Paying your balance of corporation tax

Information about the balance of tax

The balance of tax is the tax payable for the tax year after you have deducted the instalments already made for the year. This amount is paid two or three months after the end of the tax year depending on your balance-due day.

After all monthly or quarterly interim payments are made for the current year, you will receive the first Form RC160, Interim Payment Remittance Voucher, for the next year, along with another Form RC160. This additional form will show the tax year-end of the current year. Use this form to remit your balance-due-day payment, if applicable.

Balance-due day

The balance-due day is the date by which you have to pay the remainder of the tax you owe for the tax year. See paragraph 157(1)(b) of the Income Tax Act.

Generally, all corporation taxes (except Part III and Part XII.6) charged under the Income Tax Act are due two months after the end of the tax year.

However, for Parts I, VI, VI.1, and XIII.1 tax, the balance of tax is due three months after the end of the tax year if conditions 1 and 2 that follow are met, as well as condition 3 or 4:

  1. the corporation is a Canadian-controlled private corporation (CCPC) throughout the tax year;
  2. the corporation claimed the small business deduction for the current or previous tax year;
  3. the corporation's taxable income for the previous tax year does not exceed its business limit for that tax year (if the corporation is not associated with any other corporation during the tax year);
  4. the total of the taxable incomes of all the associated corporations for their last tax year ending in the previous calendar year does not exceed the total of their business limits for those tax years (if the corporation is associated with any other corporation during the tax year).

Note

For determining balance-due days, the previous-year taxable income of corporations and associated, subsidiary, and predecessor corporations means taxable income before considering specified future tax consequences, such as applying loss carrybacks.

For information on your business limit, see chapter 4 of Guide T4012, T2 Corporation – Income Tax Guide.

Changes to your business

Your balance-due day may be affected by certain events like amalgamations or wind-ups.

Amalgamations

The balance-due day of a new corporation formed after an amalgamation has taken place will be affected by the new corporation's taxable income for the previous year. This taxable income is the total of the predecessor corporations' taxable income for their tax years that ended just before they amalgamated. See paragraph 87(2)(oo.1) of the Income Tax Act.

The same rule applies for determining the business limit.

Wind-ups

To determine a parent corporation's balance-due day in its first tax year after it receives the assets of a subsidiary corporation that is winding up [paragraph 88(1)(e.9) of the Income Tax Act], the taxable income for the previous tax year is the total of:

  • the parent corporation's taxable income for that year; and
  • the subsidiary corporation's taxable income for its tax years ending in the calendar year that the parent corporation's previous tax year ended.

The same rule applies for determining the business limit.

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