Corporation income tax return

Canada Corporation income tax return. All resident corporations have to file a corporation income tax (T2) return every tax year even if there is no tax payable. This includes:

• non-profit organizations
• tax-exempt corporations
• inactive corporations

Who has to file a T2 return?

Resident corporations

All corporations—including non-profit organizations, tax-exempt corporations, and inactive corporations—have to file a T2 return for every tax year, even if there is no tax payable. The only exceptions to this rule are tax-exempt Crown corporations, Hutterite colonies, and corporations that were registered charities throughout the year.

Non-resident corporations

A non-resident corporation has to file a T2 return if, at any time in the year, one of the following situations applies:

• it carried on business in Canada;
• it had a taxable capital gain; or
• it disposed of taxable Canadian property,

A non-resident corporation also has to file a T2 return in a number of situations, including:

• When it has filed Form NR6, Undertaking to File an Income Tax Return by a Non-Resident Receiving Rent from Real or Immovable Property or Receiving a Timber Royalty, to pay Part I tax on the net amount of timber royalty income or rental income from real property under subsection 216(1) for the current year and we approved it; or
• When it has filed Form T1288, Application by a Non-Resident of Canada (Corporation) for a Reduction in the Amount of Non-Resident Tax Required to Be Withheld on Income Earned from Acting in a Film or Video Production, to pay Part I tax on the net amount of acting services under subsection 216.1(1) for the current year and Canada revenue agency approved it.

Even if neither of these requirements applies, a non-resident corporation may still want to file a return if any of the following situations apply:

• when it wants to claim a refund;
• when it wants to elect to pay Part I tax on the net amount of timber royalty income or rental income from real property under subsection 216(1) for the current year; or
• when it wants to elect to pay Part I tax on the net amount of acting services under subsection 216.1(1) for the current year.

Note Non-resident corporations must file their T2 return, schedules, and the General Index of Financial Information in Canadian funds only. They are not eligible to file in a functional currency per section 261.