Your first T2 corporate tax return
This guide explains the first T2 corporate income tax return a new corporation files. It covers the six-month filing deadline, tax instalments, the short return and the GIFI financial statements. We prepare and file your articles of incorporation for $35.00, HST included. The government fee is separate and charged at cost: $200.00 to Corporations Canada under the CBCA, or $300.00 to the Ontario Business Registry under the OBCA. Open Corporation for $35 is a department of Gondaliya CPA. A Chartered Professional Accountant reviews this guide against Canada Revenue Agency guidance before it is published, and again after each federal budget.
What the T2 is and who must file it
The T2 is the corporation income tax return filed with the Canada Revenue Agency. It reports the corporation's income for one tax year and calculates the federal and provincial tax on it.
Every corporation resident in Canada files a T2 for every tax year. That holds even when the corporation earned nothing, owes nothing or did not trade at all.
| Situation | Does the corporation file a T2? |
|---|---|
| Active and earning income | Yes |
| Incorporated but not yet trading | Yes, reporting nil income |
| Made a loss in its first year | Yes, and the loss is recorded for future years |
| Owes no tax for the year | Yes |
| Ontario corporation | Yes, with the Ontario tax calculated inside the same T2 |
The T2 is separate from the registry's annual return. Filing one does not satisfy the other, and each has its own deadline.
The six-month deadline and the balance-due date
The T2 is due within six months after the end of the corporation's tax year. The tax owing is due sooner, and missing that earlier date starts interest.
The balance of tax is due two months after the year end. A Canadian-controlled private corporation claiming the small business deduction can have three months, if its taxable income stayed within the $500,000 limit.
| Tax year end | Balance of tax due, two months | Balance due, three-month rule | T2 return due |
|---|---|---|---|
| 31 March | 31 May | 30 June | 30 September |
| 30 June | 31 August | 30 September | 31 December |
| 30 September | 30 November | 31 December | 31 March |
| 31 December | 28 February | 31 March | 30 June |
The year end that sets these dates is chosen once. Our guide to incorporating in Canada shows where that choice sits among the first decisions.
Our $35.00 fee includes HST. Government fees are passed through at cost with no mark-up. Every figure is on our full pricing page.
Instalments in the first and later years
A corporation pays tax in instalments when its tax owing is more than $3,000 for the current or the previous tax year. In its first tax year a new corporation has no previous year to measure.
The full tax for the first year is still due by the balance-due date. Instalments then start in the second year if either year's tax passes $3,000.
Quarterly instalments are open to a small Canadian-controlled private corporation with taxable income within $500,000 and taxable capital within $10 million. It also needs a clean compliance record.
| Corporation | Instalment frequency |
|---|---|
| Tax owing at or below the threshold in both years | No instalments required |
| Tax owing above the threshold in either year | Monthly, by the last day of each month |
| Small Canadian-controlled private corporation that qualifies | Quarterly, by the last day of each quarter |
| Quarterly conditions | The income, capital and compliance limits set out above |
Late or short instalments attract interest from each missed due date. The interest runs even when the T2 itself is filed on time.
We file your incorporation for $35.00, HST included
Government fee shown separately at cost. A CPA sets your year end with the T2 deadlines in view.
The short return and electronic filing
The T2 Short Return is a two-page version of the T2 for corporations with nil net income or a loss. It still exists as a paper form.
For tax years starting after 2023, a corporation must file its T2 electronically, whatever its revenue. The short paper return is no longer an option for most corporations.
| Return | Who can use it |
|---|---|
| Full T2, filed electronically | Every corporation, and the required method for most |
| T2 Short Return on paper | Eligible corporations still exempt from electronic filing |
| Exempt from electronic filing | Insurance corporations, non-resident corporations, tax-exempt corporations and those reporting in a functional currency |
A corporation that files on paper when it must file electronically faces a $1,000 penalty. The penalty table further down sets out the late-filing penalties as well.
The GIFI financial statements
The T2 carries the corporation's financial statements in a coded format called the General Index of Financial Information, or GIFI. Each line of the balance sheet and income statement maps to a GIFI code.
