Choosing a fiscal year-end for your corporation

What the CRA lets you choose

For tax purposes, a corporation’s tax year is its fiscal period, and that period cannot be longer than 53 weeks (371 days). A new corporation declares its tax year on its first T2 return after incorporation. The financial statements you attach to that return need to match the tax year you declare.

Apart from one exception, a new corporation may choose any year-end, provided the first tax year is not longer than 53 weeks from the date it was incorporated or formed by amalgamation. The exception is a professional corporation that is a member of a partnership carrying on business in Canada. It is required to have a December 31 year-end.

How the first and second years work

The first tax year starts on the date of incorporation. Every later year starts the day after the previous year ends. That means the length of the first year depends entirely on when you incorporate and what date you pick.

The CRA gives an illustration. A corporation incorporated on May 18, 2025 that chose October 9 as its year-end has a first tax year from May 18, 2025 to October 9, 2025, and a second year from October 10, 2025 to October 9, 2026. A short first year is normal and is not a problem. It simply means you file a return sooner than you might expect, so decide on the year-end before you incorporate if you can.

The dates that follow from your choice

The T2 return is generally due six months after the end of the tax year. When the year ends on the last day of a month, the return is due on the last day of the sixth month after it. A March 31 year-end gives a September 30 filing date, and an August 31 year-end gives a February 28 date. If the year ends on another day, the return is due on the same day of the sixth month after.

Payment is a separate, earlier deadline. Corporation tax is generally due two months after the year-end. A Canadian-controlled private corporation may qualify for a balance-due day three months after the year-end if it was a CCPC throughout the year, claimed the small business deduction in the current or previous year, and meets a taxable-income test against its business limit. Confirm the test with your accountant, because associated corporations are counted together. For more on the difference between filing and paying, see our guide on corporate tax filing versus payment.

Instalments move with the year-end

Corporate instalments are generally monthly. The first one is due one month less a day from the first day of the tax year, and the rest fall on the same day of each following month. A CCPC with a perfect compliance history, taxable income of $500,000 or less together with associated corporations, and taxable capital employed in Canada of $10 million or less may qualify to pay quarterly instead.

A calendar-year corporation pays on the last day of each month, or on March 31, June 30, September 30 and December 31 if quarterly. A corporation with a year running from October 10 to October 9 pays on the ninth of each month, with the first due November 9. Your own dates can be viewed in My Business Account. Choosing a year-end therefore also chooses when cash leaves the business for tax during the year.

What to weigh before you pick a date

Start with the business rhythm. A year-end shortly after your busiest season often means the inventory count, receivables and unfinished work are easier to measure, and the books close when you have time. A year-end in the middle of a peak period means closing while everyone is busy and cut-off questions are hardest.

Consider who else needs the numbers. A bank, an investor or a co-owner may expect statements on a particular date. Consider your own calendar as well: a year-end that lands when you are travelling or when your bookkeeper is stretched makes the close harder. Also remember that payroll and GST/HST run on their own schedules, so a non-calendar year-end does not move those dates. Keep a separate calendar for each account.

The income-tax effect of a year-end is real but depends on your whole situation, including how the owner is paid, associated corporations and the rates in force during the year. Ask your accountant to model the options instead of choosing a date for a supposed advantage.

An illustrative example

Suppose a landscaping corporation earns most of its revenue between May and October. All figures here are illustrative. With a December 31 year-end, the books close in the quiet season, which sounds convenient, but equipment purchases, final invoices and the T2 all arrive in the middle of winter bookkeeping. A year-end of November 30 would close just after the work stops, so receivables and unfinished jobs are fresh, and the T2 would be due May 31. The balance would generally be due at the end of January or, if eligible, the end of February.

Neither date is automatically better. The point is to list the busy months, the payment dates and who prepares the numbers, then see which date leaves the fewest bad weeks.

Changing the year-end later

Generally, unless you have received approval to change the tax year, the corporation’s tax year is the same from year to year. To request a change, write a letter to your tax services office asking for approval and explain the reasons and the effective date. Missing details can delay the request.

Some situations do not need approval, such as filing the final return of a corporation that has wound up, or when the year must end because of an emigration, a change in tax-exempt status, an acquisition of control or a change in Canadian-controlled private corporation status. A corporation that becomes bankrupt must get approval. A change can create a short year with its own return and deadlines, so plan the transition with your accountant.

What to bring to your accountant

Bring the incorporation date, any partnership membership if you hold a professional corporation, your busiest and quietest months, and the dates your lender or investors expect statements. Mention any associated corporations, because they affect the payment dates and instalment options described above.

If you have already incorporated, bring the date shown on your first T2 filing and the current instalment schedule from My Business Account. Choosing a date takes ten minutes. Undoing a poor one generally takes a letter and CRA approval, and may mean a short tax year.