We would like to start by clarifying the following: an Annual Return is NOT a Corporate Tax Return.
A corporate tax return is a mandatory corporate filing that requires to be submitted every year declaring to the Canada Revenue Agency the income that the Corporation generated during that year.
In addition with filing a Corporate Tax Return, a corporation is also required to file an Annual Return.
An Annual Return is submitted to the federal or provincial Government (depending on the jurisdiction where the company was incorporated). This annual return provides information to the Government regarding the last shareholders meetings, head office, and mailing address, as well as officers and Directors of the corporation. Failure to file an Annual Return could result in penalties or an involuntary dissolution.
What is a Corporate Tax Return (T2 tax return)?
A corporate tax return is a mandatory corporate income tax return form for the federal government of Canada. The exact term for this statement is “declaration of corporate income.”
Each company must file a corporate income tax (T2) for each taxation year. Companies can complete one of two types of T2 statements proposed by the Canada Revenue Agency.
- T2 Corporation Income Tax Return
- T2 Short Return
Resident corporations
All resident corporations (except tax-exempt Crown corporations, Hutterite colonies and registered charities) have to file a T2 return for every tax year, even if there is no tax payable. This includes:
- non-profit organizations
- tax-exempt corporations
- inactive corporations
Non-resident corporations
A non-resident corporation must file a return if, at any time in the year, one of the following situations applies:
- it carried on business in Canada
- it had a taxable capital gain
- it disposed of taxable Canadian property
This requirement applies even if the corporation claims that any profits or gains realized are exempt from Canadian income tax due to the provisions of a tax treaty.
