All corporations in Canada must file a tax or information return with Revenue Canada.

• Registered Charities must file a Charity Information Return (T3010) within six months of their year end. Failure to file a return could result in deregistration. Registered charities do not have to file a corporate tax return.

• Not-for-profit organizations that are not registered charities must file a corporate income tax return (T2) within six months of their year end. There is no late filing fee.

• More importantly, not-for-profit organizations with more than $10,000 in investment income or more than $200,000 in total assets (at the end of the immediately preceding fiscal period) must file a Non-Profit Organization Information Return (T1044(e)). The return must be filed within six months of the year end. Note that failure to file the information return on time will result in a penalty of $25/day to a maximum of $2,500 for each year of failure to file. Given the size of the penalty you should review your financial statements annually to determine whether you are required to file this return.

ANNUAL PROVINCIAL CORPORATE FILING

Currently all incorporated organizations in Ontario, including childcare centres, are required to file an Annual Return and Special Notice to confirm/update their corporate records with the Ontario Ministry of Consumer and Commercial Relations. In 1992 the provincial government started charging a filing fee of $25 for not-for-profit organizations ($50 for commercial operations) and, more importantly, started deregistering corporations for failure to file the annual returns. The cost of reactivating a deregistered corporation was between $1,000 and $1,500 - a stiff penalty for failure to file the returns - until 1995 when the Conservative government instituted a special provision to simplify re-registration and limit the cost to unpaid filing fees and the completion of a few forms.

If you have not already done so you must still file an Annual Return and Special Notice for the years 1992 through 1995 and pay the annual fees. There is, however, no need to file a return for a year end falling within the period July 1, 1995 to June 30, 1996. The filing cycle has been abolished for that period. In addition, corporations with year ends between April 1, 1995 and June 30, 1995 need not pay the $25 filing fee.

Commencing July 1, 1996, all Ontario corporations will be required to file the Annual Return and Special Notice together with their provincial corporate income tax return on an annual basis with the Ministry of Revenue. There will be no special filing fees associated with the returns. This raises some interesting issues. Currently, corporations resident in Ontario are only required to file annual corporate income tax returns if they have taxes payable. While the government had stated its intention several years ago to require all corporations to file corporate income tax returns on an annual basis, the legislation has not yet been changed. Consequently, not-for-profit organizations are currently not required to file annual Ontario corporate tax returns (CT23). Presumably the government will either change the income tax legislation to require annual filings for all corporations or the not-for-profit community will be effectively exempted from requirement to file the Annual Return and Special Notice.

The worst case scenario is that your childcare centre will be required to file an additional tax return for fiscal years ending on or after July 1, 1996. The best possible outcome is that you will not be required to file a provincial income tax return and will have one fewer annual filing to be responsible for. We will keep you posted of further developments.

For more information call the Ontario Government Information Line directly at 416-326-8555 (to navigate the automatic phone system dial: 1-1-1).