Corporate Tax Returns

A corporation is a taxpayer in its own right, and each year it files its own return with the CRA: the T2 Corporation Income Tax Return. Infoetax prepares corporate tax returns in Hamilton together with the work around them: year-end reporting, financial statements, tax planning and CRA compliance support.

Whether the corporation is a one-person professional practice or a small company with staff, the T2 comes at the end of a full year of records. This page describes what goes into the return, when it is due, and how we approach the year with you.

What goes into a T2

The T2 reports the corporation’s income for its tax year and calculates the tax it owes. It starts from the year-end financial statements, adjusts for the differences between accounting profit and taxable income, and is supported by a set of schedules. A few appear on most small-business returns:

• Schedule 1, which reconciles the profit on the financial statements to net income for tax purposes.
• Schedule 8, for capital cost allowance on equipment, vehicles and other depreciable property.
• Schedule 50, which lists the corporation’s shareholders and their holdings.
• GIFI schedules, which report the balance sheet and income statement in the CRA’s General Index of Financial Information format.

Which other schedules apply depends on what the corporation does, where it operates and how it is owned.

Year-end reporting and financial statements

A corporation’s tax year, often called its fiscal year, does not have to match the calendar year. At year-end the books are closed: accounts are reconciled, adjusting entries are made for items such as amortization and accrued expenses, and the financial statements are prepared. Owners and lenders read those statements too, but for the CRA they are the foundation of the T2. When the books are kept monthly through our bookkeeping service, year-end begins from records that have already been reconciled.

What we usually ask for at year-end

The list changes with the business, but most corporate year-ends draw on the same core documents:

• Bank, credit card and loan statements covering the full fiscal year, including the month after year-end.
• Sales records and any amounts customers still owed when the year closed.
• Supplier bills still unpaid at year-end, and receipts for larger purchases of equipment or vehicles.
• Payroll summaries, HST filings and any notices or letters the CRA sent during the year.
• The prior year’s T2, financial statements and notice of assessment, if we did not prepare them.

If something is missing, we tell you what it is and why it matters to the return before anything is filed.

When the return and the tax are due

The CRA’s guidance says a T2 is due within six months after the end of the corporation’s tax year. If the year ends on the last day of a month, the return is due by the last day of the sixth month after it, so a March 31 year-end has a September 30 filing date. The balance of tax owing comes due sooner, generally two or three months after the tax year ends depending on the corporation’s balance-due day, and some corporations also pay instalments during the year.

The CRA explains these rules on its pages about when to file a corporation income tax return and corporation payments.

Tax planning, as we use the term

Tax planning, for us, means reviewing the year with you: what the corporation earned and spent, what the owners took out and in what form, and what is changing in the year ahead. It is a conversation about your situation and the options the rules allow, not a promise of any particular result. Questions such as salary versus dividends, or when to make a large purchase, turn on details that differ from one owner to the next.

CRA compliance support

Compliance is the ongoing side of running a corporation: keeping filings current, answering CRA letters, and lining up its other obligations, such as payroll remittances, HST returns and WSIB reporting. If a review or audit letter arrives, our CRA audit assistance service covers the correspondence and the document preparation.

Newly incorporated?

A corporation’s first year-end tends to set the pattern for the ones after it. If you have only just incorporated, or are still deciding, see business registration and incorporation and our guide on how to incorporate in Ontario.

Booking a year-end conversation

Tell us the corporation’s year-end date and a line or two about the business through the quote form, or phone 905-393-7664 during weekday office hours. For over 15 years we have worked with self-employed professionals and businesses from the office on Queenston Road, serving Hamilton, Stoney Creek and the GTA.