Guide to the 2002 CT23 Short-Form Corporations Tax and Annual Return

Bulletin
Information Notice
Tax Tip
Published:  
Content last reviewed: December 1899
ISSN:
ISBN: (Print), (PDF), (HTML)

Contents

Overview

Format for 2002 Return

This Short-Form return may be used by certain smaller corporations that have a taxation year ending on or after January 1, 2000 (refer to eligibility criteria for using this return on page 5 of this Guide). In addition, to streamline the collection of corporate information, corporations are able to file a combined CT23 Short-Form Corporations Tax and Annual Return for the 2000 and subsequent taxation years. The CT23 Short-Form Corporations Tax Return collects the information required by the Corporations Tax Act. The Annual Return collects information required by the Ministry of Government Services (MGS) under the authority of the Corporations Information Act. For information on the Annual Return please refer to pages 12 to 16 of this Guide.

This Guide is to be used to complete the 2002 CT23 Short-Form Corporations Tax and Annual Return.

Acronyms used in this Guide are as follows:

  • CT23 - refers to the CT23 Short-Form Corporations Tax Return.
  • Annual Return - refers to the MGS Annual Return.
  • CT23 and Annual Return - refers to the combined CT23 Short-Form Corporations Tax and Annual Return.
  • References to the Corporations Tax Act are noted as - s.5 (meaning refer to section 5).
  • References to the Ontario Ministry of Finance Information Bulletins or Interpretation Bulletins are noted - Inf.B. 4003 or Int.B. 3004. Copies of these Bulletins may be obtained by calling the ministry at the numbers shown on page 2 or by visiting the ministry's website at ontario.ca/finance.
  • References to the federal Income Tax Act, Canada are noted as " fed".

CT23 and Short-Form Annual Return Format

The CT23 Short-Form Corporations Tax and Annual Return consists of 8 pages, including 2 pages of schedules relating solely to the MGS Annual Return (MGS Schedules A and K).

The Corporations Tax Act

This Guide is provided for convenience only. For legislative accuracy refer to the Corporations Tax Act, R.S.O. 1990, Chapter 40, as amended ("the Act"). Failure to comply with the provisions of the Act may result in loss of your Ontario Charter and dissolution and forfeiture of the corporation's property to the Crown.

Highlights of the 2002 Ontario Budget & other legislative changes

Income Tax Rate

  • The 2001 Budget set a schedule to cut the general corporate income tax rate to eight per cent by 2005. The first step in that schedule, which reduced the general rate to 12.5 per cent was accelerated to October 1, 2001.

    The 2002 Budget proposed to reschedule the corporate income tax rate cuts as follows:

    Revised schedule of Ontario Corporate Income Tax rate* (%)

      CURRENT
    RATE
    2002, 2003
    JAN. 1,
    2004
    JAN. 1,
    2005
    JAN. 1,
    2006
    General Corporate
    Income Tax Rate
    12.5 11 9.5 8

    * All tax rates would be prorated for taxation years straddling
    the effective dates.

Other Initiative

  • The deadline for acquiring an eligible school bus under the Ontario School Bus Safety Tax Incentive program would be extended to buses acquired before January 1, 2006.

Highlights of the 2001 Ontario Budget & other legislative changes

Changes to the following items were proposed in the 2001 Ontario Budget. Most of these items were introduced in Bills 45 and 127 which received Royal Assent on June 29 and December 5, 2001.

Income Tax Rate

  • Reduction of the general and small business corporate income tax rates.

Other Initiatives

  • Corporations can pay quarterly instalments if their tax payable in the current or preceding year is greater than or equal to $2,000 and less than $10,000. Applicable for taxation years commencing in 2002.
  • For taxation years ending after 2000, corporations filing the CT23 Corporations Tax Return will no longer be required to file a copy of their federal T2 return and related schedules, provided the federal documents have been filed with the Canada Revenue Agency (CRA).
  • Corporate income and capital tax Information and Interpretation Bulletins have been revised to remove obsolete information and update statutory references and are now available on the internet. Visit the ministry's website at ontario.ca/finance.

Do you have to file an Ontario Corporations Tax Return?

Exempt from Filing (EFF)

You may be exempt from filing a CT23 for the current taxation year, if your corporation meets all of the criteria listed below:

  • files a federal income tax return (T2) with Canada Revenue Agency;
  • has no Ontario taxable income;
  • has no Ontario Corporations Tax payable;
  • is a Canadian-controlled private corporation (CCPC) throughout the taxation year (i.e., generally, a private corporation with 50% or more shares owned by Canadian residents as defined in subsection 125(7) of the Income Tax Act, (Canada));
  • has provided its Canada Revenue Agency Business Number to the Ontario Ministry of Finance; and
  • is not subject to the Corporate Minimum Tax (i.e., alone or as part of an associated group whose total assets exceed $5 million or whose total revenues exceed $10 million).

Corporations are required to file an EFF Corporations Tax Return declaration form for every taxation year for which the status is claimed (effective for taxation years ending on or after January 1, 2000).

