Business Tax Deadlines for Sole Proprietors for 2021

Check out my article on tax deadlines for 2022 relating to the 2021 calendar year for small businesses.

Note: This post relates to tax deadlines in 2021 relating to the 2020 calendar year.

Update: The tax Deadline for Quebec income tax returns is now May 31st : For those of you who live in Quebec, the tax filing and payment deadline has been extended to May 31st! This means that even tax returns are technically due by April 30th, there will be no penalties if you file or pay by May 31st. Some think that CRA will follow suit, but we have not yet head anything

While many businesses got a break from some onerous tax deadlines back in the early days of Covid, unfortunately there are no such extensions for 2021.  Almost all tax deadlines are now exactly as they were in previous years and small business owners must adhere to them or risk facing penalties for late filing plus interest on any overdue balances.  That being said, it is possible that a greater amount of taxpayer relief will be available this year if you can demonstrate financial hardship due to Covid.

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I have compiled a list of deadlines for all unincorporated small business owners which includes sole proprietors and self employed individuals. You can also sign up to get a calendar of tax due dates (for sole proprietors) for your ongoing reference. 

Sales Tax Deadlines

• GST/HST returns for 2020 must be filed by June 15th, 2021

• GST/HST payments for 2020 are due by April 30th, 2021.  If payment is not made, Revenue Canada (CRA) will start charging interest starting May 1st.

• QST returns for 2020 are due by  June 15th, 2021

• QST payments for 2020 are due by April 30th.  If payment is not made, Revenue Quebec (RQ) will start charging interest starting May 1st..   Since interest charged on late QST payments is higher than interest charged on income tax, it is better to prioritize payment of QST.

• GST/HST Instalments for 2021 must be paid on a quarterly basis for those whose net GST/HST payable was higher than $3,000 in the previous year.  GST/HST Instalments are due on April 30th, 2021, July 31st, 2021, October 31, 2021 and January 31st, 2022.  If instalments are not paid CRA will charge interest starting on the due date of the instalment.

• QST Instalments for 2021 must be paid on a quarterly basis for those whose net QST payable was higher than $3,000 in the previous year.  QST Instalments are due on April 30th, 2021, July 31st, 2021, October 31, 2021 and January 31st, 2022. If instalments are not paid RQ will charge interest starting on the due date of the instalment..

Income Tax Deadlines

• Income tax returns for individuals for 2020 must be filed and paid by April 30th, 2021.  If tax returns are not filed on time penalties will apply.  If tax returns are filed on time, but the balance due is not paid, only interest applies.

• Income tax returns for Self employed sole proprietors and partnerships I.e. any unincorporated business that include the T2125 in their returns have until June 15th, 2021.  This also includes spouses of unincorporated business owners even if the spouses don’t have self employed income. If tax returns are not filed by June 15th  penalties will apply. 

• Although income tax returns for self employed unincorporated small business owners is due by June 15th, both CRA and RQ start charging interest on balances due starting May 1st.  So if you choose to file between April 30th and June 15th it is best to pay an estimate of taxes owing by April 30th to avoid or reduce interest costs.

• Instalments relating to the 2021 tax year are payable by March 15th, 2021, June 15th, 2021, September 15th, 2021 and December 15th, 2021.  If you are required to pay instalments as a sole proprietor, you will be advised on the amounts and due dates by both Revenue Canada and Revenue Quebec via mail or by going to “my account” available online.  Note that if your income taxes payable exceed $3,000 you are required to pay quarterly instalments for 2021, except if you live in Quebec where this amount is reduced to $1,800. Similarly if taxes payable owing to RQ exceed $1,800 you will be required to make instalments for 2021

• It should be noted that if your instalments start for the first time as a result of exceeding the income threshold in 2020, instalment payments will only start September 15th. 

RRSP Contribution Deadline

All individual taxpayers have until March 1, 2021 to contribute to their RRSPs for the 2020 calendar year.  The maximum amount that you can contribute can be found on your 2019 notice of assessment or by going to CRA my account. Exceeding this amount will result in penalties so you want to be careful about how much you contribute.  It should also be noted that the higher your marginal tax rate, the more benefit you get from an RRSP contribution.  

Payroll Declarations (T4 and RL1) Deadline

For Sole proprietors who pay employees via payroll:

• T4 Salary Declarations are due by March 1st, 2021

• Note that there are some new boxes on the T4 form this year relating to Temporary Wage Subsidy(TWS) and Canada Emergency Wage Subsidy (CEWS).  Small business owners who do their own declarations should familiarize themselves with the new rules and calculations.

• RL1 Salary Declarations for those with employees in Quebec are also due by March 1st, 2021

• CNESST annual salary declarations (for those in Quebec) are due by March 15, 2021

With a little bit of preparation filing your tax declarations on time is fairly straightforward and can help save you interest, penalties and the inevitable stress that comes with procrastination.

Are you an unincorporated small business or self employed owner who wants a better understanding of their small business taxes and how to prepare their tax returns? Check out our Small Business Tax Guide and/or download our free small business tax return checklist!