a corporation that has not filed its annual returns. The agency will assume that your corporation is no longer operating and will take steps to dissolve it, which means they will legally end your company’s existence. Dissolution can have severe consequences for corporations, including not having the legal capacity to conduct business and losing their charitable status. If you don’t want that to happen to your business, you better make it a habit to file your annual return on time.
When you registered your corporation, you would have elected to receive notifications via mail or email. This is how Corporations Canada will notify you when your annual return is due. We recommend using the email option.
Corporations Canada knows that some small businesses aren’t always aware of these filing requirements, so there are some considerations in the filing. Corporations Canada will only dissolve a corporation when it has not filed for two years. You will also receive a final notice of warning if your corporation is in danger of being dissolved. You will then be given additional 120 days to file your annual returns, so you still have a chance to rectify your non-conformity.
It is the responsibility of every corporation, whether big or small, to file an annual return with Corporation Canada every year. Doing so will ensure that your business will not face dissolution in the future.
If you need help understanding tax filing and annual returns, turn to Blueprint Accounting, Inc. Our team of highly experienced accountants is focused on delivering efficient and effective tax and accounting services for small businesses. Partner with us today!