Corporations who are claiming EFF status may still be required by the Ministry of Government Services to file an Annual Return; please refer to page 12 of this Guide.

Financial Institutions (banks, credit unions, mortgage investment corporations, registered securities dealers, bank mortgage subsidiaries, loan and trust corporations and trustees to the public) and insurance corporations, do not qualify for the exemption from filing a CT23 for a taxation year.

EFF corporations filing losses to be carried back and applied to prior years must file a CT23 complete with all the related schedules for the taxation year of the loss and for the taxation year to which the loss is being applied.

EFF corporations filing losses to be applied to future years where the loss carry forward amount is different for Ontario and federal purposes must file a complete CT23 tax return for the taxation year of the loss and the taxation year to which the loss is being applied.

EFF corporations filing losses to be applied to future years where the loss carry forward amount is the same for Ontario and federal purposes, must keep sufficient information on hand to substantiate the loss amount and be prepared to provide this information if requested by the Branch.

A CT23 for an period may be required, if requested by the Ministry of Finance.

Ontario Corporations Tax Account No. (MOF)

In order to file a CT23 or an EFF declaration you will require an Ontario Corporations Tax Account No. (MOF). This account number will be assigned to you shortly after you register with the Ministry of Government Services (MGS). If you have already registered with MGS and are still unaware of your Ontario Corporations Tax Account No. (MOF), please contact the ministry (see page 2).

Can You File a CT23 Short-Form Corporations Tax and Annual Return?

A corporation may file a CT23 Short-Form Corporations Tax and Annual Return if it meets all of the following criteria:

  • The corporation is a Canadian-controlled private corporation (CCPC) throughout the taxation year.
  • The corporation has a permanent establishment only in Ontario
  • The corporation is not a financial institution
  • The corporation's taxation year ends on or after January 1, 2000, its gross revenue and total assets are each $1,000,000 or less; OR the corporation's taxation year ends on or after January 1, 2001, its gross revenue and total assets are each $1,500,000 or less; OR the corporation's taxation year ends on or after October 1, 2001, its gross revenue and total assets are each $3,000,000 or less.
  • The corporation's taxable income for the taxation year is $200,000 or less. For a taxation year with less than 51 weeks, taxable income must be grossed-up. The gross-up equals the corporation's taxable income multiplied by 365 days and divided by the number of days in its taxation year.
  • The corporation is not a member of a partnership/ joint venture or a member of an associated group of corporations during the taxation year.
  • The only tax credits the corporation is claiming are the Incentive Deduction for Small Business Corporations (IDSBC), the Co-operative Education Tax Credit (CETC), or the Graduate Transitions Tax Credit (GTTC).
  • A Family Farm or Fishing Corporation which is not subject to the Corporate Minimum Tax (CMT) may also use the CT23 Short-Form Corporations Tax and Annual Return for a taxation year ending on or after January 1, 2000, if it meets all of the above criteria excluding the total asset and gross revenue test.

The CT23 Short-Form Corporations Tax and Annual Return and related Guide may be obtained by contacting the ministry, at the address shown on page 2, or by visiting the Ministry website at ontario.ca/finance.

Serving You

General information, brochures and forms may be obtained by contacting the ministry at the numbers shown on page 2 of this Guide.

Anyone wishing to electronically view or purchase Government of Ontario Publications, including Ontario Statutes and Regulations such as the Corporations Tax Act, Business Corporations Act or Corporations Information Act may do so by accessing web site ontario.ca/finance.

What if you need help to complete this return?

If you need more help after reading this Guide, please contact us at the numbers listed on page 2 of this Guide.

Hours of Services

You may call us Monday to Friday, from 8:15 am to 5:00 pm at the numbers listed on page 2 of this Guide.

Authorizing a representative

You can authorize a representative to obtain information on your tax matters by sending, or including with your return, a letter on your corporate letterhead indicating the individual or organization that you authorize to represent your interests. This letter must be signed by an authorized signing officer of the company.

Filing Your CT23 and Annual Return

Who must file?

Generally, every corporation carrying on a business in Ontario through a permanent establishment (as defined in s.4) other than corporations exempt from filing (as outlined on page 5 of this Guide) must submit a Regular or Short-Form CT23 Corporations Tax and Annual Return signed by an officer of the corporation. For specific information on who must file an Annual Return please see page 12 of this Guide.

How can you file?

The following methods are available to file a CT23 and Annual Return.

  • Complete and submit the pre-printed paper return received with this Guide;
  • Submit a plain paper return produced with certified computer software purchased from any one of many companies available from certified vendors; or
  • Submit a return on diskette (DFILE) produced with certified software available from certified vendors.
  • Submit a return through electronic filing (Corporate EFILE) where a return is transmitted electronically using certified software and submitted by an approved transmitter. At the time of writing this Guide, a Corporate EFILE software package had not been certified.

