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Determining your corporation's tax year

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

New corporations

You can declare your tax year on your first T2 return after incorporation. Make sure the financial statements you attach to the return match the tax year of the return.

The first day of your tax year (tax year start)

On your first T2 return after incorporation, use the date of incorporation as the tax year start. For all subsequent returns, your tax year start will be the day after your tax year-end.

The last day of your tax year (tax year-end)

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

Example
A professional corporation was incorporated May 18, 2011. It has to have a tax year ending on December 31. Its first tax year will be from May 18, 2011, to December 31, 2011. Its second tax year will be from January 1, 2012, to December 31, 2012.

	Tax year start	Tax year end
First tax year	May 18, 2011*	December 31, 2011
Second tax year	January 1, 2012	December 31, 2012

* Date of incorporation

Any other new corporation may choose any tax year-end as long as its first tax year is not longer than 53 weeks from the date it was either incorporated or formed as a result of an amalgamation.

Example
A corporation was incorporated May 18, 2011. It chose October 9 as its tax year-end. Its first tax year will be from May 18, 2011, to October 9, 2011. Its second tax year will be from October 10, 2011, to October 9, 2012.

	Tax year start	Tax year end
First tax year	May 18, 2011**	October 9, 2011
Second tax year	October 10, 2011	October 9, 2012

** Date of incorporation

Changing your tax year

Generally, unless you have received approval to change the tax year, the corporation's tax year is the same from year to year.

To change an established tax year:

Write a letter to your tax services office asking for approval.
Explain the reasons for the change.

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

The corporation has gone through a wind-up and you are filing its final return with an abbreviated tax year.
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.
A person or group of persons acquired control of the corporation, therefore the tax year of the corporation ends immediately before that control is acquired.

Note
A corporation that becomes bankrupt has to get our approval to change its tax year.

Forms and publications

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