Choosing a fiscal year end
This guide explains how a new corporation chooses its first fiscal year end. It covers the 53-week rule, the tax deadlines the date sets, and what changing it afterwards requires. 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.
The 53-week rule for the first year
A corporation's tax year cannot be longer than 53 weeks under the Income Tax Act. The first year end can therefore fall on any date up to 53 weeks after incorporation.
The choice is made by filing the first T2 for that period. No form chooses the year end in advance, and the articles of incorporation do not record it.
| Date of incorporation | Latest possible first year end | A common choice |
|---|---|---|
| 15 January | About 53 weeks later, in mid January | 31 December of the same year |
| 1 April | About 53 weeks later, in early April | 31 March of the next year |
| 20 July | About 53 weeks later, in late July | 30 June of the next year |
| 10 October | About 53 weeks later, in mid October | 30 September of the next year |
The first year can be shorter than 12 months. A corporation incorporated in October can end its first year on 31 December, a little over two months later.
What the year end sets
The year end is the date every corporate tax deadline counts from. Choosing it fixes the calendar the corporation runs on for as long as the date stands.
Two filings do not follow it. The federal annual return counts from the anniversary of incorporation, and T4 and T5 slips follow the calendar year.
| Deadline | Counted from | When |
|---|---|---|
| Balance of corporate tax | Year end | Two months after, or three for a qualifying small business |
| T2 corporate income tax return | Year end | Six months after |
| Ontario annual return | Year end | Six months after |
| Accrued bonus paid to the owner | Year end | Within 180 days, to be deductible in that year |
| Federal annual return | Anniversary of incorporation | Within 60 days after |
| T4 and T5 slips | Calendar year | By the end of February |
The guide to incorporating in Canada places the year end among the first decisions after the certificate.
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.
How to choose the date
No date is right for every business. The choice turns on when the business is busiest, when its records are easiest to close, and how the owner is paid.
A year end in a quiet month leaves time to count stock and close the books. A 31 December year end lines the corporation up with the calendar-year slips.
| Business pattern | What to weigh |
|---|---|
| Seasonal business | A year end just after the busy season, when stock and receivables are lowest |
| Owner paid by salary | 31 December keeps the T2 year and the T4 year the same |
| Owner paid by bonus | A year end that leaves the 180-day payment window in the next calendar year |
| Steady year-round trade | A date that suits bookkeeping and the owner's personal tax timetable |
| Corporation joining a group | The year ends of associated corporations and the shared small business limit |
We file your incorporation for $35.00, HST included
Government fee shown separately at cost. A CPA sets your year end before the first T2 fixes it.
A short first year and the small business limit
The small business deduction applies to active business income up to the $500,000 business limit. A tax year shorter than 51 weeks gets a proportionally smaller limit.
A short first year is not a problem in itself. It matters when the corporation earns a full year's income in a few months and the reduced limit falls below that income.
| Length of first tax year | Business limit for that year |
|---|---|
| 51 weeks or longer | The full limit |
| 26 weeks | About half the limit |
| 13 weeks | About a quarter of the limit |
The limit is shared among associated corporations. Our guide to individuals with significant control covers how ownership is traced across a group.
Changing the year end afterwards
Once the first T2 is filed, the year end cannot be changed without the written approval of the Canada Revenue Agency. The request has to give a business reason for the change.
A change made only to defer tax is not a business reason. Some events end a tax year on their own, such as an acquisition of control or an amalgamation.
| 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 |
| Request to change the year end | Not confirmed, reviewer to verify on the official page | Not applicable | Not confirmed, reviewer to verify on the official page | Canada Revenue Agency |
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.
Until the Canada Revenue Agency approves a change in writing, the old year end stands. Every deadline keeps counting from it.
The year end and the owner's pay
Salary and dividends are reported on calendar-year slips, while the corporation deducts salary in its own tax year. The gap between the two dates shapes how the owner is paid.
A bonus can be accrued at the year end and paid later. It is deductible in that year only if it is paid within 180 days after the year end.
| Payment | Corporation's tax year | Owner's tax year |
|---|---|---|
| Salary paid during the year | Deducted in the year paid | Taxed in the calendar year paid |
| Bonus accrued at year end | Deducted in the year accrued, if paid within 180 days | Taxed in the calendar year paid |
| Dividend | Not deductible | Taxed in the calendar year paid |
The business bank account guide covers keeping corporate and personal money apart, which these payments depend on.
A bonus accrued but not paid within 180 days is not deductible in the year it was accrued. It is deducted only in the year it is finally paid.
What a CPA checks before the year end is fixed
This guide explains the rules. It cannot tell you which date suits your business, because that depends on its trade, its owners and its plans.
The trading pattern is the first thing we look at. A seasonal business needs a year end after its busy season, not in the middle of it.
Then the owner's pay. We set the year end so salary, bonus and dividends land in the personal tax year that suits the owner.
Then the first year's length. A short first year reduces the small business limit, so we check the expected income against it.
Then the group. Associated corporations share one business limit, and their year ends affect how it is split.
Last, the calendar. We diarize the balance-due date, the T2 deadline and the Ontario annual return. 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 year end. Each answer carries the figure, the rule or the body that makes it true, so it can be read on its own.
What is the 53-week rule?
Do I choose the year end when I incorporate?
Which deadlines does the year end set?
Should I choose 31 December?
Does a short first year cost anything?
Can I change my year end later?
How does the year end affect a bonus to the owner?
What does it cost to incorporate and set the year end?
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.
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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 shareholder agreement before you sign it, consult a lawyer licensed in the province where your corporation carries on business.
