Quick answer: Winding up a corporation properly is a sequence, not a single form. You settle the corporation’s debts, distribute what’s left to shareholders, file a final T2 return, close your GST/HST and payroll accounts with CRA, and file articles of dissolution with the incorporating registry. The step owners most often skip — and most regret skipping — is requesting a clearance certificate (Form TX19) before distributing assets, which protects directors from being held personally liable for tax debts discovered after the corporation is gone.
Key takeaways
- Dissolving a corporation is a sequence: settle debts, distribute assets, file final returns, close CRA accounts, file articles of dissolution.
- A final T2 corporate return must be filed for the period ending on the dissolution date.
- Close your GST/HST (RT) and payroll (RP) program accounts with CRA once final filings are done.
- A clearance certificate (Form TX19) confirms CRA has no further claims — request it before distributing remaining assets.
- Without a clearance certificate, directors can be held personally liable for corporate tax debts found later.
Dissolving is a process, not a form
Many owners assume that closing a corporation means filing one document and walking away. In reality, a corporation is a separate legal person, and ending it cleanly means settling its affairs in a particular order — getting that order wrong can leave you personally exposed or create tax problems that outlive the company. Here’s the sequence that keeps a wind-up clean.
1. Settle debts and obligations
Before anything is distributed to shareholders, the corporation’s liabilities should be dealt with: pay off or otherwise settle creditors, remit any outstanding source deductions and GST/HST, and resolve any amounts owing to CRA. A corporation can’t distribute assets out from under its creditors, and directors carry personal responsibility for certain unremitted amounts like payroll source deductions and GST/HST.
2. Distribute the remaining assets
Whatever is left after debts — cash, equipment, retained earnings — is distributed to shareholders. This step has real tax consequences: distributing assets can trigger deemed dividends or capital gains depending on how it’s structured, and the order in which you distribute versus dissolve matters. This is the point where a conversation with your accountant pays for itself, because the difference between a well-planned and a careless wind-up can be a meaningful tax bill. Ideally, though, you hold back distribution until after the clearance certificate (step 5).
3. File the final T2 return
The corporation must file a final T2 corporate income tax return covering the period from the start of its last fiscal year up to the date of dissolution. This return is marked as the final one, and it reports the wind-up transactions — the disposition of assets, any deemed dividends, and the final tax position. Any tax owing on that return needs to be paid; the corporation isn’t truly done until its final return is assessed.
The tax on a wind-up depends entirely on how you sequence the distributions and filings. We’ll map the steps, file the final T2, and get you a clearance certificate. Book a free consult.
4. Close your CRA program accounts
A corporation typically has several CRA program accounts hanging off its business number: an RC corporate income tax account, an RT GST/HST account if you’re registered, and an RP payroll account if you had employees. Once the final filings and remittances for each are complete, those accounts should be formally closed so CRA stops expecting returns. Closing the GST/HST account also involves accounting for tax on any assets you keep or distribute, which is easy to overlook.
5. Request a clearance certificate (Form TX19)
This is the step that protects you personally, and the one owners most often skip. A clearance certificate, requested on Form TX19, is CRA’s written confirmation that the corporation has paid all amounts it owed — or has adequately secured them — so that CRA has no further claim. You request it after your final returns have been assessed, and you provide supporting documents such as the resolution to dissolve, the final notice of assessment, and a statement of how assets are being distributed.
Why it matters: if you distribute the corporation’s assets to shareholders without a clearance certificate, and CRA later discovers the corporation owed tax, the directors and the person who distributed the assets can be held personally liable for that debt — up to the value of the assets distributed. The clearance certificate is what closes that door. It’s the reason the ideal sequence is to hold distribution until the certificate is in hand.
6. File articles of dissolution
Finally, the corporation is legally ended by filing articles of dissolution with the body it was incorporated under — the federal registry (Corporations Canada) for a federal corporation, or the provincial registry (such as BC Registries) for a provincial one. This is the step that formally dissolves the legal entity. Doing it before the CRA side is wrapped up can complicate matters, which is why it generally comes last.
Getting the order right
The theme running through all of this is sequence. Settle debts before distributing; file final returns and close accounts before seeking the clearance certificate; get the clearance certificate before distributing assets; dissolve the legal entity last. Rushing to file articles of dissolution first — because it feels like "the" step — is exactly how owners end up personally chasing tax problems for a company that no longer exists. If you incorporated to protect yourself, it’s worth closing the corporation with the same care. When you’re weighing whether to wind up at all, our guide on incorporating versus operating as a sole proprietor covers the trade-offs from the other direction.
This article is general information for Canadian business owners and is current as of July 2026. It is not tax, legal or accounting advice, and it does not create a client relationship. Tax rules change and your situation is unique — please speak with a CPA before acting on anything here.
Founder of EverStone CPA, an Abbotsford CPA firm, and a member of the Chartered Professional Accountants of British Columbia (CPABC). Sunny works with incorporated contractors and small business owners across Canada on tax, bookkeeping and advisory. More about Sunny →
Frequently asked questions
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Closing your corporation the right way?
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