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Canada Tax Accounting 2022: Rates and Key Impacts

Transparency gets demanded in today’s complicated business and tax landscape. As per International Financial Reporting Standards (IFRS), Accounting Standards for Private Enterprises (ASPE), or U.S. generally accepted accounting principles, certain changes to the Canadian income tax rate in 2022 and other factors may need to take into account in your year-end financial statements. Buchprufer Solutions are well-updated with tax changes and known for Tax Accounting services.

  • Canada’s tax system is governed by the federal Income Tax Act and its rules, provincial and territorial sales tax, corporation tax, and other regulations. A Canadian resident is subjected to tax on income earned throughout the world, while a non-resident is taxed only on income earned in Canada.
  • The Department of Finance Canada creates and assesses federal tax policies and legislation in the areas of personal income taxation, corporate income taxation, and sales and excise taxes. The Canada Revenue Agency is in charge of tax collection and the interpretation of tax law.

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Substantively enacted and enacted corporate tax rates for 2022

  • For taxation years beginning after 2021 and before 2029, the federal general corporate tax rate and the federal small business tax rate for qualified zero-emission technology manufacturing and processing revenue have reduced to 7.5% (from 15%) and 4.5% (from 9%), respectively.
  • The decreased rates are gradually phased down for tax years beginning in 2029 and phased out for tax years beginning after 2031.
  • The federal and provincial general corporate income tax rates stay constant for all provinces in 2022 and subsequent years. Except as mentioned above, the federal small business income tax rate is not changed in 2022.
  • However, from January 1, 2022, the small business income tax rate on Prince Edward Island was reduced to 1% (from 2%).
  • Furthermore, Saskatchewan retrospectively extended its temporarily reduced small company income tax rate of 0% to June 30, 2023. (From June 30, 2022).

Saskatchewan also postponed the dates of other anticipated rate changes by one year, causing the rate to rise to 1% on July 1, 2023, and then drop back to 2% on July 1, 2024.

Additional taxes for banks and life insurers

  • For tax years ending after April 7, 2022, groups of banks and life insurers are subject to an extra 1.5% income tax on taxable income exceeding $100 million (the taxable income exemption may be distributed among the group members).
  • If the taxation year straddles April 7, 2022, the additional tax is prorated for the number of days after that date.
  • The Canada Recovery Dividend also imposes a one-time 15% tax on bank and life insurer groups.
  • The 15% tax is calculated under these regulations based on the average “group” taxable income over $1 billion for the 2020 and 2021 taxation years.
  • For the 2022 tax year, affected firms are obligated to pay the Canada Recovery Dividend in five equal installments.

Why do you need a CPA in Canada?

The taxes system in Canada is incredibly complicated and even unique in certain ways. In addition to local taxes, there are also federal, provincial, and other taxes. Every citizen, resident, and non-resident who earns income from the nation is subject to them.

  • Distinct provinces and localities have different local tax laws, but regardless of these variations, people and legal entities must pay local taxes and maintain accounting records.
  • If you own a large company, you most likely have several professional accountants on staff; however, what if your company is small and you cannot afford an accountant, or if you are a private individual who requires accounting services only once a year when filling out and submitting a tax return form?
  • In this situation, hiring a professional accountant is advised. At Buchprufer, our team of experts ensures the utmost quality for Accounting Services in Canada.

How may Buchprufer accounting services in Canada assist you?

  • Accuracy and Timeliness:
    Our tax accountants in Canada are experts on Canadian tax law and will guarantee the expected outcome the timely and accurate completion of declarations, reports, plans, etc. At the same time, you can relax knowing that everything is operating as it should and concentrate on other matters, like future growth.
  • Professionalism:
    All of our staff members are highly skilled and qualified accountants. Our services are as reliable as those offered by a full-time accountant, so you can be assured that the process gets done.
  • Affordable and Time-saving:
    You only need to contact our business, explain your objective, and you’re done. We will handle all accounting tasks. The cost of our services will be significantly less than that of hiring an accountant.

The tax accounting and audit support specialists at Buchprufer can assist you in determining how these tax law changes may affect the financial statements of your company. We can assist your company in managing its responsibilities under Canadian, US, and international financial reporting standards for income tax accounts and disclosures.

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