By Barbara Surry CPA CMA
Does my Condominium Corporation have to file a T2 (Corporate income tax return)?
Technically yes, however there are several Condominium Corporations that do not. Condominium Corporations for the most part, are exempt from corporate income taxes under subsection 149(l) of the ITA (as they are considered to be a not for profit organization). Filing the form is an easy task for the accountant who does the annual financial statements. There are no penalties to Condominium Corporations for late filing this return. Once a business number is obtained, filing the T2 becomes required.
Can my Condominium Corporation get the GST it pays back as an ITC (Input tax credit)?
If your Condominium Corporation is a residential Condominium Corporation, it is “exempt” under the provisions of GST. That means it cannot charge GST on the Condominium fees nor can it get back the GST it pays as an ITC (input tax credit).
If your Condominium Corporation is a commercial Condominium (occupied by businesses) or a mixed Corporation (part commercial and part residential) then there is a revenue test to see if the Corporation must charge GST. For commercial or mixed use Condominium Corporations, the revenue threshold is $50,000 per annum. If the annual fees from the commercial units is $50,000 or more, then the Corporation must charge GST on the fees to the commercial units, and it can apply to get the GST paid back in the same percentage of commercial fees to total condominium fees (residential plus commercial).
What is a T1044 (Not for profit information return)?
When your Condominium Corporation reaches $ 200,000 in total assets, or more than $ 10,000 in interest or rent revenue, starting the next fiscal year, the Corporation must file this return within six months of the fiscal year end. Once the Corporation has filed this return, it is required to file the return each year after that. Penalties do apply for late or non-filing this return if required to do so as follows: $25 per day to a maximum of $ 2,500 per year for each return not filed, or late filed.
What do we do if we determine we should have submitted these forms and did not?
It is time to consult with an accountant who understands how to submit a voluntary disclosure form. The T1044 forms will have to be prepared for each year that they were required and not done, and submitted with the proper voluntary disclosure forms. In most cases Canada Revenue will waive the penalties.
What do we have to do to obtain a Canada Revenue Business Number?
You will have to complete a form RC1. This form is available on the Canada Revenue website. It is not possible to apply for a business number for Condominium Corporations online like other businesses. It is most efficient to print out the form (there is an online fillable form available), and submit it to Canada Revenue along with a Form 8 (list of registered directors) and a CAD sheet (Condominium additional plan sheet). We have not had any success trying to register Corporations on line, but have with mailing in the RC1 with the suggested paper work. Form is available at: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/registering-your-business/register.html
Does my Condominium Corporation have to prepare T4’s?
If your Condominium Corporation has an employee, then yes, a T4 summary and supplementary must be prepared and submitted. The necessary remittances must be made on the 15th of each month. The T4 return can be prepared and submitted on line. These returns are due on February 28 of each year.
WCB returns (WCB coverage is required for employees) are also due on that date.
Most Condominium Corporations do not have employees, as contractors are usually used. If you hire an unincorporated person to do work for the Condominium Corporation, do check to see if they have WCB coverage and liability insurance. If they do not have their own WBC, the Condominium Corporation will have to have coverage. Consider issuing them a T4A for payments made, to ensure the amounts paid are property reported by them as income, which will require the Corporation to obtain their social insurance number. If you are paying them over $ 30,000 per annum and they are charging GST, be sure their GST number is noted on their invoices.