Balance-due day

Payment comes before filing

The CRA defines the balance-due day as the date you must pay the remainder of the tax owing for the year. Generally, corporation taxes charged under the Income Tax Act, apart from a couple of special parts, are due two months after the end of the tax year. The return itself is due within six months of the year-end.

That gap catches owners off guard. A corporation can still be working on its T2 months after the tax was due, so interest can start running on an unpaid balance even though the return is not yet late.

When the later three-month date applies

A CCPC may get a balance-due day three months after year-end if three conditions are met. It must be a CCPC throughout the tax year, it must have claimed the small business deduction in the current or previous year, and its taxable income for the previous year must not exceed its business limit. If it is associated with other corporations, the test compares their combined taxable income for their last tax years ending in the previous calendar year with their combined business limits.

For this test the CRA uses taxable income before specified future tax consequences, such as applying loss carrybacks. Amalgamations and wind-ups have their own rules, so tell your accountant if either happened.

A simple illustration

Take a corporation with a December 31, 2026 year-end. If it qualifies only for the standard rule, the balance is due two months later. February 28, 2027 is a Sunday, and the CRA treats a payment as on time if it arrives by the next business day, so the effective date is March 1, 2027. If it qualifies for the three-month date, the balance is due March 31, 2027. In both cases the T2 is due six months after year-end. The amounts and dates are illustrative; confirm your own.

What to discuss with your accountant

Ask which balance-due day applies to your corporation and why, especially if you share a business limit with another company or your income grew last year. Request a tax estimate and payment amount before the due date rather than waiting for the finished return. The CRA generally treats a payment as made on the day it receives it or the day a participating financial institution processes it, so allow for processing time, especially for ATM or mailed payments.

Also ask how instalments, if you pay them, reduce the balance. The tax instalments entry explains that separate obligation, and the corporate tax filing versus payment guide walks through the sequence.