Information Bulletin 4003 provides the filing requirements for electronic (EFILE), diskette (DFILE) and paper filing of the CT23. Copies of this bulletin may be obtained by calling the ministry at the numbers shown on page 2 or by visiting the ministry's website at ontario.ca/finance.

Your corporation's CT23 and Annual Return will be imaged. Please ensure that the document is neat, legible and suitable for imaging. Please type or print all information in block capital letters using dark ink .

Previous versions of the CT23 including Ministry preprinted and computer generated returns, may not be used by corporations required to file a CT23 and Annual Return for the 2000 and subsequent taxation years. Please ensure that any software used is Y2K compliant.

When must you file?

A completed CT23, Annual Return (if applicable) and supporting documents must be received within 6 months after the end of the corporation's taxation year. The Minister considers the CT23 delivered on the date it is received by the Ministry of Finance.

What are the penalties if you file your CT23 return late and have not made sufficient payments for the year?

Rules for Calculating Penalty

The following penalties may be imposed for filing incomplete or late CT23s that are required to be filed on or after December 18, 1998. A taxpayer having 1 late filed CT23 may be subject to a penalty of 5% of the deficiency in the tax account for the taxation year, plus an additional 1% for each full month that the CT23 is late, to a maximum of 12 months. A taxpayer having 2 late filed CT23s within 4 taxation years may be subject to a penalty on the latter return of 10% plus 2% for each full month that the CT23 is late to a maximum of 20 months.

For additional details on these penalties, refer to Information Bulletin 4004 - Penalties and Fines.

When will we pay or charge interest?

Calculating Daily Compound Interest (Information Bulletin 4010)

Notice of (Re)Assessment

  1. Debit Interest at the rate provided in the Regulations, is calculated and charged daily for every day that there is a deficiency in your account (includes unpaid taxes, interest, penalties and other unpaid amounts). A corporation's account is divided for interest purposes, by period of time, into an instalment account for the instalment period and a tax account for the period after the instalment period. The instalment period is the period from the first day of your taxation year to the day before the balance of tax due date or the day before the most recent (re)assessment for the taxation year, whichever is earlier.
  2. Instalment credit interest at the rate provided in the Regulations, is calculated daily for each day that there is a surplus in your instalment account, from the last day of the first month in the instalment period, to the end of the instalment period.
  3. Credit interest on overpayments at the rate provided in the Regulations, is calculated and allowed daily for each day there is a surplus in your tax account after the end of your instalment period, for the taxation year. If a return is not filed on time, no credit interest will be allowed for the period from the day your return was required to be filed, to the day after your return is filed.

Application of Payments

Any amount paid, applied or credited (on or after August 1, 1995) in respect of amounts payable, will be applied firstly against any tax owing, secondly against any penalty owing, thirdly against any interest owing and fourthly against any other amounts owing by the corporation.

Revised Instalments

Instalment debit and credit interest will be re-calculated to reflect revised instalments resulting from the reassessment of the tax payable on which the instalments are based, except in the case of loss carry-backs.

Effects of Loss Carry-backs

Loss carry-backs for losses incurred in taxation years that end on or after August 1, 1995, do not affect the calculation of interest for the instalment account, the tax account or for the purposes of determining the amount of the late-filing penalty (if the CT23 due date is on or after August 1, 1995), until the date that is the later of the following:

  1. The first day of the taxation year after the loss year;
  2. The day on which the corporation's CT23 for the loss year is delivered to the Minister; or
  3. The day on which the Minister receives a request in writing from the corporation to reassess the particular taxation year to take into account the deduction of the loss.

Interest off-set

Debit and credit interest is netted for a particular taxation year. Netting between different taxation periods is not permitted.

What should you include with your CT23?

Electronic filing - Corporate EFILE

  • The ministry will receive electronically from CRA the financial information and notes in the form of the General Index of Financial Information (GIFI). GIFI will normally be accepted in lieu of a paper copy of the financial statements of the corporation.

Paper returns and D-Filed returns

  • The ministry prefers corporations to file the financial statements prepared for the shareholders of a corporation (Refer to Inf.B. 4002R). However, the ministry will normally accept a hard copy of the GIFI.

Where the GIFI is filed, the ministry may request financial statements in the form specified by the legislation (see paragraphs 2 and 3 of Inf.B. 4002R) where the GIFI is incomplete, inaccurate, or does not provide sufficient information to verify the corporation's tax liability under the Act.

Elections for Rollovers

The transferor and transferee corporations in a "rollover" are required to file a joint Ontario election made under sections 29.1 and 31.1 of the Act. These elections are the Ontario counterparts to federal elections made under subsections 85(1), 85(2) and 97(2) of the Income Tax Act (Canada). Corporations should use a hard copy of federal form T2057, T2058 or T2059 as appropriate, altered as necessary for Ontario purposes.

Corporations are recommended to file their Ontario election form with their CT23. However, under the Act, corporations are allowed to file their Ontario election by the latest date that a federal tax return must be filed by any party to the election. This date may be subsequent to the due date for the CT23.

