What if your corporation has not filed a T2 for several years?

A corporation files a T2 for every tax year. No revenue, no bank activity, and “we meant to close it” do not cancel the return. The T2 is due six months after the fiscal year-end. The balance of corporate tax is usually due two months after year-end. Some Canadian-controlled private corporations that claimed the small business deduction get three months, if they meet the prior-year test. Those are two different dates. People miss the balance date and think they still have until the return is due.

When corporate tax is unpaid and the return is late, the late-filing penalty follows the familiar pattern: 5% of the unpaid tax plus 1% for each full month, up to 12 months, plus daily prescribed-rate interest. If CRA has already issued a demand to file and a penalty was charged in any of the three preceding years, the repeated-failure penalty is 10% plus 2% a month, up to 20 months.

What “several years” actually means in the file

Each year stands on its own return, but the years are not independent in practice. Shareholder loans, dividends, and wages only make sense when the T2 and the shareholder’s T1 tell the same story. A dividend declared in the minute book and never reported, or cash taken and never classified, is usually the part that changes the tax.

• Nil or dormant years still need a T2. There is a short-form path for some inactive corporations, but the return still has to be filed.
• One late T2 does not automatically dissolve an Ontario company. The provincial annual return is a separate filing, and prolonged default can lead to dissolution.
• Books that were never kept have to be rebuilt from bank statements before a serious T2 can be signed.
• A ready corporate year at Tax Everyday is the corporate package: $2,000 plus HST. A stack of years is quoted.

Start with the year-ends, not a phone call

Write down each fiscal year-end, whether the company had a bank account, and whether anyone was paid. If CRA has not yet contacted the company about those T2s, do not open the conversation yourself until someone has checked whether a voluntary disclosure could still apply. If a demand to file has already arrived, the file is in penalty territory and the returns should be prepared against that deadline.

Drop the articles, the last filed T2 if one exists, and the bank statements. We quote the catch-up before we start. The office is at 3300 Steeles Ave W in Vaughan, open every day from 8 to 8, and the same work is done from the file drop if you are not local.