Taxation Info-Guide

The Taxation Info-Guide is designed to help you navigate through the federal, territorial and municipal government programs, services and regulation related to taxation that may apply to individuals starting or operating a business in Yukon. Although most of the questions will be answered in an Info-Guide, the list is by no means exhaustive. The selected items provide a helpful overview of the programs, services and regulations in a related area.

TABLE OF CONTENTS

1. Tax Information for Starting A Business
1.1 Municipal Taxes
1.2 Territorial Taxes
1.3 Federal Taxes
1.4 Federal Income Tax

2. Tax Credits
2.1 Small Business Investment Tax Credit
2.2 Yukon Mineral Exploration Tax Credit
2.3 Research and Development Tax Credit
2.4 Scientific Research and Experimental (SR&ED) Program

3. Professional Services
3.1 How do I find a professional bookkeeper or chartered accountant?
3.2 Selecting Professional Services

4. Information Services
4.1 Finance and Taxation Information for Enterprises
4.2 Forms and Publications -- Internet Ordering Service
4.3 Guide for Canadian Small Businesses
4.4 Sevices of Income Tax Rulings and Interpretations Directorate
4.5 Tables on Disketee - TOD -- Payroll Deductions
4.6 Corporate Internet Filing

5. Management Services
5.1 Business Window
5.2 New Employer Visits
4.3 Social Insurance Number (SIN)

1. Tax Information for Starting A Business

1.1 Municipal Taxes

Business owners pay property taxes at the municipal level. At present municipal governments in the Yukon do not collect a municipal business tax.

For more information contact your local municipal government. See the document Yukon Municipal Government Directory for a listing of incorporated municipalities including their contact information.

1.2 Territorial Taxes

Businesses operating in the Yukon may be subject to the following taxes and programs depending on the nature of their business:

• Yukon Income Tax
• Fuel Tax
• Tobacco Tax
• Insurance Premium Tax
• Beverage Container Program

For more information on Yukon Income Tax, Fuel Tax, Tobacco Tax, Insurance Premium Tax and the beverage Container Program, call the Government of Yukon (Department of Finance) at (867) 667-5343 / Toll Free (In Yukon) 1-800- 661-0408, local 5343 or visit their Website at http://www.finance.gov.yk.ca/general/taxation.html

Unlike many provinces in Canada, the Government of Yukon does not charge a Provincial/Territorial Sales Tax (PST), also known as the Retail Sales Tax (RST).

For more information, call the Government of Yukon (Department of Finance) at (867) 667-5343 / Toll Free (In Yukon) 1-800- 661-0408, local 5343 or visit their Website at http://www.finance.gov.yk.ca/general/taxation.html

1.3 Federal Taxes

Below are several key federal tax regulations that start-up businesses must be aware of:

Goods and Services Tax (GST) and Harmonized Sales Tax (HST) - Canada Revenue Agency (CRA)

Most persons and organizations engaged in commercial activities in Canada who have annual worldwide, taxable sales of more than $30 000 must register for and collect the Goods and Services Tax / Harmonized Sales Tax (GST/HST).

All taxi operators must register for GST/HST, regardless of their revenues.

For further information, see the document Goods and Services Tax and Harmonized Sales Tax - GST/HST, call 1-800-959-5525 or visit the Web site http://www.cra-arc.gc.ca/tax/business/topics/gst/menu-e.html

GST/HST and the Indian Act - Canada Revenue Agency (CRA)

Under Section 87 of theIndian Act, the personal property of an Indian or Indian band situated on a reserve and their interests in reserve lands are not subject to tax. The application of the GST/HST is consistent with provisions of the Act.

Information for Aboriginal People

• For information about tax and customs benefits and requirements under the Canadian Indian Act, see Information for Status Indians.
• For examples of how the Indian Act exemption applies to employment income and other related income, see the Indian Act Exemption for Employment Income Guidelines.

For further information, see the document GST/HST and Indians or call 1-800-959-5525.

Business Number (BN) - Canada Revenue Agency (CRA)

The Business Number (BN) is a reference numbering system that replaces the multiple numbers businesses required to deal with government. The BN is designed to help businesses reduce costs and increase competitiveness; it also increases government efficiency and helps it deliver one-stop service at Business Windows.

Who must obtain a Business Number (BN) for the GST/HST?

If your total annual sales are less than or equal to $30,000, you are considered to be a small supplier and are not required to have a BN for the purpose of GST. If you do not obtain a BN, you do not charge GST/HST.

