Your first T2 return after incorporating
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The first tax year starts on the incorporation date and cannot be longer than 53 weeks. The return is due six months after its year-end.
The first tax year
On the first T2 return after incorporation, the tax year starts on the date of incorporation. You choose the year-end on that first return. A corporation’s tax year is its fiscal period, and it cannot be longer than 53 weeks, which is 371 days. A new corporation can choose any year-end as long as the first tax year does not exceed 53 weeks from the date it was incorporated.
When it is due
A corporation files its T2 within six months of the end of each tax year. When the year ends on the last day of a month, the return is due on the last day of the sixth month after it. A fictional example: a corporation incorporated on 15 October 2026 that chooses a 31 December 2026 year-end files by 30 June 2027. If it chooses 30 September 2027, which is within 53 weeks of 15 October 2026, it files by 31 March 2028. The dates are invented and follow the rule above.
The tax owing is due earlier than the return. It is generally due two months after the end of the tax year. It is due three months after for a Canadian-controlled private corporation that meets the CRA’s conditions, which turn on whether it claimed the small business deduction and on its taxable income against its business limit. The CRA charges daily compound interest on a balance from the day after it is due until it is paid.
The first-time filer schedule
On the first return after incorporation, the T2 asks whether it is the first year of filing. If you answer yes, you file Schedule 24, First Time Filer After Incorporation, Amalgamation, or Winding-up of a Subsidiary into a Parent, with the return.
What the books need to show
- Every transaction from the date of incorporation, in the corporation’s own account.
- Money you put in and money you took out, recorded as what it was, such as a shareholder loan, a salary or a dividend.
- Anything the business owned or owed before incorporation, and whether it moved into the corporation.
When does the first tax year start?
On the date of incorporation.
Can I choose any year-end?
Any year-end, as long as the first tax year is not longer than 53 weeks from the date of incorporation.
When is the first T2 due?
Within six months of the end of the first tax year. The tax owing is generally due two months after year-end, or three months for a CCPC that meets the CRA’s conditions.
What is Schedule 24?
The first-time filer schedule, filed with the return after incorporation, amalgamation, or the winding-up of a subsidiary into a parent.
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