T2 corporate tax deadlines & late-filing penalties

Corporate tax deadlines trip up more owners than almost anything else, because the T2 has two separate dates — one to pay, one to file — and they aren't the same. Miss either and the CRA charges you. Here's exactly how it works, with the penalty math spelled out.

The two deadlines every corporation has

Filing deadline: your T2 return is due six months after your fiscal year-end. A December 31 year-end means a June 30 filing deadline; an August 31 year-end means the end of February.

Payment deadline: any balance owing is due before that — generally three months after year-end for a CCPC claiming the small business deduction, or two months otherwise. This is the one owners forget: you can file on time and still owe interest because the money was due earlier.

The late-filing penalty, with a worked example

The CRA's basic late-filing penalty is 5% of the unpaid tax at the due date, plus 1% for each complete month the return is late, to a maximum of 12 months.

Example: your corporation owes $10,000 and files four months late.

• Base penalty: 5% of $10,000 = $500
• Monthly penalty: 1% × 4 months × $10,000 = $400
• Late-filing penalty total: $900 — before interest

On top of that, interest compounds daily on the unpaid balance from the payment due date. And if the CRA had issued a demand to file and you'd been hit with this penalty in the previous three years, the rate doubles to 10% plus 2% per month — a repeat four-month filing on the same $10,000 becomes $1,800.

Instalments: paying as you go

If your corporation owes more than $3,000 in tax, the CRA generally expects quarterly instalments during the year rather than one payment at the end. Miss them and instalment interest — and potentially a separate instalment penalty — applies. We forecast your tax early so instalments are right-sized and you're never scrambling. This is core to our corporate tax service.

What to do if you're already behind

File anyway, immediately — the late-filing penalty is based on the balance owing, so filing on time even when you can't pay in full avoids the filing penalty entirely and stops the monthly clock. If you've missed multiple years, the CRA's Voluntary Disclosures Program may reduce penalties if you come forward before they contact you.

The bottom line

Two dates, both tied to your year-end, both with real costs for missing them. The simplest fix is to hand the tracking to someone whose job it is. We file every T2 on time and keep clients ahead of both deadlines — entirely online, through our virtual T2 filing service.