For further information see the document Business Number - BN, call 1-800-959-5525 or visit the Website http://www.cra-arc.gc.ca/tax/business/topics/bn/menu-e.html

Excise Taxes and Excise Duties - Canada Revenue Agency (CRA)

When goods are manufactured in Canada, excise tax is payable at the time the goods are delivered to the purchaser. When goods are imported, excise tax is payable by the importer, at the time the goods are imported.

Excise duties are charged on spirits, wine, beer, and tobacco products manufactured in Canada. There is also a special duty which applies on imported spirits delivered to or imported by a licensed user. Both, theExcise Act andExcise Act, 2001 sets out the rates of excise duty for these goods.

For further information, see the document Excise Taxes and Excise Duties, call 1-800-959-8287 or visit the Web site http://www.cra-arc.gc.ca/tax/technical/exciseduty-e.html

Income Tax - Payroll Deductions

Under the Income Tax Act, an employer is required to withhold any amounts relating to income tax from an employee's paycheque. As an employer, you are holding these deductions in trust for your employees; therefore, you are expected to keep these funds separate from the operating funds of your business.

T1-General Income Tax Return - Canada Revenue Agency (CRA)

All individuals use a return to report income and determine their income tax obligations under the laws of Canada and of all provinces and territories, except Quebec. (Quebec residents must use a separate provincial return for their provincial income taxes.) Non-incorporated self-employed individuals may also require supplementary guides, to determine their personal income tax obligations.

For further information, see the document Income Tax Returns - T1 General Income Tax and Benefit Return, call 1-800-959-5525 or visit the Web site http://www.cra-arc.gc.ca/menu/EmenuLBA.html

Income Tax Returns: the T2 Corporation Income Tax Return and the T2 Short Return - Canada Revenue Agency (CRA)

Under theIncome Tax Act , all corporations have to file a T2 orT2 Short return, even if there is no tax payable. This includes non-profit organizations*, tax-exempt corporations and inactive corporations. The only exception to this rule is a corporation that was a registered charity throughout the year.

For further information, see the document Income Tax Returns - the T2 Corporate Income Tax Return and the T2 Short Return, call 1-800-959-5525 or visit the Web site http://www.cra-arc.gc.ca/E/pbg/tf/t2/README.html for T2 Corporation Income Tax or http://www.cra-arc.gc.ca/E/pbg/tf/t2short/README.html for T2 Short Return.

Objections and Appeals/Income Tax Act/Excise Tax Act - Canada Revenue Agency (CRA)

TheIncome Tax Act and theExcise Tax Act allow taxpayers to formally dispute a tax assessment. Canada Customs and Revenue Agency appeals officers then impartially review the assessment.

For further information, see the document Objections and Appeals - Income Tax Act/Excise Tax Act, call 1-800-959-5525 , or visit the Web site http://www.cra-arc.gc.ca/E/pub/gm/31-0/31-0-e.html

Trust Accounts Division - Canada Revenue Agency (CRA)

The Trust Accounts Division works to ensure that employers and workers meet the withholding, remitting and reporting requirements of theIncome Tax Act, theCanada Pension Plan, theEmployment Insurance Act and theExcise Tax Act . It also ensures they meet the requirements for provincial tax withheld at source, for all provinces except Quebec.

For further information, see the document Trust Accounts Division, call 1-800-959-5525 or visit the Web site http://www.cra-arc.gc.ca/tax/business/topics/payroll/t4032jan04/menu-e.html

1.4 Federal Income Tax - Government of Canada

How is income tax administered in the Yukon?

Yukon businesses are required to pay income tax to the Government of Canada and Government of Yukon (see Yukon Income Tax above). Both levels of government have a separate tax rate. Canada's Personal and Corporate Income Tax AND Yukon's Personal and Corporate Income Tax are administered by the Government of Canada (Canada Revenue Agency). Tax returns and payments for both levels of government are made directly to the Government of Canada. For more information on Federal and Yukon personal tax rates and corporate tax rates, call the Government of Yukon (Department of Finance) at (867) 667-3074 / Toll Free (In Yukon) 1-800- 661-0408, local 3074 or visit the Web site http://www.finance.gov.yk.ca/general/income_tax.html

Taxes on Sole Proprietorships and Partnerships

Sole proprietorships and partnerships can deduct the same expenses from taxable income as corporations can. These expenses must relate to the generation of business income. However, your business income, or share of the business income, in a partnership, is taxed personally. You may have to pay your income tax by installments. You may also need to make installment payments for Canada Pension Plan contributions on your own income. Remember to budget for these payments.

