Canada updates electronic filing requirements for business entities

20 August, 2023

On 16 August 2023, the Canada Revenue Agency (CRA) announced that businesses filing six or more information returns must file them electronically to avoid penalties.

Recent legislation has amended mandatory electronic filing thresholds. Beginning 1 January 2024, businesses filing six or more information returns (slips and summaries) must file electronically. This removes the clause that allowed a filer with 50 or fewer information returns to file by paper. Businesses filing five or fewer information returns can still choose to file by paper.

Examples of information returns include the T4 payroll return (remuneration paid), T5 (investment income), T3 (trust income) and T4A (pension and other income return).

Benefits to filing online

Electronic filing has many benefits over paper processing. It saves businesses time and money since recipients can confirm their tax information earlier and receive refunds and credits much faster. It’s also safer and more reliable because data flows seamlessly over secure networks. Paper processing, on the other hand, is vulnerable to human error and disruptions.

For both business and individual accounts, electronic filing offers:

convenience and ease
faster processing times
quicker communication for errors and discrepancies
earlier confirmations for tax information
faster refunds and credits

How to file electronically

The CRA offers many digital services, such as secure portals like My Business Account, mobile apps, and additional services for businesses to easily manage their tax affairs.

If you have a web access code, here are some options:

Web Forms: An application that is ideal for smaller returns, up to 100 slips
Internet file transfer (XML): An application to use payroll, commercial, or in-house developed software, to submit an XML file of up to 150 MB over the Internet

If you do not have a web access code, the following can be used:

My Business Account: A portal that allows business owners (including partners, directors, and officers) access to their GST/HST, payroll, corporation income taxes, excise taxes, excise duties, and other levies accounts online
Represent a Client: A portal that allows representatives to access tax information on behalf of individuals and businesses, including their employer

A note on penalties

There are currently mandatory electronic filing penalties to businesses that file paper returns for over 50 slips. There will be a $125 penalty introduced starting 1 January 2024 to businesses who file paper returns in the 6-50 range.

Penalty based on the number of information returns (slips)