Transferor and transferee corporations must file a copy of their federal election form T2057, T2058 or T2059 with their CT23, where the transferor and the transferee are either a corporation or a partnership with at least one corporate partner.

Corporations that elect under section 85 of the Income Tax Act (Canada) to transfer assets to or from a nonarm's length corporation with a permanent establishment in a Canadian jurisdiction other than Ontario, must file additional information. See Tax Legislation Bulletin 96-3 "Inter-Provincial Asset Transfers" for details. The bulletin is available by calling the ministry at the numbers shown on page 2 of this Guide.

Send your tax payment(s) (payable to the Minister of Finance ) and completed CT23 by the appropriate due dates to:

Ministry of Finance
PO Box 620, 33 King Street West
Oshawa ON L1H 8E9

For information on what should be included with your Annual Return, please see page 12 of this Guide.

After You File

What happens to your CT23 after we receive it?

When we receive your CT23, we review it based on the information you provided and send you a Notice of Assessment based on that review.

In some cases, your CT23 may be selected for a more detailed review and additional information may be requested.

Is the payment of instalments always required?

No. Instalments are not required in the first year of filing or when taxes payable for either the current or previous taxation year are less than $2,000. All taxes must be paid on or before the balance of tax due date. (refer to Balance of Tax)

The 2001 budget introduced quarterly instalments. Tax must be paid by quarterly instalments (every three months), if your tax payable for the current year or preceding year is equal to or greater than $2,000 and less than $10,000. This applies to taxation years commencing in 2002. The measure received legislative authority through Bill 127 which received Royal Assent on December 5, 2001.

Quarterly instalments should be calculated according to one of the following methods:

  • 1/4 of the tax payable for the current taxation year; or
  • 1/4 of the tax payable in the previous taxation year; or
  • for the first quarter of the taxation year, 1/4 of the tax payable two years ago; and for the next three quarters, 1/3 of the difference between last year's tax payable and the instalment paid for the first quarter.

Tax must be paid by monthly instalments if your tax payable for the current taxation year and for the previous taxation year are each $10,000 or more.

If your tax payable is such that monthly instalments are applicable, each instalment, usually due on the last day of the month, should be calculated according to one of the following methods:

  • 1/12 of the tax payable for the current taxation year; or
  • 1/12 of the tax payable in the previous taxation year; or
  • for the first two months, 1/12th of the tax payable two years ago; and for the next ten months, 1/10th of the difference between last year's tax payable and the amount paid for the first two months.

Where instalment calculations are based on a prior short taxation year, the tax payable figure used for that year must be grossed-up to reflect the amount that would have been payable for a full year.

A corporation that is the successor corporation of amalgamated corporations must use the total predecessor corporations' tax liability in the computation of instalments.

Balance of Tax

The difference between the current year tax liability and the amounts paid by instalments represents the balance of tax due.

The balance of tax due must be paid within three months after the end of your taxation year if your corporation was a Canadian-controlled private corporation throughout the taxation year and had taxable income of not more than the corporation's business limit for Ontario purposes for the previous taxation year. For additional information regarding changes to the business limit for Ontario purposes introduced in the 2000 Ontario Budget, refer to page 10 of the 2002 CT23 Guide (long version).

If the previous taxation year was less than 51 weeks, the corporation's business limit for Ontario purposes must be prorated (i.e., $280,000 × the number of days in taxation year ÷ 365). The taxable income must not be more than this prorated limit.

For Accounts or Payment enquiries, please call Corporations Tax, Accounts Enquiry lines at the numbers listed on page 2 of this Guide.

Voluntary Disclosure

It is the policy of the Ontario Ministry of Finance that any corporation or individual, who voluntarily discloses a violation of a statute administered by the Ministry of Finance, be allowed to settle any related debt by making full payment including interest.

If the above condition is met, the ministry will not prosecute or impose civil penalties for gross negligence, willful evasion or late-filing. The identity of an individual or corporation making a voluntary disclosure will be held in strict confidence as are all matters between the ministry and its clients.

For complete information, please obtain a copy of the ministry's Voluntary Disclosure bulletin or contact the ministry at 1 866 ONT-TAXS (1 866 668-8297).

Identification (Page 1)

Page 1 is a common page to both the CT23 and the Annual Return. In order to avoid delays in the processing of the returns, it is essential that page 1 of the return contain all of the following:

  • Answer to the question: MGS Annual Return Required? (see page 12 of this Guide for further information)
  • Registered / Head Office Address
  • Corporation's Legal Name and Mailing Address
  • Ontario Corporations Tax Account No. (MOF)
  • Taxation Year Start Date
  • Taxation Year End Date
  • Answer to the question: Has address changed since last filed CT23 Return? If yes, please indicate the date of change.
  • Date of Corporation's Incorporation or Amalgamation
  • Ontario Corporation No. (MGS - refer to the articles of incorporation)
  • Canada Revenue Agency Business Number
  • Jurisdiction Incorporated (in full, no abbreviations)
  • If the corporation was not incorporated in Ontario, the date business activity commenced and ceased (if applicable) in Ontario

Note: If there has been a taxation year end change approved by Canada Revenue Agency, please attach a copy of the approval to the return.