For more information on income tax for sole proprietorships and partnerships, tax returns, to obtain tax guides, or to open an installment account, contact the Canada Revenue Agency at 1-800-959-5525 or visit their Web site at http://www.cra-arc.gc.ca/tax/business/topics/solepartner/menu-e.html

Corporate Taxes

Corporate income tax rates vary depending on the type of business and its net income. As of April 2005, the combined federal / territorial corporate income tax rate is 39.1% for general businesses and 19.1% for small businesses. The small business threshold (the amount of income eligible for the small business tax rate) increased from $250,000 to $300,000 as of January 1, 2005. Yukon does not have any territorial capital or payroll taxes, which are common in many other provinces and U.S. states.

Different forms of income, such as interest, royalties, income from foreign subsidiaries, capital gains and dividends, are treated differently, making corporate business taxes complicated and constantly changing.

For more information on corporate taxes, tax returns, territorial tax rates, installment payments, contact the Canada Revenue Agency at 1-800-959-5525 or visit their Web site at http://www.cra-arc.gc.ca/tax/business/topics/corporations/menu-e.html

2. Tax Credits

Yukon businesses may be eligible for one or more of the following tax credits:

2.1 Small Business Investment Tax Credit - Government of Yukon

The Yukon Small Business Investment Tax Credit (YSBITC) is a personal tax credit that reduces Yukon income tax for eligible investors who invest in eligible business corporations making qualified investments.

For more information, call 1-867-667-3014 / Toll Fee (In Yukon) 1-800- 661-0408, local 3014, see the document  Yukon Small Business Investment Tax Credit (YSBITC)  or visit the Web site http://www.economicdevelopment.gov.yk.ca/general/sbitc.html

2.2 Yukon Mineral Exploration Tax Credit - Government of Yukon

The Yukon Mineral Exploration Tax Credit is a refundable corporate and personal income tax credit of 25% of eligible mineral exploration expenditures incurred by eligible individuals and corporations conducting off-minesite exploration in the Yukon, between April 1, 2001 and March 31, 2007.

For more information, call ( 867) 667-3074 / Toll Free (In Yukon) 1-800-661-0408, local 3074, see the document  Yukon Mineral Exploration Tax Credit (YMETC)  or visit the Web site http://www.emr.gov.yk.ca/mining/ymetc.html

2.3 Research and Development Tax Credit - Government of Yukon

The Yukon Research and Development Tax Credit is a refundable corporate and personal income tax credit of 15% (or 20% if paid or payable to Yukon College) for eligible expenditures incurred by a corporation after June 30, 2000 or by an individual after December 31, 2000.

For more information, call ( 867) 667-3074 / (In Yukon) 1-800-661-0408, local 3074, see the document  Yukon Research and Development Tax Credit  or visit the Web site http://www.economicdevelopment.gov.yk.ca/general/rdtaxcredit.html

2.4 Scientific Research and Experimental Development (SR&ED) Program - Canada Revenue Agency (CRA)

The federal government provides income tax incentives to Canadian taxpayers that conduct scientific research and experimental development (SR&ED) in Canada. The program encourages industry, including small business and start-up firms, to develop technologically advanced products and processes in Canada.

Claimants can apply for SR&ED investment tax credits for expenditures such as wages, materials, machinery, equipment, some overhead, and SR&ED contracts.

For further information, see the document  Scientific Research and Experimental Development (SR&ED;) Program , call 1-800-959-5525 or visit the Web site http://www.cra-arc.gc.ca/taxcredit/sred/menu-e.html

3. Professional Services

3. 1 How do I find a professional bookkeeper or chartered accountant?

Depending on the size and complexity of your business you may need to hire the services of a professional bookkeeper or chartered accountant to keep your financial records in order and to prepare and submit your tax returns. Doing your own accounting can be a time consuming and difficult process if you don't have financial skills to manage your finances. You might be better focusing other aspects of your business that you are more suited to.

Consult with other businesses in your community and find out whom they use to do their bookkeeping and tax returns. Or search through your telephone directory for bookkeepers, accountants and business consultants.

3. 2 Selecting Professional Services - Canada Business

The use of professional services is essential to the success of a small business. They can provide knowledge and expertise in the areas in which you may have little. They may also round out your management team to ensure your business is operating efficiently. As an entrepreneur, there are four main areas of professional services with which you may consult: accountant, lawyer, banker and insurance broker.

For further information, see the document Selecting Professional Services .

4. Information Services

4.1 Finance and Taxation Information for Enterprises - Statistics Canada

Statistics Canada maintains financial and taxation information on incorporated enterprises operating in Canada.

