Economical Corporate Dissolution Tax Return for Canadian Businesses

For the 2025 tax year the filing and payment deadline is 30 April 2026. If you or your spouse were self-employed, the filing deadline moves to 15 June 2026, but any balance owing is still due 30 April 2026. Interest starts the day after the payment deadline, and a late-filing penalty applies on top when a return with a balance owing is filed late. File on time even with nothing owing, because income-tested benefits are recalculated from the filed return.

File a T1 return for the year, sending it electronically with CRA-certified software or mailing a paper return. Gather your slips and receipts first and check them against the ones listed in My Account. For the 2025 tax year the filing and payment deadline was 30 April 2026, or 15 June 2026 to file if you or your spouse were self-employed, with payment still due 30 April 2026. CRA online filing for 2025 returns closes 29 January 2027.

As the rules stand for the 2025 tax year filed in 2026, the late-filing penalty is 5% of the balance owing plus 1% of that balance for each full month the return is late, to a maximum of 12 months, so 17% at worst. It rises to 10% plus 2% per month for up to 20 months, a 50% maximum, but only where the CRA formally demanded the return and had already charged a late-filing penalty for any of the three preceding tax years. Interest compounds daily.

Yes. Severance is taxable in the year you receive it, and the employer withholds tax before paying it out. Amounts paid as salary continuance are taxed like regular employment income. A single lump sum has a flat withholding rate applied, which is only a prepayment against the tax finally calculated on your return, so a balance can still be owing. Part of a retiring allowance may qualify for a direct transfer to an RRSP, which defers the tax.

Ottawa collects personal income tax, corporate income tax and GST/HST, which together make up most federal revenue, plus excise duties and taxes on fuel, alcohol, tobacco and cannabis, customs duties on imports, and a share of other levies. CPP and EI contributions are also collected federally but fund those programs directly. The CRA administers most of these; Quebec administers its own provincial income tax and the QST. Revenue totals are published in the Public Accounts of Canada.

Often yes. A non-resident business making taxable supplies in Canada must register and charge GST/HST once it passes $30,000 of taxable revenue over four consecutive calendar quarters or within a single quarter, using the rate for the customer's province: 5% GST, 13% in Ontario, 14% in Nova Scotia from 1 April 2025. Simplified registration rules apply to digital products and platform sales to Canadian consumers. A US supplier also pays GST/HST on its own Canadian purchases.

Yes, where you owe. The late-filing penalty is 5% of the unpaid balance plus 1% for each full month the return is late, up to 12 months. It rises to 10% plus 2% a month, to 20 months, only where the CRA formally demanded the return and charged you a late-filing penalty in one of the three preceding years. Compound daily interest runs on the balance as well. With nothing owing, there is no penalty.

Sometimes. GST or HST applies when land is sold in the course of a business or by a builder, such as a commercial lot or subdivided development land, at 5% GST or the provincial HST rate, which is 13% in Ontario for 2026. A sale of personal-use vacant land by an individual is often exempt. Separately, most provinces and some cities charge land transfer tax on the buyer. Settle the GST/HST treatment in the agreement before closing.

Medical expenses cannot be carried forward to a future year the way tuition or a capital loss can. What you can do is choose the period the claim covers, and that period does not have to match the calendar year, so expenses from late in the previous year can be grouped with this year's and clear the income-based threshold once instead of twice. Pick the period that captures the largest total, then claim all of it on one return.

Register through Business Registration Online, or by phone or mail, and the CRA issues the business number together with the program accounts you request: GST/HST, payroll, corporate income tax, or import-export. Incorporating federally usually generates the number automatically, so check whether you already have one before applying again. Open the GST/HST account before your first return is due and the payroll account before the first remittance, since deadlines run from the obligation, not the registration.

Students cannot deduct residence fees or apartment rent from income, and rent earns no federal credit. What a student can claim is tuition, the interest paid on an eligible government student loan, and moving costs in some situations. Where the province pays a rent-based benefit, Ontario and Manitoba among them, the rent goes on that provincial schedule instead. Filing a return with little or no income still preserves unused tuition amounts and keeps benefit payments flowing.

Yes. An existing tax debt does not stop you registering a business number, incorporating, or opening a GST/HST or payroll account. What changes is collection. As a sole proprietor you and the business are the same taxpayer, so the CRA can apply business refunds against your personal balance. Directors can also be assessed personally for a corporation's unremitted payroll deductions and GST/HST. Put a payment arrangement in place for the old balance and keep the new remittances current.