Name and Address

The "Corporation's Legal Name", for filing purposes, is the legal name of the corporation as stated in the articles of incorporation or subsequent amendment document. Please enter the full name, including all punctuation.

The "Mailing Address" is the corporation's current address for the purpose of receiving correspondence from Corporations Tax, i.e., CT23 Corporations Tax and Annual Return form; Notice of (Re)Assessment; Statement of Account; and refund cheques (if applicable).

The "Registered / Head Office" Address and the "Location of Books and Records" Address must consist of a street name and number, or a rural route and number or a lot and concession number. Post office box is not an acceptable address. Please do not abbreviate City/Town/Village names.

The "Name of person to contact" refers to an individual whom the ministry may contact for further information/ clarification regarding the return.

MGS Information

Page 1 also includes information required by MGS collected under the authority of the Corporations Information Act. If the corporation has answered "Yes" to the question "MGS Annual Return Required?", please complete the following additional information:

  • The corporation's "Ontario Corporation No. (MGS)". This is the number assigned to the corporation by the MGS.
  • If the corporation is an Extra-Provincial Corporation as defined by the Corporations Information Act please complete the "Address of Principal Office in Ontario" and, if applicable the "Former Corporation Name".
  • If more than one MGS Schedule A is being submitted, please indicate the number in the box provided.
  • Please tick the "No Change" box if there has not been any change in the Directors/Officers/ Administrators information previously submitted to MGS.

Certification (MGS) (Page 1)

If the corporation has answered "Yes" to the question "MGS Annual Return Required?" please complete the certification section on page 1. The authorized person must be an Officer, Director or other person having knowledge of the affairs of the corporation.

Identification (Page 3)

Type of Corporation

If the corporation is one of the 3 specialty types, enter a check mark in the appropriate box.

Amended CT23

If a CT23 was previously filed for this taxation year, enter a check mark in the "Amended Return" indicator field. Although an amended return is an acceptable method for making adjustments to tax return(s) previously filed, the preferred method is to send a letter to the attention of the Desk Audit Section (see page 2 of this Guide for address).

The letter should identify the taxpayer by indicating the corporation's legal name and seven-digit Ontario Corporations Tax Account No. (MOF). The letter should clearly describe the adjustment(s) requested and should include supporting documentation, e.g., amended schedules.

Corporations may not file an "Amended Annual Return". If filing an amended CT23, please ensure the answer to the question "MGS Annual Return Required?" is "No".

Final Taxation Year up to Dissolution (wind-up)

As long as a corporation's articles of incorporation remain legally in force, the corporation must file either a tax return or if applicable, an Exempt From Filing (EFF) Declaration. This requirement applies to all corporations, including those that have neither taxable income nor assets due to inactivity. Since assessments are not produced for exempt years, a corporation must file a CT23 in the final year that its charter is active in order for it to dissolve. Any corporation incorporated outside the jurisdiction of Ontario must contact the Ministry of Government Services, Companies Branch, 1-800-361-3223 to reflect this status change on the Ontario public record. For additional details on corporate dissolutions, refer to Information Bulletin 4006.

Reporting a Fiscal Year End Change

A fiscal year end change must be authorized by Canada Revenue Agency. Once approved, simply indicate this change on page 3 of the CT23 "Taxation Year End Has Changed".

Other Information

If the corporation has transferred assets to or from a nonarm's length corporation with a permanent establishment in a Canadian jurisdiction other than Ontario, enter a check mark in the applicable box. See "Elections for Rollovers" on page 8 of this Guide for details of the election forms and other information to be filed.

Ontario has enacted technical changes to the Act which adopt the elective rules under fed s.85 and 97 in a more rigid fashion. Generally, these rules tie Ontario into the federal elected amounts and apply to elections in respect of dispositions made on or after May 6, 1997.

Income Tax (Page 4)

The 2001 Ontario Budget introduced further reductions to the Ontario corporate income tax rate. Effective October 1, 2001, the rate is reduced from 14% to 12.5%. The rate will be further reduced to 11% on January 1, 2003, with a further reduction to 9.5% on January 1, 2004; and on January 1, 2005, the rate will be reduced to 8%. For a taxation year that straddles an effective date, the rates will be prorated. These measures received legislative authority through Bills 45 and 127 which received Royal Assent on June 29 and December 5, 2001 respectively.

The 2002 Ontario Budget has proposed to reschedule the reduction to the corporate income tax rates. Effective October 1, 2001, the rate was reduced from 14% to 12.5%. The rate will be further reduced on January 1, 2004 to 11%, with a further reduction on January 1, 2005, to 9.5%; and on January 1, 2006, the rate will be reduced to 8%.

On page 4, line [40] enter the amount of the corporation's Income Tax that you determine. Enter NIL if reporting a non-capital loss.