For further information, see the document Finance and Taxation Information for Enterprises, call 1-800-263-1136 , or visit the Web site http://www.statscan.ca

4.2 Forms and Publications -- Internet Ordering Service - Canada Border Services Agency (CBSA)

The Canada Border Services Agency (CBSA) provides Internet access to many of their forms and publications. Documents are available in several formats and can be viewed and printed or downloaded to the client's computer. In addition, most forms and publications can be ordered on line and subsequently mailed to the client.

For further information, see the document Canada Border Services Agency Forms and Publications -- Internet Ordering Service, call 1-800-959-5525 or visit the Web site http://www.asfc-cbsa.gc.ca/formspubs/request-e.html

4.3 Guide for Canadian Small Businesses - Canada Revenue Agency (CRA)

The Guide for Canadian Small Businesses provides useful information on a broad range of issues, such as how to set up a business, the GST/HST, excise taxes and duties, importing/exporting, payroll deductions, and income tax.

For further information, see the document Guide for Canadian Small Businesses , call 1-800-272-9675 or visit the Web site http://www.cra-arc.gc.ca/E/pub/tg/rc4070/rc4070eq.html

4.4 Services of the Income Tax Rulings and Interpretations Directorate - Canada Revenue Agency (CRA)

The Income Tax Rulings Directorate is the centre of income tax expertise within the Canada Revenue Agency (CRA); it is responsible for issuing advance income tax rulings and technical interpretations upon which its clients can rely. The Directorate's staff is well educated, trained and experienced and capable of effectively dealing with any income tax issue that arises.

For further information, see the document Services of the Income Tax Rulings Directorate, call 1-800-959-5525 or visit the Web site http://www.cra-arc.gc.ca/

4.5 Tables on Diskette - TOD -- Payroll Deductions - Canada Revenue Agency (CRA)

Tables on Diskette (TOD) is an electronic version of the payroll deduction tables. TOD calculates the amount of income tax, Canada Pension Plan (CPP) contributions and Employment Insurance (EI) premiums that the Canada Revenue Agency (CRA) requires an employer to withhold from an employee's income.

For further information, see the document Tables on Diskette - Payroll Deductions , call 1-800-959-5525 or visit the Web site http://www.cra-arc.gc.ca/

4.6 Corporation Internet Filing - Canada Revenue Agency (CRA)

The Corporation Internet Filing initiative provides the client with an easy-to-use, convenient, secure, and confidential option for filing your corporation income tax return. As a result, the CRA will benefit from reduced processing costs. Corporation Internet Filing streamlines the tax-filing process, provides the filer with an immediate confirmation of receipt and results in faster refunds.

For more information see the document  Corporation Internet Filing , call 1-800-959-5525 or visit the Web site at http://www.cra-arc.gc.ca/eservices/tax/business/corpnet/about-e.html

5. Management Services

5.1 Business Window - Canada Revenue Agency (CRA)

Businesses can get one-stop service at Business Windows in most Canada Revenue Agency (CRA) offices. Service is offered at the counter, by telephone or fax for the four Business Number (BN) accounts (i.e. corporate income tax, import/export, payroll deductions and GST). Business Window staff can also put business clients in touch with the right contact for other CRA business programs.

For further information, see the document Business Window, call 1-800-959-5525 or visit the Web site http://www.cra-arc.gc.ca/

5.2 New Employer Visits - Canada Revenue Agency (CRA)

Personalized visits to new employers help them to understand withholding procedures and to solve any trust accounts problems they may have.

For more information, see the document  New Employer Visits . The program is also detailed in the Employer's Guide - Payroll Deductions available on the CRA Web at http://www.cra-arc.gc.ca/E/pub/tg/t4001/README.html

5.3 Social Insurance Number (SIN) - Human Resources and Skills Development Canada - HRSDC

The Social Insurance Number (SIN) is a unique nine digit number used in the administration of various Canadian government programs.

For further information, see the document Social Insurance Number - SIN , contact your local Human Resource Centre of Canada (formerly known as the Canada Employment Centre), visit the HRDC Web site http://www.sdc.gc.ca/asp/gateway.asp?hr=en/cs/sin/0300/0300_in022.shtml&hs=sxn or check the government listings in your telephone directory.

DISCLAIMER
Information contained in this document is of a general nature only and is not intended to constitute advice for any specific fact situation. Users concerned about the reliability of the information should consult directly with the source, or seek legal counsel.

Links Policy
Some of the hypertext links lead to non-federal government sites which are not subject to the Official Languages Act and the material is available in one language only.