The statements come from the corporation's books. Clean bookkeeping from the first deposit is what makes the first GIFI straightforward.
| GIFI schedule | What it holds |
|---|---|
| Schedule 100 | The balance sheet: assets, liabilities and shareholder equity |
| Schedule 125 | The income statement: revenue and expenses for the year |
| Schedule 141 | The notes checklist on who prepared the statements and how |
A separate corporate bank account keeps those books clean. Our business bank account guide covers opening one.
Penalties and what the first return costs
A late T2 is penalized only when tax is owing, but the penalty grows each month. The rates double after a demand to file, where a late-filing penalty also applied in any of the three previous years.
The Canada Revenue Agency charges these penalties. Our own fees are fixed and set out in the second table.
| Failure | Maximum penalty |
|---|---|
| T2 filed late, first time | 5 percent of the unpaid tax, plus 1 percent for each full month late, up to 12 months |
| T2 filed late after a demand to file, with a penalty in any of the three previous years | 10 percent of the unpaid tax, plus 2 percent for each full month late, up to 20 months |
| Paper T2 where electronic filing is required | $1,000 |
These penalty figures were last checked on 7 October 2026.
| Item | Amount | HST | Total | Who charges it |
|---|---|---|---|---|
| Our incorporation filing fee | $35.00 | Included | $35.00 | Open Corporation for $35 |
| Federal articles of incorporation | $200.00 | Not applicable | $200.00 | Corporations Canada |
| Ontario articles of incorporation | $300.00 | Not applicable | $300.00 | Ontario Business Registry |
| Preparing the first T2 | Not confirmed, reviewer to verify on the official pricing page | Not confirmed | Not confirmed, reviewer to verify on the official pricing page | Gondaliya CPA |
Our $35.00 fee includes HST and government fees are passed through at cost with no mark-up. These figures were last checked on 7 September 2026.
What a CPA checks before the first T2
This guide explains the rules. It cannot tell you what your first return will show, because that depends on the books and the decisions made during the year.
The year end is the first thing we look at. It sets the balance-due date, the T2 deadline and the length of the first tax year.
Then the books. We reconcile the bank account and map each account to its GIFI code before the return is drafted.
Then the owner's pay. Salary and dividends are reported differently, and the choice changes both the T2 and the owner's personal return.
Then the small business deduction. We confirm the corporation qualifies and whether the $500,000 limit is shared with associated corporations.
Last, the instalments. We work out whether the second year needs them and diarize each due date. The parent firm sets out the same ground in its Gondaliya CPA resources library.
Frequently asked questions
These are the questions owners ask about the first T2. Each answer carries the figure, the rule or the body that makes it true, so it can be read on its own.
When is my first T2 return due?
Do I file a T2 if the corporation earned nothing?
Do I have to pay instalments in the first year?
Can I use the T2 Short Return?
What is GIFI?
What is the penalty for filing the T2 late?
Is the Ontario corporate tax filed separately?
What does it cost to incorporate before the first T2?
Why owners trust the filing to us
Gondaliya CPA Professional Corporation is registered with CPA Ontario under firm registration number 61330051. Our clients have left us 1,300+ five-star Google reviews, and we work from 13 Ontario offices, open 9:00 AM to 8:30 PM, Monday to Sunday. We back every filing with a 30-day money-back guarantee and a 60-day fee-matching policy, and we are a Xero Partner Award Winner 2026. Open Corporation for $35 is a department of Gondaliya CPA.
Ready to incorporate
Send the intake form and we will confirm your jurisdiction, your share structure and your year end before anything is filed. Our fee is $35.00, HST included, and the government fee is shown separately at cost. Payment is by Interac e-Transfer to info@gondaliyacpa.ca, and the security question is Not Applicable because auto-deposit is enabled.
No legal advice
Gondaliya CPA Professional Corporation is a firm of Chartered Professional Accountants licensed by CPA Ontario, firm registration number 61330051. It is not a law firm. We prepare and file corporate documents and we provide accounting and tax advice. Nothing on this page is legal advice, and reading it creates no solicitor and client relationship. For legal advice, including advice on a dispute with the Canada Revenue Agency, consult a lawyer licensed in the province where your corporation carries on business.