If claiming an IDSBC, check the YES box and complete lines [50] , [54] , and [55] on page 4.

The 2002 Ontario Budget has proposed to reschedule the reduction to the corporate income tax rates. As a result, to ensure that the small business corporate income tax rate is reduced to 4% on January 1, 2005, the schedule below outlines the corresponding changes to the IDSBC rates and the applicable periods to which the rates apply.

IDSBC Rate Applicable Period
6.5% October 1, 2001 to December 31, 2002
7.0% January 1, 2003 to December 31, 2003
6.0% January 1, 2004 to December 31, 2004
5.5% January 1, 2005 to December 31, 2005
4.0% January 1, 2006 and thereafter

Capital Gains - The 2000 Ontario Budget announced that Ontario would reduce the inclusion rate for capital gains from 75% to 66 2/3% effective for capital gains realized after February 27, 2000. In addition as announced by the Minister of Finance in a News Release "Province Forecasts $1.4 Billion Surplus" dated December 4, 2000, Ontario will further reduce the capital gains inclusion rate from 66 2/3% to 50% effective retroactively to capital gains realized after October 17, 2000. These changes and effective dates coincide with the federal treatment regarding capital gains inclusion rate reductions.

Specified Tax Credits (Page 5)

The following 2 tax credits are specified refundable tax credits. These tax credits must first be applied to reduce income taxes payable and any unused portion of the tax credit will be treated as a deemed payment on account of taxes payable. For administrative ease, the sum of all the credits should be entered on page 5, line [220].

Enter the amount of the specified tax credit - applied to reduce income tax on page 5, line [225] ;

Enter any unused portion to be used as a deemed payment on the summary on page 3, line [955].

Co-operative Education Tax Credit (CETC)

If claiming the CETC, complete Schedule F.

Graduate Transitions Tax Credit (GTTC)

If claiming the GTTC, complete Schedule G.

Reconciliation of Net Income (Loss) for Federal Tax Purposes to Ontario (if different) (Page 5)

Reconcile net income (loss) for federal tax purposes with net income (loss) for Ontario purposes if amounts differ.

Transfer the net income (loss) determined on page 5, line [690] to page 4 of the CT23.

The following changes were introduced in the 1998, 1999 and 2002 Ontario Budgets.

Workplace Child Care Tax Incentive

(Page 5, line [666] )

The Workplace Child Care Tax Incentive (WCCTI), introduced in the 1998 Ontario Budget, is a 30% deduction of qualifying capital cost expenditures, incurred by a corporation to construct new on-site licensed child care facilities in Ontario, to renovate existing facilities in Ontario or for contributions made to an unrelated party for these types of expenditures.

For additional information on the WCCTI refer to Tax Legislation Bulletin, Number 99-2, dated August 1999.

Workplace Accessibility Tax Incentive

(Page 5, line [668] )

The Workplace Accessibility Tax Incentive (WATI), introduced in the 1998 Ontario Budget, provides for an additional 100% deduction of qualifying expenditures that are incurred by an employer to accommodate a newlyhired person with a disability. The maximum amount of qualifying expenditures is $50,000 per eligible employee.

For additional information on the WATI refer to Tax Legislation Bulletin, Number 99-1, dated August 1999.

Ontario School Bus Safety Tax Incentive (OSBSTI)

(Page 5, line [671] )

The Ontario School Bus Safety Tax Incentive (OSBSTI), introduced in the 1999 Ontario Budget, is a 30% deduction of the capital cost of acquiring a new school bus.

The 2002 Ontario Budget has proposed a new deadline for the purchase of a school bus. It must be acquired prior to January 1, 2006.

For additional information on the OSBSTI refer to Tax Legislation Bulletin, Number 00-3, dated June 2000.

Continuity of Losses Carried Forward - Analysis of Balance by Year of Origin (Page 6)

Complete these schedules whenever losses are incurred or losses are carried forward.

Note: Commencing with the 2001 CT23 tax return capital losses are now shown at 100% of losses (before applying the inclusion rate).

Request for Loss Carry-back (Page 3)

Complete this schedule if the corporation is carrying back a non-capital, net-capital, farm or restricted farm loss. The onus is on the taxpayer to substantiate any loss being carried back to a prior year.

Summary of Taxes Payable (Page 3)

In the summary section, bring forward the amount of Income Tax, and enter on page 3, line [950]. Enter payments made on page 3, line [960]. If claiming the Specified Tax Credits, enter the unapplied amount (see Specified Tax Credits section) on page 3, line [955].

If you are requesting a refund -

  • for the full overpayment, complete line [975]. Any related credit interest will also be refunded.
  • and you want the total overpayment, including any related credit interest, to be applied to a particular taxation year, complete the "Apply to" field but leave line [980] blank.
  • and you want to apply a specific amount to a taxation year, complete the "Apply to" field and put the amount in line [980]. Any remaining balance will be refunded.

Certification (CT23) (Page 3)

Complete the "Certification" section by providing the name of the authorized signing officer of the corporation. Be sure to sign and date the CT23.

