Hi guys,
So I submitted YE’s return for one of my clients as Dec 31, but clients actually started collecting Revenue and having Expenses on September 1, so YE suppose to be at Aug 31. Is there an effective way to fix this mistake or I need to submit a letter to CRA and wait for them to approved of it before I could resubmit the correct returns?
You can choose any year-end within 53 weeks of the date of incorporation for the first year-end. There’s nothing that says it has to be or should be one year after beginning business operations. You can request to CRA that the year-end be changed and explain the reason, but they might reject the change.
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The first question should be: what is the legal status of the client - is it a partnership, a sole propreitorship or a corporation? The rules are not the same for the different entities. @iain.fyffe assumes you represent a corporation, but if it is not a corporation, his answer is wrong.
The only difference between a partnership and a corporation is that partnerships don’t have (up to) 53 weeks for their first year-end, it’s limited to 12 months. Changes to a partnership’s year-end have to be approved by CRA, similar to a corporation.
Proprietorships can choose an alternate year-end, but that has to be elected into, and if you don’t elect it when filing the return I’d suggest CRA will see that as an acceptance of the default calendar year-end. They might accept a late-filed election I suppose.
So regardless of the business type:
(1) The timing of the start of business activities does not dictate your fiscal year-end, it’s always either a free choice or it’s the calendar year-end depending on the circumstances, and
(2) Once you have filed using a particular year-end, you need approval to change it, which you may not get.
Same two points as before.
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Sine the title to this thread indicates the filing of a T2……Corporation it is.
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Uhhh, i guess I should read it all before commenting! Thanks!