T2 Corporation – Income Tax Guide – Chapter 1: Page 1 of the T2 return

Identification

Accurately complete page 1 of your return, so we can properly identify the corporation and process the return more quickly. You cannot use the Corporation Internet Filing service to change the corporation's head office address or mailing address.

You can change the mailing, physical, and books and records address of the corporation by:

  • using the "Manage address" service through Represent a client, if you are an authorized representative or employee; or at My Business Account if you are the business owner; or
  • calling 1-800-959-5525.

Line 001 – Business number (BN)

The BN is a 15-character number composed of three parts. The first nine characters identify your business. The "RC" identifies the corporation income tax program. The last four characters identify the particular program account.

On line 001, enter your BN for income tax purposes. Enter "0001" as the program account identifier unless we have advised you to use a different one. You will find the corporation's BN on previous notices of assessment, account statements, or remittance forms.

Note

If you are a non-resident corporation requiring a BN, see Guide RC2, The Business Number and Your Canada Revenue Agency Program Accounts.

Line 002 – Corporation's name

Enter the full name of the corporation. Do not use abbreviations, and make sure the punctuation is correct.

Lines 010 to 018 – Address of head office

Line 010 – Has this address changed since the last time we were notified?

If you answer no, do not complete lines 011 to 018.

Lines 011 to 018

Enter the new head office address of the corporation, including the street number, street, city, province/territory/state, and postal code or zip code in the appropriate area. Complete line 017, if it applies.

Lines 020 to 028 – Mailing address

Complete this area if the corporation's mailing address is different from its head office address.

Line 020 – Has this address changed since the last time we were notified?

If you answer no, do not complete lines 021 to 028.

Lines 021 to 028

Enter the new mailing address of the corporation by completing lines 021 to 028. Complete line 027, if it applies.

If the corporation's mailing address changes, you can change this address:

Lines 030 to 038 – Location of books and records

Line 030 – Has the location of books and records changed since the last time we were notified?

If you answer no, do not complete lines 031 to 038.

If this is your first year of filing after incorporation or amalgamation, you must tick yes and complete lines 031 to 038.

Lines 031 to 038

Enter the address of the location where the corporation keeps its books and records by completing lines 031 to 038. Complete line 037, if it applies.

Lines 040 and 043 – Type of corporation at the end of the tax year

Line 040

Tick the box that describes the corporation type at the end of the tax year. The corporation type determines whether or not the corporation is entitled to certain rates and deductions. See the following for details.

Reference
IT-391, Status of Corporations

Box 1 – Canadian-controlled private corporation (CCPC)

The corporation is a CCPC if it meets all of the following requirements at the end of the tax year:

  • it is a private corporation;
  • it is a corporation that was resident in Canada and was either incorporated in Canada or resident in Canada from June 18, 1971, to the end of the tax year;
  • it is not controlled directly or indirectly by one or more non-resident persons;
  • it is not controlled directly or indirectly by one or more public corporations (other than a prescribed venture capital corporation, as defined in Regulation 6700);
  • it is not controlled by a Canadian resident corporation that lists its shares on a designated stock exchange outside of Canada;
  • it is not controlled directly or indirectly by any combination of persons described in the three previous conditions;
  • if all of its shares that are owned by a non-resident person, by a public corporation (other than a prescribed venture capital corporation), or by a corporation with a class of shares listed on a designated stock exchange, were owned by one person, that person would not own sufficient shares to control the corporation; and
  • no class of its shares of capital stock is listed on a designated stock exchange.

References
Subsections 89(1) and 125(7)
IT-458, Canadian-Controlled Private Corporation

Box 2 – Other private corporation

The corporation is another private corporation if it meets all of the following requirements at the end of the tax year:

  • it is resident in Canada;
  • it is not a public corporation;
  • it is not controlled by one or more public corporations (other than a prescribed venture capital corporation, as defined in Regulation 6700);
  • it is not controlled by one or more prescribed federal Crown corporations (as defined in Regulation 7100); and
  • it is not controlled by any combination of corporations described in the two previous conditions.

References
Subsection 89(1)
Regulations 6700 and 7100

Box 3 – Public corporation

The corporation is a public corporation if it is resident in Canada and meets either of the following requirements at the end of the tax year:

  • it has a class of shares listed on a designated Canadian stock exchange; or
  • it has elected, or the minister of National Revenue has designated it, to be a public corporation and the corporation has complied with prescribed conditions under Regulation 4800(1) on the number of its shareholders, the dispersing of the ownership of its shares, the public trading of its shares, and the size of the corporation.

