Who has to file a corporation income tax (T2) return

Resident corporations

All resident corporations, except 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; and
• inactive corporations.

If you were a registered charity throughout the year, you do not have to file a T2 return. For more information on charities, see Charities and Giving.

Non-resident corporations

A non-resident corporation has to file a return if, at any time in the tax year, one of the following situations applied:

• The corporation carried on business in Canada.
• The corporation had a taxable capital gain.
• The corporation disposed of taxable Canadian property, unless the disposition takes place after 2008 and all of the following criteria apply:
  • no tax is payable under Part I for the tax year;
  • the corporation is not liable to pay any amount under the Act for any previous tax year (other than an amount covered by adequate security under section 116 or 220); and
  • each taxable Canadian property disposed of in the tax year is excluded property under section 116 or property for which a certificate was issued under section 116.

Effective after March 4, 2010, the definition of taxable Canadian property was amended to exclude shares of corporations, and certain other interests, that, during the 60-month period ending at the time of determination, do not derive their value principally from real or immovable property situated in Canada (including Canadian resource property and timber resource property).

Other situations may require a non-resident corporation to file a T2 return, such as:

• to pay tax on taxable income the corporation earns in Canada under section 115 of the Canadian Income Tax Act, including payments for services rendered in Canada for which taxes were withheld under Regulation 105 of the Canadian Income Tax Act;
• to pay Part I tax on the net amount of timber royalty income or rental income from real property as an elective income tax return under section 216 of the Canadian Income Tax Act;
• as a corporation subject to tax under Part XIV (known as additional tax on non-resident corporations); and
• as a travelling corporation (for example, musical group) that operates in Canada for a limited period in a tax year.

For more information on these situations, see the T2 Corporation Income Tax Guide.

Note
Non-resident corporations must file their T2 return, schedules, and the GIFI in Canadian funds only. They are not eligible to file in a functional currency per section 261.

Forms and publications

• T2 Corporation Income Tax Guide (T4012)
• T2 Corporation Income Tax Return
• T2 Short Return