Every year corporations have to pay corporate tax. What’s often overlooked by most owner-managed companies is how the CRA tracks these payments. This is somewhat ridiculous.
CRA and the Ministry of Finance create a new account every fiscal year a corporation pays taxes. Either I am missing something huge or this is one of the most backwards administrative moves in history.
This creates one very large problem. Amounts constantly get posted to the wrong account/year. For instance, if your late paying your corporate taxes there is the possibility your payment may be applied to the following fiscal year. Instead of using logic or reasoning the CRA will begin to charge interest on the amount you “owe.” That’s the most common example I’ve seen. The whole idea makes no sense. There have been numerous times where I’ve had to call CRA and suffer through the following conversation.
Me: I got our client’s last notice of assessment I…
Agent: Yes they have some interest and penalties outstanding
Me: Yeah, thats because you applied their 2007 tax payment to the 2008 year
Me: So can you apply it to the correct fiscal year, which would cancel all these interest and penalties that have been charged?
Agent: Are you sure you want to do that?
Me: (pissed off at this point/coworkers laughing at me because I’m so pissed off) Yes please.
Agent: Ok, all done
There is a very simple solution to this problem. Use one account. That’s it. You know who uses this system? Banks. Could you imagine how ridiculous it would be if they didn’t? Everytime you were charged your monthly service charge the bank creates a new bank account for you. To track your service charge payments “easier.”
Worst of all, if this time actually gets billed it costs the client about $50.