Best corporate tax lawyers in Canada as ranked by Lexpert
Corporate Tax lawyers advise on the taxation of public and private corporate, joint venture and other related and non-related business structures; tax planning respecting mergers and acquisitions, company restructurings, reorganizations, debt rescheduling and liquidations; taxation of commercial contract transactions, transfer pricing, leasing and other commercial agreements; taxation of natural resource extraction, refining and sales including various associated business structures; property related taxation particularly in relation to property development; taxation of financing transactions; taxation of various debt instruments, capital market instruments, funds and securitized assets; tax treaties, international corporate tax and tax aspects of international commercial transactions; taxation of foreign investment in Canada and the taxation of Canadian off-shore investment.
That laws doe corporate tax lawyers in Canada focus on?
Corporate income tax in Canada finds its legal basis in the Income Tax Act (or the Act), which is regulated by the Canadian Revenue Agency (or CRA). Anything from filing, paying, and disputes are made before the CRA as mandated by the Act. Altogether, corporate tax lawyers advise or represent their clients in any of these stages of taxation, before any of the administrative or judicial courts or tribunals.
There are two kinds of corporations – resident and non-resident – which has different rules as to corporate taxes.
All Canadian-resident corporations – which includes for-profit, non-profit, tax-exempt, or inactive – are required to file their corporation income tax return every tax year. This rule applies even if there is no taxable as to its computation. However, the only exempted corporations from filing their return are Crown corporations, Hutterite colonies and registered (not-for-profit) charities.
Non-resident corporations, on the other hand, are only required to file their corporation income tax return, when it conducted any part of its business in Canada, when the non-resident corporation had a taxable capital gain, or when the said non-resident corporation sold a taxable property in Canada. This rule still holds true even if the non-resident corporation claims exemption based on any tax treaty.
In addition, non-resident corporations can voluntarily file for a corporation income tax return, even if none of the above circumstances applies, when the said non-resident corporation would want to apply or claim a tax refund, or would want to pay Part I tax under the subsection 216(1) or 216.1(1) under the Act.
However, there are situations where a non-resident corporation are exempt from filing corporation income tax return. When it had sold or disposed of a taxable Canadian property, or had a taxable capital gain, these corporations are not required to file their return when no Part I tax of the Act is payable for that tax year; when the said non-resident corporation does not have any tax liability from the previous tax year; or when the taxable Canadian property is disposed of are excluded according to section 116 of the Act.
Filing of tax return (Section 150, the Act)
Corporation income tax return in Canada must be filed within six (6) months at the end of each tax year, which is the end of the fiscal year for a corporation. The deadline of the tax return would at the last day of the sixth (6th) month, if the end of the fiscal year is on the last day of the month. But if the end of the fiscal year is not on the last day of the month, then the tax return should be filed on the same day of the sixth (6th) month.
Payment of income tax (Section 153, the Act)
Generally, corporations would have to pay their income taxes on a monthly or quarterly basis, except for the total of Part I, Part VI, Part VI.1, and Part XIII.1 taxes payable is $3,000 or less, which is either for the previous or the current year.
Rates of income tax (Section 123, the Act)
The rate of the federal income tax is 38% of the corporation’s taxable income, as provided in Part 1 of the Act. It can be lowered to 28% after federal tax abatement, which reduces the provincial or territorial corporation’s taxable income in Part 1 by 10%. General tax reductions are discussed below.
In the provinces or territories, there are two levels of rates – the lower rate and the higher rate. The lower rate will apply to the deductions for the federal small businesses. On the other hand, the higher rate will apply to all other income.
Penalties (Section 162, the Act)
The CRA may impose the following penalties for corporations who violated any of the provisions of the Act. Litigations may ensue arising out of these penalties, and should this unfortunately happen, corporate tax lawyers may assist corporations in defending themselves before the court.
Late filing of tax returns (Section 162(1), the Act)
A 5% penalty will be imposed for the late filing of corporate tax returns. On top of the 5% would be the 1% for each complete month that the return has not yet been filed, after the supposed deadline, up to 12 months maximum.
Repeated failure to file tax returns (Section 162(2), the Act)
The penalty for a corporation which has repeatedly failed to timely file their corporate tax returns will be twice increased. In this case, the penalty is now 10% of the unpaid tax when the corporate tax return should have been filed, and an addition of 2% for each complete month that the return has not yet been filed, after the supposed deadline, up to 20 months maximum.
False statements or omissions (Section 163(2), the Act)
When a corporation, either knowingly or under circumstances of gross negligence, consented in making a false statement or omission on a corporate tax return, shall also be penalised either $100 or 50% of the amount of understated tax, whichever is higher. Hiring one of the best corporate tax lawyers listed below is essential in this instance.
Misrepresentations by a third party (Section 163.2(1), the Act)
Under the Act, a third party would be liable and penalised if the said third party would advise or help another, or would knowingly allow a taxpayer, in filing for a false return or false tax information.
Appeals (Section 169, the Act)
Any unfavourable decision on an assessment or reassessment by the CRA, or by the Minister of Finance, on any tax matter originally heard by the said two federal entities, can be appealed before the Tax Court of Canada (or the TCC). However, it is highly advisable to exhaust all available administrative remedies before CRA and the Minister, before proceeding with the TCC.
What does a corporate tax lawyer do in Canada?
Corporate tax lawyers in Canada assists clients, such as businesses and corporations, in ensuring compliance of filing and paying corporate income taxes with the CRA. Corollary to that, corporate tax lawyers also represent clients whenever there are tax disputes before the CRA and other tax authorities, when litigations have been commenced before any of the tax courts, which include appeals for the adverse decisions by the court. Before any merger, acquisition, divestiture, and reorganisations or restructurings can begin with, the services of corporate tax lawyers are also sought to guide these companies with regards to the tax responsibilities which may arise therefrom.
How do I avoid or reduce corporate tax in Canada?
Tax reductions (Section 123.4, the Act)
A general tax reduction is available on qualifying income at a net tax rate of 15%, but applicable only on taxable income that is subject to the 38% tax rate. However, this reduction is not applicable to any income that benefits from preferential corporate tax treatment. A corporate tax lawyer can help you determine this.
Canadian-controlled private corporations (or CCPCs) which claims small business deduction (or SBDs) may avail themselves of a net tax rate of 9% on the corporation’s active business income up to $500,000.
Not all enjoy doing taxes, but our corporate tax lawyers are here to help. Contact one of them for your corporate tax needs.