T2 for 2022:
Corporation jurisdiction incorporated - Ontario (business is based and operates in Ontario)
However, the business had a few sales in BC in 2022 (first time they had out of province sales).
The service for the BC sales involved the work being completed in BC.
How would I go about recording these two BC sales in the T2 so the necessary provincial taxes are sent to the province of BC?
Are you asking for the preparation of the Corporate tax return, or for the Sales tax return?
If Sales Tax Return, is your client registered for BC-RST? If not, your client should only be filing a GST/HST return and the amounts for the sale go on the normal GST/HST Return.
If Corporate Tax Return, does your client have a permanent establishment in the province of British Columbia, as per subsection 400(2)? If so, you will be checking box 205 on your T2 return, then following the instructions. Note that merely deriving income from a customer located in another province does not result in a permanent establishment, nor does performing work in the other province (which is referred to as “surjorning”.)
Use Schedule 5 to report sales (and salaries, if any) in different provinces.
Atul
per your comemnt - “…the necessary provincial taxes…”; Have you collected PST ? (the new expanded Provincial Sales Tax (PST) registration requirements requires some business to register for PST in BC). If so, it may have to file PST Return. Other than that i don’t see any other requirement here.
Thank you all for your comments - I really appreciate it.
Please allow me to clarify a few items.
I’m asking about the Corporate income tax return.
The sole shareholder called BC sales tax office (before making any sales) and was told he didn’t need to register for PST but rather to collect GST and remit on GST/HST return.
Below is a timeline of what happened:
The shareholder originally lived in Ontario where he has the incorporated business and was not employed.
Pandemic hurt his business and he decided to get employed.
His opportunity came in the form of a job in BC - he got an offer and moved to BC in January 2022.
Although the primary reason for the move was employment he decided to try and expand the incorporated business from Ontario to BC, as well.
He was instructed to connect with a BC lawyer to ensure he was following the laws to operate in BC.
He secured some business in BC (one sale - just over $1,000.00) in addition to working a full-time job.
Meanwhile, things started to open up/get back to the norm in Ont and he had to fly back to Ont a few times during 2022 to keep things running smoothly with the business.
With everything back to normal in Ontario with his business he left his BC job and moved back to Ont in March 2023.
In all that time, what was the registered address for the head office of the corporation? (i.e. where was all corporate mail being sent?)
Did the shareholder do any of the legal work to register his corporation in BC? I don’t think Ontario is part of the “New West Partnership”, but there are likely other inter-provincial agreements in place to allow businesses (from other than MB,SK, and AB) to “continue” in BC. He probably just had to file the appropriate paperwork (or get a lawyer to do it).
Answering those questions should help you figure out what jurisdiction(s) the corporation operated in.
Despite the above, you could use T2 S5 (as noted by @atul) to allocate some of the income tax to provinces other than where the corporation is “based”. For total sales of $1,000 (thus minimal income tax), I expect CRA would not bother to investigate or ask the client to prove why the tax should be allocated to another province.