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Every incorporated business in Canada must file a T2 Corporation Income Tax Return each year, even if it had no income or was dormant. This guide walks through the full T2 process end to end, from your fiscal year-end to the notice of assessment.
When your T2 is due
A corporation chooses its own fiscal year-end, and the return is due six months after that date. A December 31 year-end means a June 30 filing deadline. The catch is payment: any balance owing is due two or three months after year-end (three months for a Canadian-controlled private corporation claiming the small business deduction on the first $500,000 of active income). Filing on time but paying late still triggers interest at the CRA's prescribed rate, compounded daily.
What goes into the return
The T2 itself is a summary. The substance sits in the schedules attached to it:
- GIFI (Schedules 100, 125, 141) restate your balance sheet and income statement using the CRA's General Index of Financial Information codes.
- Schedule 1 reconciles accounting profit to taxable income, adding back items like 50% of meals, golf dues and accounting reserves.
- Schedule 8 claims capital cost allowance on your depreciable assets.
- Schedule 50 lists shareholders holding 10% or more.
- Schedule 3 reports dividends paid and received, which drive Part IV tax and your RDTOH balance.
The small business deduction
An active-business CCPC pays a combined federal-provincial rate of roughly 12% on its first $500,000 of income, versus the general rate near 26%. That preferential rate grinds down once passive investment income inside the company exceeds $50,000 in a year, and disappears entirely at $150,000 of passive income. Watching that threshold is one of the highest-value planning conversations a small corporation can have.
After you file
The CRA issues a notice of assessment, usually within weeks of an electronic T2 filing. Keep every supporting record for six years from the end of the tax year they relate to. A reassessment can normally reach back three years for a CCPC, longer where the CRA alleges misrepresentation. Filing a complete, well-reconciled return is the single best defence against a review.