Corporate Tax & Year-Ends in Vancouver

Yes. All resident corporations — other than tax-exempt Crown corporations, Hutterite colonies, and registered charities — have to file a T2 for every tax year even if there is no tax payable, and the CRA states that an inactive corporation, meaning one that has not operated during the tax year, still has to file. The obligation follows the corporation's existence rather than its activity, so it runs until the company is formally dissolved. A nil return is still a return: it has a year-end, a balance sheet, and a filing deadline.

Six months after the end of your fiscal year — a 31 December year-end means a T2 due 30 June. The balance owing is due earlier: generally two months after year-end, or three months for a corporation that was a Canadian-controlled private corporation throughout the tax year, claimed the small business deduction in the current or previous tax year, and whose previous-year taxable income stayed within its business limit — and where it is associated with other corporations, the test is their combined taxable incomes for their last tax years ending in the previous calendar year against their combined business limits. That gap is what catches owners out — you can file on time and still be paying arrears interest. Where a due date falls on a Saturday, Sunday, or a public holiday the CRA recognizes, the next business day counts as on time.

The statements are; the name isn't. "Notice to reader" came from Section 9200, which CSRS 4200 replaced for periods ending on or after 14 December 2021, and the communication that now accompanies compiled statements is a compilation engagement report — lenders often still ask for it by the old name. A compilation is not an audit and not a review: the practitioner compiles financial information from what you provide, expresses no opinion and no conclusion, and provides no assurance on it — and where the statements are going to a lender or another third party, a compilation engagement is only available if that party is in a position to request further information from you directly, or has agreed the basis of accounting with you. If a lender or a shareholder agreement requires an audit or a review engagement instead, that has to be settled before the year-end work starts, because it is a different engagement.

It depends on the corporation's income and what else sits on your personal return — it is a calculation, not a rule of thumb. Salary is employment income reported on a T4, with income tax and CPP contributions withheld at source and remitted by the corporation, which must also contribute an amount equal to the CPP it deducts — a cost that belongs in the comparison — and salary counts as earned income, which is what builds RRSP room. Dividends are reported on a T5, due to the CRA and to you by the last day of February following the calendar year the dividend was paid in — the calendar year, not your fiscal year — with no payroll withholding and no RRSP room; you report a grossed-up amount and claim the dividend tax credit against it, 115% of the actual amount for dividends other than eligible and 138% for eligible dividends, with a larger credit. Which one you can pay is not a choice: a CCPC can pay eligible dividends only to the extent of its general rate income pool, which reflects income that has not benefited from the small business deduction, so profit taxed at the small business rate comes out as a non-eligible dividend — and designating beyond that capacity attracts Part III.1 tax of 20% of the excessive designation.

Not as statements — as GIFI codes. All corporations except insurance corporations should prepare their financial statement information using the General Index of Financial Information and file it with the T2. Schedule 141 goes with it, and it is the set of questions that records who was primarily involved with the financial information, the extent of that involvement, and whether they expressed a reservation. That is why the year-end statements and the return are one piece of work rather than two — the statements are the source of the return.

The year's bookkeeping, bank and loan statements through to year-end, and last year's T2 and financial statements. Beyond that: your articles of incorporation and current share register, your business number with its program accounts, and any CRA notices or letters received during the year. Incomplete bookkeeping is common — where the records are not complete we can work from the source documents, and the engagement letter sets out what is covered before the work starts. Authorizing us as your representative on the business number lets us see the CRA's side ourselves; level 1 access is view-only, and level 2 also allows changes to the accounts you name.