Quick answer: Form T2057 is the joint election that lets you move property into a corporation without triggering the full tax on the gain. The taxpayer and the corporation both sign it, and it is due with the earliest return of anyone party to the transfer.
A section 85 rollover is unforgiving of small errors, and a missed election costs far more than having one prepared. An email enquiry will tell you whether yours is straightforward.
When is my T2057 election due?
Enter the transfer date and each party’s year-end; the earliest return date wins. The date appears straight away.
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On this page
What the form is
T2057 is the prescribed form for an election under subsection 85(1) of the Income Tax Act. The CRA describes it as being “for use by a taxpayer and a Canadian corporation to jointly elect under subsection 85(1)”.
A section 85 election defers tax. Moving appreciated property into a corporation would normally count as a sale at fair market value, taxing the whole gain. The election lets the parties agree an elected amount between tax cost and fair market value, so the gain is deferred.
It is a joint election. Both the transferor and the corporation are party to it, and both sign. It is not something the corporation files on its own.
Who files it
Anyone incorporating an existing business and moving assets in, transferring real property or shares into a holding company, or reorganizing ownership between related corporations.
In practice, the commonest small-business case is an unincorporated business being incorporated, where goodwill, equipment and receivables move into the new company.
The form at a glance
| Item | Detail |
|---|---|
| Legislation | Subsection 85(1) |
| Who signs | The taxpayer and the corporation, jointly |
| Due | The earliest day on which any party to the election has to file its return for the year the transfer happened |
| Filed late | Accepted up to three years late where the conditions are met, on payment of the penalty |
| Late penalty | Lesser of $8,000 and $100 per complete month |
What to have ready before you file
Most delay comes from assembling what the form needs, not the form itself. Before starting, have the fair market value and tax cost of each asset, the agreed elected amount, the consideration coming back (shares and any boot), and the CRA account number of every party for line 001.
Gathering it first also surfaces the problems early: a missing account number, a balance nobody has actually calculated, a date that does not line up. There is still time to fix them, rather than finding them after a filing has been rejected.
What catches people out
A CRA account number is required at line 001 before the form can be filed. Without an accepted SIN, business number, trust account number or individual tax number, it cannot be submitted, so apply at the start of a reorganization.
Extra pages and your own templates are allowed for Schedule A, but the CRA requires the matching black-box line numbers and row numbers from the official form to be carried onto them, or the filing is delayed.
The due date is driven by whichever party files earliest, not by the corporation. An individual transferor with an April deadline can pull the election forward ahead of the corporation’s own year-end.
A late, amended or revoked election costs the lesser of $8,000 and $100 per complete month from the original due date until the CRA receives a satisfactory request. The CRA generally will not process it until paid.
How it is filed
Both parties sign, and the election is filed with the return of whichever party has the earliest filing deadline for the year of the transfer. It is not attached to the corporation’s return by default, which is the assumption that causes most late elections.
Either way, keep the signed copy with the working papers. An election is only as defensible as the file showing how its figures were reached, and that file is what a review asks for.
Most section 85 elections are filed when a sole proprietor moves the business into a new corporation, and the values chosen on the form are decided in that planning, not after it; see incorporation advice for how that conversation runs.
Worked example
Sam has run a consulting practice as a sole proprietor for six years and incorporates on 1 March 2027. He moves two things into the new corporation:
| Asset | Fair market value | Tax cost | Elected amount | Result today |
|---|---|---|---|---|
| Equipment (Class 8) | $20,000 | UCC $12,000 | $12,000 | No recapture; the class opens in the corporation at $12,000 |
| Goodwill (Class 14.1) | $150,000 | Nil | $1 (nominal) | No gain; the $150,000 of value is deferred into the shares |
Sam takes back shares, and may take a promissory note (boot) up to the elected amount without triggering tax. Without the election, the transfer would be a sale at $170,000 and the $150,000 goodwill gain would be taxed in 2027.
Where it lands on the return
Nothing appears as income on Sam’s 2027 T1 when the elected amounts equal tax cost. The T2057 itself is filed with the CRA as a separate election, not inside either return: the corporation records the assets at the elected amounts (its Schedule 8 opens Class 8 at $12,000 and Class 14.1 at $1), and the adjusted cost base of Sam’s new shares equals the elected amounts less any boot. Those figures carry forward to every later sale, so the working papers matter as much as the form.
Deadline and penalty
Due on the earliest date any party has to file a return for the year of the transfer. Here Sam’s 2027 self-employed T1 is due June 15, 2028 and the corporation’s first T2 (December 31, 2027 year-end) June 30, 2028, so the election is due June 15, 2028. Filed late, the penalty is the lesser of $100 for each month late (to a maximum of $8,000) and one-quarter of 1% of the amount by which fair market value exceeds the agreed amount, per month; the CRA accepts a late election up to three years after the due date on payment of that penalty, and later only where it is just and equitable. The values are decided in the planning; see how a section 85 rollover works.
Common questions about T2057
When is the T2057 due?+
What happens if I file it late?+
Can I file it without a business number?+
Who has to sign it?+
Where this comes from
- CRA — IC76-19, Transfer of property to a corporation under section 85 (due date and late-filing penalty)
- CRA — T2057 form page
- CRA — Penalty for accepting a late, amended or revoked election
General information current as of , not advice for your situation. Elections are unforgiving about dates — confirm yours before you file. Please speak with a CPA about your circumstances.
Related reading
- The lifetime capital gains exemption
- How a section 85 rollover works
- Incorporating an existing business
- All CRA forms we cover
Other CRA forms
Who does this work
A section 85 election is the paperwork at the end of a reorganization, not the start of one. The elected amount, what moves, and what comes back as shares are decided first, and they are decided once.
If that is where you are, the service page for plan the rollover before the transfer sets out what the engagement covers and how it is quoted.
Elections are date-driven and unforgiving. Email us before the deadline rather than after — we quote the work in writing first.
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A section 85 rollover is filed alongside a corporate return and its consequences run for years afterwards, which makes it corporate tax work in the Fraser Valley rather than a one-off form.
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