Filing corporate taxes in Canada can feel complex, with CRA rules, GST/HST requirements, and bookkeeping obligations that change regularly. This guide is designed to help business owners, finance teams, and accounting professionals navigate all aspects of filing corporate taxes for 2025.
From T2 corporate income tax deadlines to bookkeeping best practices and GST/HST registration, this guide provides clear, practical steps to keep your corporation organized and compliant. Whether you’re managing a private corporation for the first time or reviewing current processes, you’ll gain a comprehensive understanding of corporate taxes in Canada, deadlines, payment obligations, and supporting documentation.
TL;DR (for Canadian business owners)
All resident corporations, including inactive ones, must file a T2 corporate tax return each year. Here’s a quick overview for 2025:
- Filing deadline: 6 months after fiscal year-end
- Balance due: 2–3 months after year-end, depending on corporation type
- Small CCPCs: May access the Small Business Deduction. In Ontario, a combined 2025 tax rate of 12.2% applies on the first $500,000 of active business income
- GST/HST registration: Required if taxable supplies exceed $30,000 in a single quarter or over four rolling quarters
- Bookkeeping: Corporations must keep adequate records for six years after filing, as CRA audits non-compliance
- Penalties for late filing: 5% of unpaid tax plus 1% per month (up to 12 months). Repeat late filers face double penalties
T2 Corporate Tax Return — Who files and when
Who Must File
All resident corporations in Canada must file a T2 corporate tax return every year, even if the corporation has no income, no activity, or reports a loss.
- Exemptions: Certain tax-exempt corporations, such as registered charities, do not need to file.
Filing Deadline
T2 returns are due 6 months after the corporation’s fiscal year-end.
- Example: For a December 31 year-end, the T2 return is due by June 30 of the following year.
Payment Deadlines (Balance Due)
- CCPCs claiming the Small Business Deduction (SBD): Payment is due within 3 months of year-end
- Other corporations: Payment is due within 2 months of year-end
Balance-Due Interest
- The CRA charges daily compounding interest on amounts unpaid after the deadline.
- Interest rates are prescribed and updated quarterly by the CRA.
What goes into the T2
Financial Statements
Corporations must file financial statements with the T2. These are submitted using GIFI codes (General Index of Financial Information), which standardize the reporting of revenues, expenses, and balance sheet items. Properly prepared financial statements are essential for accurate corporate taxes in Canada reporting.
Schedules (Common Examples)
- Schedule 1: Reconciles net income for accounting purposes to net income for tax purposes by adjusting for non-deductible expenses and taxable add-backs.
- Schedule 7: Reports Aggregate Investment Income and Part IV tax on dividends received from other corporations.
- Schedule 8: Calculates Capital Cost Allowance (CCA), Canada’s system of tax depreciation on capital assets.
- Schedule 50: Provides detailed shareholder information, including ownership percentages.
Or we can state “Please see our corporate schedule excels…”
Special Elections
The T2 allows corporations to make certain elections or claims, including:
- Loss carrybacks: Apply current losses to recover prior years’ tax.
- SR&ED (Scientific Research & Experimental Development): Claims for R&D tax incentives.
- Other elections: Depending on corporate circumstances (e.g., capital dividend elections).
GST/HST obligations for corporations
Registration Threshold
Corporations must register for GST/HST once they exceed $30,000 in taxable supplies in a single calendar quarter or over four consecutive quarters. Registration must occur within 29 days of crossing the threshold.
- Small suppliers under $30,000 are not required to register but may choose to do so voluntarily.
- Proper registration and reporting are essential for accurate corporate taxes in Canada compliance.
Reporting Frequency (Based on Annual Taxable Revenues)
- Annual: Revenue of $1.5 million or less
- Quarterly: Revenue between $1.5 million and $6 million
- Monthly: Revenue exceeding $6 million
Filing Deadlines
- Monthly/Quarterly filers: Returns are due 1 month after the reporting period ends
- Annual filers: Returns are due 3 months after fiscal year-end
Input Tax Credits (ITCs)
Corporations can claim Input Tax Credits (ITCs) to recover GST/HST paid on expenses related to commercial activities.
- Proper receipts and invoices must be maintained to substantiate ITC claims.