The Annual Return (MGS)

The Annual Return is comprised of page 1 of the combined CT23 Corporations Tax and Annual Return and either of MGS Schedule A or MGS Schedule K (page 7 or 8). The information provided on these pages is collected under the authority of the Corporations Information Act for the purpose of maintaining a public database of corporate information. The Ministry of Finance (MOF) is collecting this information on behalf of the Ministry of Government Services (MGS). This collection process applies to corporations that have a taxation year ending on or after January 1, 2000.

If you answer "Yes" to the question below, "Is An MGS Annual Return Required?", most of the information on page 1 of the combined return and where applicable, MGS Schedule A or MGS Schedule K, will be provided to MGS by the MOF. Authority for providing this information is given pursuant to subsection 98(4) of the Corporations Tax Act.

Is An MGS Annual Return Required?

Every corporation that is incorporated, amalgamated or continued in Ontario under the Business Corporations Act, Ontario must file an Annual Return. This type of corporation is referred to as an "Ontario Corporation".

Every foreign corporation which has a licence endorsed under the Extra-Provincial Corporations Act to carry on business in Ontario must file an Annual Return. Foreign extra-provincial corporations are those corporations that are incorporated, amalgamated or continued outside Canada. This type of corporation is referred to as a "Foreign Business Corporation".

If neither of the above applies to the corporation then please answer "No" to the question "MGS Annual Return Required?".

If one of the above conditions does apply but the corporation has filed the Annual Return electronically to MGS, then the corporation's response to the question will be "No".

Note: A corporation that is incorporated, continued, or amalgamated in a Canadian jurisdiction other than Ontario is not required to file an Annual Return.

How Can You File?

The following methods are available to file the Annual Return:

  • Complete and submit the combined preprinted paper CT23 and Annual Return or the Annual Return and EFF Declaration to the Minister of Finance at the address indicated on the top of page 1 of these documents.
  • Complete the electronic filing version of the Annual Return directly with the Ministry of Government Services. For information on this filing option, refer to the ServiceOntario website at ontario.ca/cnh4. If applicable, the corporation would submit its CT23 to the Minister of Finance separately.

When Must You File?

A corporation with share capital that is required to deliver a CT23 (or is EFF) and an Annual Return is required to file the Annual Return within six months after the end of its taxation year. This applies whether the Annual Return is delivered to the MOF or electronically to MGS.

A corporation is only required to file one Annual Return in a calendar year. This return is due at the time the first CT23 is required to be delivered to the MOF during the calendar year. A corporation's CT23 is required to be delivered on or before the last day of the sixth month after the end of the taxation year.

The Annual Return will be considered delivered on the date it is received by the Ministry of Finance. The effective date of filing for the Annual Return is the date the information is updated in the Ontario Business Information System (ONBIS). The effective date of filing for the CT23 is the date the Minister of Finance receives it.

If the Annual Return is filed electronically during MGS business hours, the date of receipt will be considered to be that day. Otherwise, the date of receipt will be the next business day of MGS.

An Annual Return is considered filed if it is complete and has been recorded in the ONBIS.

Incomplete Annual Returns are considered to be deficient. MGS will contact corporations regarding Annual Return deficiencies. The Annual Return will not be considered filed until the deficiency is corrected.

What Must You File?

Ontario Corporations must complete all of the information on page 1 of the combined CT23 Corporations Tax and Annual Return. MGS Schedule A will only be required if there has been a change in the information previously submitted to MGS with regard to the Directors, Officers, or Administrators of the corporation.

Foreign Business Corporations must complete all of the information on page 1 of the combined CT23 Corporations Tax and Annual Return and MGS Schedule K. MGS Schedule K will only be required if there has been a change in the information previously submitted to MGS with regard to Chief Officer/Manager or Agent for Service.

All information in the Annual Return must be current as of the date of delivery to the Ministry of Finance or to the MGS.

Each corporation must keep an up-to-date paper or electronic record of the prescribed information set out in the return available for examination at its registered office or principal place of business in Ontario.

Note: If you are filing a CT23 or are claiming an exempt from filing (EFF) status, please refer to the beginning of this Guide for information on completion and filing requirements.

Completion of Page 1

Page 1 is a common page to both the CT23 and the Annual Return. In order to avoid delays in the processing of the return, it is essential that page 1 of the return contain all of the following:

  • Answer to the question: MGS Annual Return Required? (See above to determine whether the corporation is required to file)
  • Corporation's Legal Name and Mailing Address
  • Registered/Head Office Address - Address must consist of a street name and number, or a rural route and number, or a lot and concession number. Post office box is not an acceptable address. Please do not abbreviate City/Town/Village names.
  • Ontario Corporations Tax Account No. (MOF)
  • Taxation Year Start Date
  • Taxation Year End Date
  • Answer to the question: Has address changed since last filed CT23 Return? If yes, please indicate the date of change.
  • Date of Corporation's Incorporation or Amalgamation
  • Ontario Corporation No. (MGS)
  • Canada Revenue Agency Business Number
  • Jurisdiction Incorporated (in full, no abbreviations)

Note: If there has been a taxation year end change approved by Canada Revenue Agency, please attach a copy of the approval to the return.

