Advance Deposits

Q.1 Does the Canada Revenue Agency (CRA) still accept prepayments (advance deposits) from business taxpayers?

A.1 Yes, the CRA still accepts advance deposits from business taxpayers. However, the way advance deposits are administered by the CRA has changed.

Q.2 Why has the advance deposit process changed?

A.2 The CRA has made changes to make sure that advance deposits are only made when there is a risk of reassessment and that the amounts on deposit are reasonable.

Q.3 What changes have occurred that I should consider before making an advance deposit?

A.3 All advance deposits need to be assigned to a specific tax year and be validated to ensure there is a risk of reassessment for the tax year. There are limitations regarding the transfer of advance deposits. Please refer to Questions 6 and 7 below. The calculation of the prescribed rate of interest has changed, resulting in a reduction of 2 percentage points for amounts payable to corporations.

Q.4 How do I make an advance deposit?

A.4 You can make an advance deposit using Form RC159, Amount Owing Remittance Voucher. To request additional remittance vouchers, see Online Request, Corporate Requests, and select Additional Remittance Vouchers.

To assist us in processing your payment, clearly indicate that it is an advance deposit and include both your 15-character account number and the tax year-end for which the advance deposit is intended. If you are making an advance deposit for multiple tax years, include a list of the individual tax years for which you are expecting a reassessment and the amount to be held for each year.

Note: If the necessary information is not included, the advance deposit may be refunded.

Q.5 Why do I have to provide a specific tax year for my advance deposit?

A.5 This information allows the CRA to confirm that there is a risk of reassessment and that the amount is reasonable.

Q.6 Can I transfer my advance deposit to another tax year?

A.6 Once an advance deposit is assigned to a specific tax year, it cannot be transferred to a different tax year as an advance deposit. However, you may transfer the advance deposit:

• to pay an existing balance;
• as an instalment payment for an unassessed tax year on your corporation account;
• as an instalment payment for an unassessed period on your GST/HST account; or
• as a remittance on your Payroll account.

Q.7 If I transfer my advance deposit to my instalments for the current tax year, can I request a refund or transfer of this amount at a later date?

A.7 Once an advance deposit is transferred to your instalments, it takes on the rules for instalment payments.

Instalment payments cannot be refunded until we have assessed the tax return for the tax year in question. However, you may transfer an instalment payment:

• to pay an existing balance;
• to an unassessed tax year on your corporation account;
• to an unassessed period on your GST/HST account; or
• to your Payroll account as a remittance.

Q.8 I am filing my T2 Corporation Income Tax Return. Can you hold the overpayment on my account for a future reassessment?

A.8 An overpayment can only be held as an advance deposit for the tax year where the overpayment occurred. This amount cannot be transferred to any other tax year as an advance deposit. If you need an overpayment from a specific return to be held, you can send a request to Corporation Services at your tax centre or call our Business Enquiries line at 1-800-959-5525 prior to filing your return.

Q.9 What happens to any credit remaining once my reassessment is processed?

A.9 If there is a credit remaining after a reassessment and there are no balances owing or missing returns on any of your CRA accounts, the advance deposit will be refunded.

However, if you have informed us that you are expecting multiple reassessments to the same tax year, we will contact you to discuss the options available.

Q.10 I have an advance deposit on my account that is no longer needed. What are my options?

A.10 If an advance deposit is no longer needed, you may:

• request a refund of the advance deposit;
• transfer the advance deposit to pay an existing balance;
• transfer the advance deposit as an instalment payment for an unassessed tax year on your corporation account;
• transfer the advance deposit as an instalment payment for an unassessed period on your GST/HST account; or
• transfer the advance deposit to your Payroll account as a remittance.

Q.11 How can I get more information about managing my advance deposits?

A.11 If you were unable to find the information you were looking for about this topic, please call our Business Enquiries line at 1-800-959-5525.