If a public corporation has complied with certain prescribed conditions under Regulation 4800(2), it can elect, or the minister of National Revenue can designate it, not to be a public corporation.

References
Subsections 89(1) and 248(1)
Regulations 4800(1) and 4800(2)

Box 4 – Corporation controlled by a public corporation

The corporation is a corporation controlled by a public corporation if it is a Canadian subsidiary of a public corporation. This type of corporation does not qualify as a public corporation for determining the type of corporation.

Box 5 – Other corporation

The corporation is another corporation if it does not fall within the other categories. Examples of other corporations include general insurers and Crown corporations.

Line 043 – If the type of corporation changed during the tax year, provide the effective date of the change

Indicate the effective date of the change. Do not include other types of changes in this section, such as the change from active to inactive status.

A change of corporation type may bring significant tax consequences. For example, certain calculations on the return depend on whether the corporation was a private corporation or a CCPC throughout the tax year, at any time in the tax year, or at the end of the tax year.

Note

If the corporation changed from, or to, a CCPC see line 066. Do not complete line 043 if you answer yes at line 066, and you are filing a tax return with a deemed tax year-end because of subsection 249(3.1).

Lines 060, 061, 063, 065 – To which tax year does this return apply?

Lines 060 and 061 – Tax year start and tax year-end

The corporation's tax year is its fiscal period. A fiscal period cannot be longer than 53 weeks (371 days).

In the spaces provided, enter the first and last days of the tax year. If the particular time of day applies, enter the hours and minutes to specify the time. The first day of this tax year has to be the day after the last day of the previous tax year. You have to file a return for every calendar year.

A new corporation may choose any tax year-end as long as its first tax year does not exceed 53 weeks from the date it was either incorporated or formed as a result of an amalgamation.

Make sure the financial statements or the General Index of Financial Information (GIFI) you attach to the return match the tax year of the return.

Note

A professional corporation that is a member of a partnership and that carries on business in Canada has to have a December 31 year-end.

Generally, unless you have received approval to change the fiscal period, the corporation's fiscal period is the same from year to year. To change an established fiscal period, write a letter to your tax services office asking for approval and explaining the reasons for the change.

However, you do not need approval to change the fiscal period in some situations, including the following:

  • the corporation has wound-up and you are filing its final return with an abbreviated fiscal period;
  • the corporation has to end its tax year at a certain time because it is emigrating to another country, becoming exempt from tax, or ceasing to be exempt from tax; or
  • a person or group of persons acquired control of the corporation under subsection 249(4).
Note

A corporation that becomes bankrupt must get our approval to change its fiscal period.

References
IT-364, Commencement of Business Operations
IT-454, Business Transactions Prior to Incorporation

Lines 063 and 065 – Has there been an acquisition of control to which subsection 249(4) applies since the previous tax year?

If you answer yes, enter on line 065 the date the control was acquired.

There is an acquisition of control when, during the tax year, a person or group of persons acquired control of the corporation.

When control is acquired, subsection 249(4) provides that the tax year of the corporation ends immediately before that control is acquired. You do not need approval for the changed tax year.

File a return for the tax year that ends immediately before control is acquired. The next tax year starts at the time control is acquired, and the corporation can choose any tax year-end within the next 53 weeks.

If control is acquired up to seven days after the end of an established tax year, generally, a corporation can choose to extend the tax year up to the time control is acquired. In this case, attach a letter to your return that says you are making an election under paragraph 249(4)(c).

Where shares of a corporation are transferred to an estate because of a death, there is no acquisition of control. In general, this also applies when the transfer is made to a related person. As a result, there is no deemed tax year-end and no tax return is required to be filed. For more information, see subsection 256(7).

Note

The acquisition of control under subsection 256(9) of a corporation is usually deemed to occur at the beginning of the day on which the acquisition takes place. However, the particular time of day that the acquisition of control took place will be recognized if the corporation makes an election under subsection 256(9). To elect under subsection 256(9), include a note with your return for the tax year ending immediately before control was acquired and enter the hours and minutes that specify the time of day at line 065.

This deeming rule does not apply when determining the status of a corporation as a small business corporation or a Canadian-controlled private corporation at the time of the transaction that caused the change of control. The status of the corporation will not change until the actual time of the acquisition.

Line 066 – Is the date on line 061 a deemed tax year-end according to subsection 249(3.1)?

