Who has to file a corporation income tax return (T2)
All resident corporations (except tax-exempt Crown corporations, Hutterite colonies and registered charities) have to file a T2 return for every tax year, even if there is no tax payable. This includes:
- non-profit organizations
- tax-exempt corporations
- inactive corporations
A non-resident corporation must file a return if, at any time in the year, one of the following situations applies:
- it carried on business in Canada
- it had a taxable capital gain
- it disposed of taxable Canadian property
This requirement applies even if the corporation claims that any profits or gains realized are exempt from Canadian income tax due to the provisions of a tax treaty.
A non‑resident corporation that had a taxable capital gain or disposed of taxable Canadian property does not have to file a return if the disposition meets all the following criteria:
- no tax is payable under Part I for the tax year
- the corporation is not liable to pay any amount under the Act for any previous tax year (other than an amount covered by adequate security under section 116 or 220)
- each taxable Canadian property disposed of in the tax year is:
- excluded property under section 116, or
- property for which a certificate was issued under section 116
The definition of taxable Canadian property excludes shares of corporations, and certain other interests, that, during the 60-month period ending at the time of determination, do not derive their value mainly from real or immovable property situated in Canada (including Canadian resource property and timber resource property).
Other situations may require a non-resident corporation to file a T2 return, including:
- when it has filed Form NR6, Undertaking to File an Income Tax Return by a Non-Resident Receiving Rent from Real or Immovable Property or Receiving a Timber Royalty, to pay Part I tax on the net amount of timber royalty income or rental income from real property under subsection 216(1) for the current year and we approved it
- when it has filed Form T1288, Application by a Non-Resident of Canada (Corporation) for a Reduction in the Amount of Non-Resident Tax Required to Be Withheld on Income Earned from Acting in a Film or Video Production, to pay Part I tax on the net amount of acting services under subsection 216.1(1) for the current year and we approved it
Even if neither of these requirements applies, a non-resident corporation may still want to file a return if any of the following situations apply:
- when it wants to claim a refund
- when it wants to elect to pay Part I tax on the net amount of timber royalty income or rental income from real property under subsection 216(1) for the current year
- when it wants to elect to pay Part I tax on the net amount of acting services under subsection 216.1(1) for the current year
Non-resident corporations must file their T2 return, schedules, and the General Index of Financial Information in Canadian funds only. They are not eligible to file in a functional currency per section 261.
If you have questions about non-resident returns, go to Businesses – International and non-resident taxes.
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