Late Corporate Tax Filing for Corporations Behind on Their T2 Returns
A corporation that has missed one T2 return, or several, still owes every one of them, with penalties and interest growing on any tax unpaid. Bestax rebuilds the books, prepares each missing return and brings the corporation back on schedule with the CRA.
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When a Corporation Falls Behind on Filing
Every resident corporation must file a T2 return each year, whether it made money or not. Corporations fall behind for ordinary reasons: a busy year, an accountant who left, or a company that went quiet. The path back is the same.
- Corporations with one or more years of T2 returns that were never filed.
- Inactive or holding companies that stopped filing because nothing seemed to happen.
- Owners who received a CRA demand to file or a notice of an estimated assessment.
- Corporations whose books were not kept up and must be rebuilt before any return can be filed.
- Businesses wanting to close, sell or borrow, but held up by missing tax filings.
- Corporations with Alberta, Quebec or Ontario filings that also fell behind.
Late returns are usually filed directly. Where unreported income or several years of penalties are involved, a voluntary disclosure may be worth considering before the CRA makes contact.
Not sure which route fits? Read about our Voluntary Disclosures Program support, or our T2 Corporate Tax Returns.
What Our Late Filing Service Covers
We work out what is missing, rebuild what is needed and file the years in an order that keeps each one consistent with the next.
- A review of the corporation’s CRA account: which years are missing, assessed or estimated, and what is owing.
- Rebuilding the books from bank statements, invoices and receipts where they were not kept.
- Financial statements and T2 returns for each missing year, with the schedules each one needs.
- Provincial returns where they are filed separately, such as Alberta’s AT1 and Quebec’s CO-17.
- Advice on whether to file directly or through the Voluntary Disclosures Program.
- Penalty and interest relief requests where the circumstances support one, and replies to the CRA.
What the CRA Charges for Late T2 Returns
A T2 return is due six months after the end of the corporation’s tax year. The tax itself is due earlier: two months after year end, or three months for many Canadian-controlled private corporations. Interest runs on unpaid tax from that balance-due day, compounded daily.
The late-filing penalty is 5% of the tax unpaid at the filing deadline, plus 1% for each full month the return is late, up to 12 months. If the CRA has issued a demand to file and the corporation was charged a late-filing penalty in any of the three previous years, it rises to 10% plus 2% per month, up to 20 months.
Every resident corporation files a T2 each year, including inactive corporations with no tax to pay.
The CRA’s reassessment period for a year only begins once that year’s return has been assessed.
Each year’s opening balances come from the year before, so missing years are usually filed in order.
Refunds, including a dividend refund, can be lost if a return is filed more than three years after the year end.
Where nothing is owing, the percentage penalty is nil, but the return is still required, and information returns filed with it carry penalties of their own.
Corporate Filing Deadlines and the Cost of Missing Them
A corporation’s filing calendar starts from its own year end. These are the dates that matter most when years have been missed.
| Obligation | What it is | When it is due | If it is late |
|---|---|---|---|
| Balance of tax owing | Federal and provincial corporate tax for the year | Two months after year end, or three for many CCPCs | Interest from the due date, compounded daily |
| T2 return | The federal return, with financial statements and schedules | Six months after year end | 5% of unpaid tax plus 1% per full month, up to 12 months |
| Repeated late filing | A late return after a demand, with a penalty in one of the three previous years | Six months after year end | 10% of unpaid tax plus 2% per full month, up to 20 months |
| Alberta AT1 or Quebec CO-17 | Provincial corporate returns filed separately from the T2 | Generally six months after year end | Provincial penalties and interest under each province’s rules |
| Ontario annual return | Corporate information filed with the Ontario Business Registry | Each year, through the Registry | Continued non-filing can lead to compliance action by Ontario |
The CRA can cancel or reduce penalties and interest under its taxpayer relief provisions, for the previous ten calendar years, where circumstances beyond the corporation’s control caused the delay.
What We Need to File the Missing Years
Catching up starts with what the CRA already has on file, so we look at the corporation’s account before rebuilding anything.
Missing records are normal at this stage. We rebuild each year from bank and third-party statements and keep the working papers with the file.
- Your business number, articles of incorporation and year end.
- The last T2 return filed, with its financial statements and notice of assessment.
- Bank and credit card statements for every year that is missing.
- Sales invoices, expense receipts and loan statements for those years.
- Payroll, GST/HST and dividend records, if the corporation had them.
- Any CRA letters, demands to file or notices of assessment received since the last return.
Our Late Corporate Filing Process
Review the account
With your authorization, we check what the CRA has on file, which years are missing and what is owed.
Choose the route
We advise whether to file directly or consider a voluntary disclosure, and agree the order of years.
Rebuild the books
We reconstruct each year’s records and prepare financial statements from them.
Prepare the returns
We complete each T2 and any provincial return, and review the figures with you before filing.
File and follow up
We file every missing year, track the assessments and answer the CRA’s questions.
Stay current
Once caught up, we file each new year on time so the corporation does not fall behind again.
Why Corporations Choose Bestax to Catch Up
Books and returns together
The same team rebuilds the records and prepares the returns, so the figures carry through every year.
The right route
We tell you plainly whether direct filing or a voluntary disclosure suits your corporation.
Every year in order
We file the missing years in sequence, so balances, losses and carryforwards line up.
Provinces included
Alberta, Quebec and Ontario filings are handled alongside the federal returns.
We deal with the CRA
Demands, notices and questions come to us as your representative, not to you.
Related Bestax Services
T2 Corporate Tax Returns to keep the corporation on time once the missed years are filed.
Catch-Up Bookkeeping to rebuild the books that missing returns depend on.
Compilation Engagements for the year-end financial statements each T2 is filed with.
CRA Audit & Review Support when the CRA has already issued a demand or an estimated assessment.
What Our Clients Say
Had a CRA audit notice and panicked. Called Bestax, and they dealt with it calmly and efficiently. I didn’t even have to speak to the CRA myself. Worth every penny!
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Frequently Asked Questions
It is 5% of the tax unpaid at the filing deadline, plus 1% for each full month late, up to 12 months. For repeated late filing after a demand, it is 10% plus 2% per month, up to 20 months. Interest is charged separately. Our guide to the penalty for late tax filing in Canada explains more.
Yes. Every resident corporation must file a T2 return each year, even with no income and no tax payable. A corporation that has stopped operating keeps filing until it is formally dissolved.
Yes. The CRA can issue a demand to file and, if the returns still do not arrive, assess the corporation on its own estimate of income. Filing the actual returns is the way to replace those estimates with real figures.
Most late returns are filed directly. The Voluntary Disclosures Program may be worth considering where unreported income or substantial penalties are involved and the CRA has not yet contacted the corporation.
The CRA can cancel or reduce them under its taxpayer relief provisions when the delay was caused by circumstances beyond the corporation’s control, such as serious illness or a disaster. It is the CRA’s decision, and relief covers the previous ten calendar years.
Every unfiled year is still owed. Where the CRA has made a demand, it will specify the years it wants. We review the corporation’s account first, so you know exactly which years are outstanding before work begins.