If at any time a corporation becomes or stops being a Canadian-controlled private corporation (CCPC) for any reason other than an acquisition of control, subsection 249(3.1) provides that the tax year of the corporation is deemed to end immediately before that change. You do not need the minister's approval for the changed tax year.

File a return for the tax year that ends immediately before the change. The next tax year is deemed to start on the date that the corporation type changed, and the corporation can choose any tax year-end within the next 53 weeks.

If the change occurs up to seven days after the end of an established tax year and there has not been an acquisition of control and the corporation has not become or stopped being a CCPC, within those seven days the corporation can choose to extend the tax year up to the time the change occurred. In this case, attach a letter to your return that says you are making an election under paragraph 249(3.1)(c).

Line 067 – Is the corporation a professional corporation that is a member of a partnership?

A professional corporation is a corporation that carries on the professional practice of an accountant, dentist, lawyer, medical doctor, veterinarian, or chiropractor.

Line 070 – Is this the first year of filing after incorporation?

If you answer yes, you have to file Schedule 24, First Time Filer After Incorporation, Amalgamation, or Winding-up of a Subsidiary into a Parent, with your return. If you do not file Schedule 24, the processing of your return may be delayed.

See chapters 2 and 3 for other schedules you may have to attach to your return.

Note

The tax year of a new corporation cannot be longer than 53 weeks from the date it was incorporated.

If this is your first year of filing after incorporation, you must tick yes at line 030 and complete lines 031 to 038.

Line 071 – Is this the first year of filing after amalgamation?

If you answer yes, you have to file Schedule 24, First Time Filer After Incorporation, Amalgamation, or Winding-up of a Subsidiary into a Parent, with your return. If you do not file Schedule 24, the processing of your return may be delayed.

Note

The tax year of a new corporation cannot be longer than 53 weeks from the date it was amalgamated.

If this is your first year of filing after amalgamation, you must tick yes at line 030 and complete lines 031 to 038.

Line 072 – Has there been a wind-up of a subsidiary under section 88 during the current tax year?

If you answer yes, you have to file Schedule 24, First Time Filer After Incorporation, Amalgamation, or Winding-up of a Subsidiary into a Parent, with your return. If you do not file Schedule 24, the processing of your return may be delayed.

Reference
IT-126, Meaning of "Winding-up"

Line 076 – Is this the final tax year before amalgamation?

Predecessor corporations filing their last returns have to answer yes to this question on their final returns.

When two or more corporations amalgamate, each of the predecessor corporations has to file a return for the period ending immediately before the effective date of amalgamation. You will find the effective date on the certificate of amalgamation or the letters patent of amalgamation.

Note

We cannot accept returns filed for the period up to the adoptive date of amalgamation, or the date of the shareholders' resolution.

Line 078 – Is this the final return up to dissolution?

You have to answer yes if you have already permanently dissolved your corporation with the incorporating authority and you are filing your final return for a tax year ending on the date of dissolution. You will find the date of dissolution on the articles of dissolution.

The responsible representative has to get a clearance certificate from the tax services office before distributing any of the corporation's property under his or her control. By getting the certificate, the responsible representative will avoid being personally liable for the unpaid taxes, interest, and penalties. Include Schedule 100, Balance Sheet Information, with the final return, which shows how the assets were distributed.

Notes

If you want to dissolve your corporation, you should send an application for dissolution to the government body that governs the affairs of your corporation.

Taxpayers wishing to dissolve an Ontario jurisdiction corporation should contact Business Enquiries and not the Ontario Ministry of Revenue.

Once the corporation has been dissolved, you should send us the articles of dissolution. Otherwise, we consider that the corporation still exists, and it will have to file a return even if there is no tax payable.

Once the corporation is dissolved, any refunds to which the corporation would be entitled revert to the Crown and cannot normally be issued to the corporation or its representatives unless the charter is reinstated.

References
Subsection 159(2)
IC82-6, Clearance Certificate

Line 079 – If an election was made under section 261

If the return is not reported in Canadian currency, indicate the functional currency used.

Corporations resident in Canada throughout the tax year can elect to report in a functional currency, except for:

  • investment corporations;
  • mortgage investment corporations; and
  • mutual fund corporations.

A functional currency is a currency of a country other than Canada that is:

  • a qualifying currency (currently, the British pound, the euro, the Australian and the U.S. dollar); and
  • the primary currency in which the taxpayer maintains its records and books of account for financial reporting purposes for the tax year.

