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 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.

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.

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.

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

• T2 Corporation Income Tax Guide (T4012)
• IT364, Commencement of Business Operations
• IT454, Business Transactions Prior to Incorporation

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