T2 return (Canadian Corporate Return) (Part1)

 

Ø  Who is required to file t2 return?

All corporations with annual gross revenue of more than $1 million must file their T2 Corporation Income Tax Return electronically, except for:

·       insurance corporations

·       non-resident corporations

·       corporations reporting in functional currency

·       corporations that are exempt from tax payable under section 149 of the Income Tax Act

Ø  What is due date of filing t2 return?

The due date of return (T2's) is not later than six months after the business' year-end. A corporation's year-end may vary, but the most common year-end is December 31. Example: If a business has a December 31 year end for its 2022 fiscal year, its filing deadline is June 30, 2023. 

Ø  What is t2 SHORT return?

T2(Short Return): Simpler Version

There are two categories of corporations that are eligible to use this return.

              You can use this return if the corporation is:

• a Canadian-controlled private corporation throughout the tax year and has either a loss or a nil net income for income tax purposes this year; or

• exempt from tax under section 149 of the Income Tax Act (such as a non-profit organization).

In addition, the corporation must meet all the following conditions to use this return:

• it has a permanent establishment in only one province or territory.

• it is not claiming any refundable tax credits (other than a refund of instalments paid);

• it did not receive or pay out any taxable dividends.

• it is reporting in Canadian currency.

• it does not have an Ontario transitional tax debit; and

• it does not have an amount calculated under section 34.2 of the federal Act

Ø  What INFORMATION IS REQUIRED TO PREPARE T2 RETURN?

Following Information is required to file T2 Return:

o   Company name and address

o   Business Number from the Canada Revenue Agency

o   Name, address and country of residence for all company shareholders

o   Name, address, and country of residence for all authorized corporate signatory shareholders.

o   Complete financial statements (statements of income, balance sheet) filed with the General Index of Financial Information (GIFI)

o   The company's main activities

o   The different sources of income for the company (investment income, etc.)

o   Whether shareholders hold shares in other companies or if the company is bound or associated with other companies

o   Whether the company performs its activities or owns property abroad

o   Whether activities are held in other Canadian provinces

o   Whether the company received or paid dividends

o   Acquisition or disposal of fixed assets

T2 Return: https://www.canada.ca/content/dam/cra-arc/formspubs/pbg/t2/t2-22e.pdf

We will discuss about various schedules of T2 Return in coming blogs.

 

Compiled By

CA. Harsimran Kaur