Payroll, installments & other filings
Payroll Obligations
Corporations with employees must withhold and remit:
- CPP (Canada Pension Plan contributions)
- EI (Employment Insurance premiums)
- Income tax at source
Payroll remittances are due monthly, quarterly, or accelerated, depending on payroll size and remittance history. Proper remittance ensures accurate corporate taxes in Canada reporting.
Corporate Tax Installments
If a corporation’s federal tax payable was more than $3,000 in the previous year (and is expected to be in the current year), it must make quarterly tax installment payments during the year.
- Installments are typically due on the last day of each quarter based on the fiscal year.
Information Slips
- T4 slips: Issued to employees for employment income, due February 28 of the following year.
- T5 slips: Issued to shareholders or other parties for dividends, interest, and other investment income, also due February 28 of the following year.
Payroll remittances are due monthly, quarterly, or accelerated, depending on payroll size and remittance history. Read more about your payroll obligations in our payroll guide for Canadian corporations
Bookkeeping & record retention
Retention Period
CRA requires corporations to keep books and records for 6 years from the end of the last tax year they relate to. The retention clock starts at the end of the fiscal year.
Accepted Formats
Records can be kept in paper, digital, or cloud-based formats. They must remain readily accessible to the CRA upon request. Original source documents (invoices, receipts, contracts) are critical for supporting reported income, expenses, and Input Tax Credits (ITCs).
Audit Risk
Poor or incomplete recordkeeping is one of the CRA’s top audit triggers. Missing or inadequate documentation can lead to denied deductions, reassessments, penalties, and interest. For examples of common reporting issues, including meal and entertainment expenses, see our blog on avoiding missed business deductions.
Common penalties & pitfalls
Late T2 Filing Penalties
Corporations that file their T2 late face an initial penalty of 5% of the unpaid tax at the filing date, plus 1% per month for up to 12 months. Repeat failures within three years result in the penalty doubling to 10% of unpaid tax plus 2% per month, up to 20 months.
Gross Negligence Penalties
If false statements or omissions are made knowingly, or in circumstances amounting to gross negligence, the CRA can apply a penalty equal to 50% of the understated tax or overstated credits.
GST/HST Registration Failures
Corporations that fail to register for GST/HST once they exceed the registration threshold may face backdated assessments, plus interest and penalties. They may also lose the ability to claim related Input Tax Credits (ITCs) on historical expenses.
Other Common Pitfalls
- Poor recordkeeping can lead to missed business deductions, including meal and entertainment expenses.
- Missing installment payments, triggering interest on late installments.
- Misclassifying income or expenses, such as mixing personal and business transactions.
Frequently Asked Questions (FAQ)
Q: Do I need to file a T2 if my corporation had no income?
A: Yes. All resident corporations must file a T2 corporate tax return annually, even if they earned no income or were inactive. The only exceptions are certain tax-exempt entities, such as registered charities.
Q: Can I carry back losses from prior years?
A: Yes. Non-capital losses can generally be carried back up to 3 years to recover taxes paid in prior years. They can also be carried forward up to 20 years to offset future taxable income.
Q: How long should I keep invoices if I claim Input Tax Credits (ITCs)?
A: Invoices and supporting records must be retained for at least 6 years after the end of the tax year and filing. CRA requires original source documentation—digital or paper—to validate ITC claims.
Q: When do I need to register for GST/HST?
A: Registration is mandatory once your corporation exceeds $30,000 in taxable supplies in a single quarter or over four consecutive quarters.
Q: What happens if I miss an installment payment?
A: CRA charges daily compounding interest on any late or missed installments. Repeated late payments can also trigger further CRA scrutiny or audits.
Q: When are T4 and T5 slips due?
A: Both employee T4 slips and shareholder T5 slips must be filed with CRA and distributed to recipients by February 28 of the following year.
Conclusion
Filing corporate taxes in Canada involves T2 returns, GST/HST registration, payroll remittances, and proper recordkeeping. Missing deadlines, misclassifying expenses, or incomplete records can lead to penalties, interest, and audit risk.
Accurate financial statements, timely GST/HST reporting, and keeping records for at least six years are essential. Following these practices helps ensure your corporation stays compliant and prepared for future audits.