T2 corporation income tax return
A T2 corporation income tax return is the annual return a corporation resident in Canada files with the Canada Revenue Agency. The CRA says resident corporations, with listed exceptions, must file one every tax year even when no tax is payable, so a company has a return history a buyer can ask to see.
The T2 is filed for one tax year, and the CRA’s T2 guide says the financial statements or General Index of Financial Information attached to it must match that tax year. It is the document a buyer meets when reviewing a company’s filed returns in a share purchase. The CRA states that all resident corporations, except tax-exempt Crown corporations, Hutterite colonies and registered charities, have to file one every tax year, even if there is no tax payable. A missing year is therefore a question to put to the seller.
What to check or ask
- Whether a return was filed for every tax year, including years with no tax payable
- Whether the financial statements or General Index of Financial Information attached match the tax year of the return, as the CRA’s T2 guide requires
- Whether the CRA has reassessed any year; the CRA says the normal reassessment period depends on whether the corporation was a Canadian-controlled private corporation at the end of the tax year
- Where the returns differ from the financial statements shown to you
For why the filed returns matter in a deal, see why buyers ask for three years of tax returns.
Sources
This definition is checked against primary sources. Links were last confirmed on the dates shown.
- 01Canada Revenue AgencyGovernmentCorporation income tax return
- 02Canada Revenue AgencyGovernmentT2 Corporation – Income Tax Guide – Chapter 1: Page 1 of the T2 return
- 03Canada Revenue AgencyGovernmentWhen we reassess your T2 return
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