The standard tax year in Canada is the calendar year, although companies can choose any tax year-end as long as it is not more than 53 weeks from the date it was either incorporated or formed.
Annual tax returns must be filed no later than 6 months following the close of the previous tax year. In general, if the tax year ends on the last day of a month, the return is due by the last day of the sixth month after the end of the tax year. If the tax year ends on a day other than the last day of a month, the return is due by the same day of the sixth month after the end of the tax year.
In response to the COVID-19 pandemic, Canada announced an extension for filling T2 corporation income tax returns due in June, July, or August 2020 to 1 September 2020. Further, no penalties will be imposed on the delay in filing corporate tax returns, provided they are filed by 30 September 2020.
Companies in Canada are required to make monthly tax installments by the end of each month. There are three options for determining the monthly tax installments:
- 1/12 of the estimated tax payable for the current tax year;
- 1/12 of the tax payable from the previous tax year;
- 1/12 of the tax payable from the year before the previous tax year in the first two months, and 1/10 of the difference between the tax for the previous tax year and a total of the first two payments in each of the remaining 10 months.
Qualifying small Canadian-controlled private corporations may make quarterly tax installments based on methods similar to monthly installments.
Monthly/quarterly tax installments are not required If taxes payable is less than CAD 3,000 for the current or previous year before taking into consideration specified future tax consequences prior to the deduction of current-year refundable tax credits.
Any outstanding tax due following the close of the tax year must be submitted within 2 months following the close of the tax year, or within 3 months when certain conditions are met.
In response to the COVID-19 pandemic, Canada announced that the payment of income-tax amounts and installments that are due between 18 March 2020 and September 2020, is deferred until after 30 September 2020. Further, no interest or penalties will be levied on these amounts during the said period.
E-filing is mandatory for companies with gross revenue exceeding CAD 1 million and is otherwise optional.
Information and access to the e-filing system can be found on the Canadian Revenue Authority's Corporation Internet Filing webpage.