File your inactive corporation tax return with T2inc.ca

An inactive business in Canada refers to a registered corporation that is not engaged in any commercial activity. This means that the corporation has no operating income, no business transactions, and incurs minimal or no expenses.

The corporation may be temporarily inactive (e.g., waiting to resume operations), or it may be permanently inactive, planning for eventual dissolution. Despite the lack of income, the corporation continues to exist legally and is required to comply with annual filing requirements. This includes filing corporate tax returns, such as the T2 corporation income tax return and CO-17 tax return, even if the corporation remains inactive throughout the year.

If you'd like more information about corporate taxation for inactive corporations, we offer affordable corporate tax consultations.

Filing a tax return is mandatory for all corporations in Canada, whether they are active or inactive. Even if your corporation has no income, it is still required by law to file a T2 return (and a CO-17 tax return in Quebec) each year.

This filing ensures that the corporation remains in compliance with tax laws, and failure to file can result in penalties and interest. These penalties can accumulate over time and negatively impact your company's financial position, even if the business is not generating revenue. Filing avoids these penalties and maintains the active legal status of your corporation.

Yes, you must file a corporate tax return each year, regardless of whether your business is active or dormant. Filing your corporate tax return each year confirms to the IRS that your business is still active, even if it's not doing any business.

Failure to file your annual return may result in administrative penalties from the Canada Revenue Agency (CRA) or Revenu Quebec. It is also important to file on time to avoid interest charges on unpaid taxes, even if no taxes are owed. By filing consistently, you ensure that your business remains in compliance with both provincial and federal tax regulations.

To file an inactive business tax return, you will need to gather a few key documents. First, you'll need to provide your corporation's business number (BN) and, if applicable, your Quebec business number (NEQ) for Quebec-based corporations.

Since your corporation has no income or expenses, you'll also need to provide supporting documents that demonstrate the corporation's inactivity. These may include:

• Financial statements: Even if they show no activity, they are still required for filing purposes.
• Bank statements: These confirm that there were no financial transactions during the tax year.
• Previous tax returns: If this is not your first filing, providing a copy of your previous returns will help confirm the continuity of your company's inactive status.

It's important to note that inactive businesses that did not operate for the entire tax year may not need to include detailed financial schedules such as the balance sheet (Schedule 100), income statement (Schedule 125), or capital dividend account (Schedule 141).

The cost of our inactive corporation tax filing service depends on the assistance provided by our tax accountants. We offer flexible pricing to accommodate different needs:

• No Assistance Package: Starting at $199.00, this package is designed for businesses with no income, expenses, or active bank accounts. You simply complete a questionnaire and we handle the preparation and filing of your return.
• Assistance Package: Starting at $299.00, this option includes the assistance of our tax professionals who will help you compile past filings, financial statements, and any other necessary documentation to ensure a complete and accurate return.

Both packages ensure compliance and help you avoid penalties for failure to file.