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Video instructions and help with filling out and completing Fill Form 2220 Corporations

Instructions and Help about Fill Form 2220 Corporations

Hi my name is Alan Madden I am a chartered accountant and a tax expert in the Toronto Mississauga and Oakville regions of Ontario Canada today's short video is about how to prepare a corporation income tax return for a business in Canada I'm going to walk you through step by step the corporation income tax return process including the completion of all applicable schedules the hope is by the end of this video you'll be able to complete your own corporation income tax return so let's start in this example I'm using a fictitious company called tech consulting company Inc let's look at the income statement of this particular company tech consulting Inc has a December 31st 2022 year and with sales of $200,000 and expenses listed below totaling eighty four thousand dollars at the bottom you'll see profit revenue minus expenses of a hundred and sixteen thousand dollars it's a profitable company let's take a look at the balance sheet or the statement of worth of tax consulting company Inc tech consulting company Inc has cash assets of eighty three thousand one hundred dollars so it's a healthy balance sheet total assets of a hundred forty nine thousand one hundred total liabilities of thirteen thousand and equity representing the money retained inside the corporation of 136 100 before you start the preparation of your corporate income tax return you'll require both the income statement and balance sheet of your company now where do we get the schedules for the preparation of the tax return that's an easy answer it can be obtained from the Canada Revenue Agency's website zero four which is shown at the top bar CRA - AR CGC dot CA under search the site I'm now going to look for the schedules and I will type in t2 returns and schedules I'll hit the search button the 8th link under the search results is t2 returns and schedules it provides a listing of all of the schedules that you could ever possibly need for the preparation of a company tax or chart in reality you only need a few of these schedules so pick and choose the ones that you require let's start with the basic schedules for the preparation of the tax return schedule 100 the balance sheet is a summary of the balance sheet information which I showed to you previously total assets of one hundred forty nine thousand one hundred and total liabilities of thirteen thousand with equity of 136 one hundred the next schedule is schedule 125 the income statement again this schedule is a summarization of your company's income statement Harry we can see the sales operating expenses and net income for accounting on line nine ninety seven zero for a hundred and sixteen thousand dollars those schedules are simple to complete the next schedule schedule fifty is an information schedule on here you simply report the name of each shareholder in this case I put myself Alan Madden social insurance number and the number of shares owned schedule eight is the calculation of capital cost allowance on the tangible assets of the company owns this represents the wear and tear on the company's physical assets during the year the company acquired two categories of assets furniture for $15,000 and computers for $1000 both of which you can see in column three in column eleven the capital cost allowance is calculated they ston the depreciation rates in column eight twenty percent and a hundred percent computers have a special right off if they were purchased before February 2022 and that the entire computer purchase is tax deductible the full amount in any other case the half-year rule applies meaning that only half of the depreciation that would otherwise be applicable can be claimed in the year of acquisition so for furniture instead of 20% it's 10 percent or $1500 and the year of acquisition schedule one the calculation of net income for tax purposes which we're now looking at is the heart of the tax return on Schedule one we can see that our accounting income is a hundred sixteen thousand dollars coming from our income statement and schedule 125 meals and entertainment half of which are non deductible are added back one thousand of the two thousand dollars capital cost allowance of $2,500 representing the wear and tear on the assets is deducted after the add backs and deductions our net income for tax purposes is a hundred fourteen thousand five hundred now we go to the t2 corporation income tax return schedule two hundred this is an eight page form on the first page on box one I've disclosed the business number on boxes 2 to 18 on the top left I've disclosed the address of the head office I have not completed the mailing address or the location of the books and records because they are the same as the address of the head office I've entered the year on box 60 and 61 in this case my company has a 2022 calendar year your company's year may differ the answers to most of these are no on Box ATI check yes that the corporation is a resident of Canada and on box 40 on the left hand side I have checked that the Canadian corporation that I own in this example is a Canadian controlled private corporation meaning that it receives a beneficial tax rate on page two I've checked the boxes of the schedules that I'm preparing on page three I've entered in the additional information most companies do not use IFRS if they're small businesses I have entered in a box 284 the description of the services being provided consulting services 100% the rest of the schedule is the calculation of tax the small business deduction 19,000 465 the formulas shown their net income times 17% let's continue the base amount of part one tax on line 550 again is another formula which.

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