What If You Need Help to Complete this Annual Return?

If you need more help after reading this section, please contact the ministry at the numbers listed on page 2 of this Guide.

Fines and Penalties

Sections 13 and 14 of the Corporations Information Act provide penalties for failure to file an Annual Return and the appropriate MGS Schedule(s) A or K.

A person, other than a corporation, is liable to a fine of not more than $2,000. A corporation is liable to a fine of not more than $25,000.

MGS Schedule A

MGS Schedule A must report current information on all directors and the five most senior officers of the corporation. All changes that have taken place since the last filing of the Annual Return, Initial Return or Notice of Change must also be included. Schedule A is not required where there has not been any change in the information reported on the last filing. Senior officers include the following positions or their equivalent: president, general manager, treasurer and secretary.

A minimum of one director is required in a non-offering business corporation and a minimum of three directors is required for all others.

The MGS Schedule A provides space for information on two Director/Officer positions.

Please photocopy the blank MGS Schedule A if you require additional space. Please state the number of MGS Schedule A's being submitted in the box on page 1 of the Annual Return.

Please complete all of the applicable fields on the schedule, ensuring that the Corporation's name includes all punctuation and that the Ontario Corporation No. (MGS) is the number assigned by MGS.

If the box "Other (specify)" is applicable, in order to cease or change an officer previously reported under "Other Titles", cease the officer, then use a blank schedule "A" to add (if applicable) the new information.

Instructions for completing MGS Schedule A

Field Name

Items to include

Corporation's Legal Name include all punctuation
Ontario Corporation No. (MGS) enter your Ontario Corporation No.
Date of Incorporation or Amalgamation enter your incorporation or amalgamation date in the box provided

Director/Officer Information Full Name and Address for Service:

  • Last Name
  • First Name
  • Middle Name(s)
  • Street Number and Street Name
  • Suite No.
  • City/Town/Village
  • Province/State
  • Country
  • Postal/Zip Code
complete all fields where applicable
Director
  • Resident Canadian "Yes" or "No" boxes
  • Date Elected
  • Date Ceased
complete all fields where applicable
  • check applicable box (applies for directors of business corporations only)
  • insert the date the individual became a director
  • insert the date the director ceased to hold his/her position
Officer
  • "Date Appointed" boxes
  • "Other (specify)"
  • "Date Ceased" boxes
  • "Other (specify)"
complete all fields where applicable
  • indicate the position currently held by the individual and complete the date appointed as an officer to his/her current position(s)
  • insert the date the officer was appointed and check the appropriate box under "other titles"
  • insert the date the officer ceased to hold his/her position(s)
  • please specify if "other titles" apply
  • to cease r change an officer previously reported under "Other Titles" cease the officer, then use a blank schedule "A" to add (if applicable) the new information.

MGS Schedule K

Schedule K is for reporting current information on the Chief Officer/Manager and the Agent for Service for foreign business corporations which have a licence endorsed under the Extra-Provincial Corporations Act to carry on business in Ontario.

Only one Schedule K may be submitted. Please do not photocopy.

Please complete all of the applicable fields and boxes on the schedule, ensuring that the Corporation's name includes all punctuation and that the Ontario Corporation No. (MGS) is the number assigned by MGS.

Instructions for completing MGS Schedule K

Field Name

Items to include

Corporation's Legal Name include all punctuation
Ontario Corporation No. (MGS) enter your Ontario Corporation No.
Date of Incorporation or Amalgamation enter your incorporation or amalgamation date in the box provided
Chief Officer/Manager Information Full Name and Office Address of the Chief Officer/Manager in Ontario:
  • Last Name
  • First Name
  • Middle Name(s)
  • Street Number and Street Name
  • Suite No.
  • City/Town/Village
  • Province
  • Country
  • Postal Code
complete all fields where applicable
Indicate the Appointment Period for the Position of Chief Officer/Manager:
  • "Date Appointed" boxes
  • Date Ceased
complete all fields where applicable
  • insert the date the Chief Officer/Manager was appointed
  • insert the date the Chief Officer/Manager ceased his/her appointment
Indicate if the Agent for Service is an Individual or a Corporation:
  • "Individual" box
  • Agent's Last Name
  • Agent's First Name
  • Middle Name(s)
  • Street Number and Street Name
  • Suite No.
  • City/Town/Village
  • Province
  • Country
  • Postal Code
  • "Corporation" box
  • Corporation Name
  • Ontario Corporation No.
  • Care Of
  • Street Number and Street Name
  • Suite No. (If Applicable)
  • City/Town/Village
  • Province
  • Country
  • Postal Code
  • enter a check mark if applicable
  • complete all fields where applicable
  • enter a check mark if applicable
  • complete all fields where applicable

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