To elect to report in a functional currency, file Form T1296, Election, or Revocation of an Election, to Report in a Functional Currency.

Note

Even if you elect to report in a functional currency, you still have to complete lines 840 and 898 in Canadian currency.

You cannot change functional currency. If you cease to qualify as a functional currency reporter, you must revert to determining your Canadian tax results in Canadian dollars. You cannot make the election again.

For more information, go to Functional currency.

Reference
Section 261

Lines 080 to 082 – Is the corporation a resident of Canada?

If you answer no, enter the country of residence on line 081 and file Schedule 97, Additional Information on Non-resident Corporations in Canada. Non-resident corporations have to mail their returns to the International Tax Services Office (ITSO). See Non-resident corporations for the address and telephone and fax numbers.

Note

Certain non-resident corporations can file electronically through Corporation Internet Filing and do not have to mail their returns to the ITSO.

Line 082 – Is the non-resident corporation claiming an exemption under an income tax treaty?

If you answer yes, file Schedule 91, Information Concerning Claims for Treaty-Based Exemptions.

For more information about the filing obligations of non-resident corporations, see Non-resident corporations.

Line 085 – If the corporation is exempt from tax under section 149

If the corporation is exempt from tax under section 149, tick one of the boxes following this line.

These corporations, which include non-profit organizations, do not usually have to pay any corporation income tax because they are exempted by one of the following paragraphs:

Box 1 – Exempt under paragraph 149(1)(e) or (l)

Tick this box if one of the two following paragraphs applies:

  • Paragraph 149(1)(e)exempts the following types of organizations, as long as no part of the income of these organizations was payable or otherwise available for the personal benefit of proprietors, members, or shareholders:
    • agricultural organizations;
    • boards of trade; and
    • chambers of commerce.
  • Paragraph 149(1)(l)exempts a club, society, or association that is not a charity and that is organized and operated solely for:
    • social welfare;
    • civic improvement;
    • pleasure or recreation; or
    • any purpose other than profit.

No part of these organizations' income can be payable to, or otherwise available for the personal benefit of, any proprietor, member, or shareholder, unless the proprietor, member, or shareholder was a club, society, or association that promotes amateur athletics in Canada.

You may have to file Form T1044, Non-Profit Organization (NPO) Information Return, if the organization meets the definition in paragraph 149(1)(e) or 149(1)(l) and if one of the following conditions applies:

  • the organization received or was entitled to receive taxable dividends, interest, rentals, or royalties in the tax year totalling more than $10,000;
  • the organization's total assets were more than $200,000 at the end of the immediately previous tax year; or
  • the organization had to file Form T1044 for a previous tax year.

If you have to file an information return for any tax year, you will have to file a return for all future tax years. Form T1044 has to be filed in the six months following the end of the tax year. See Guide T4117, Income Tax Guide to the Non-Profit Organization (NPO) Information Return.

References
Subsection 149(12)
T4117, Income Tax Guide to the Non-Profit Organization (NPO) Information Return
T1044, Non-Profit Organization (NPO) Information Return
IT-83, Non-Profit Organizations – Taxation of Income from Property
IT-496, Non-profit Organizations

Box 2 – Exempt under paragraph 149(1)(j)

Tick this box if paragraph 149(1)(j) applies.
Paragraph 149(1)(j) exempts a non-profit corporation for scientific research and experimental development (SR&ED) if it meets all the following conditions:

  • the corporation is constituted exclusively for carrying on or promoting SR&ED;
  • no part of the corporation's income is payable to or otherwise available for the personal benefit of any proprietor, member, or shareholder;
  • the corporation did not acquire control of any other corporation;
  • the corporation did not carry on any business during the period for which exemption is claimed; and
  • the corporation must, in each period for which it claims exemption, have spent amounts in Canada that are either:
    • expenditures on SR&ED directly undertaken by it or on its behalf; or
    • payments to an association, university, college, or research institution to be used for SR&ED.

Box 3 – Exempt under 149(1)(t)

Tick this box if paragraph 149(1)(t) applies.
Paragraph 149(1)(t) exempts certain insurers who receive at least 20% of their premiums from insuring residences of farmers or fishers, farm property, or property used in fishing.

Box 4 – Exempt under other paragraphs of section 149

Tick this box if the corporation is exempt under any other paragraph of section 149.

In this case, the corporation has to attach to the return all relevant information on this exemption and specify under which paragraph it is exempt.