Canadian Small Business Corporation Tax: the T2 Filing Deadline, When Balance-Due Day Comes First, and How Instalments Work

2026-10-13 · RKube Services

Canadian corporation tax dates: the T2 filing deadline, balance-due day two or three months after year-end, and how CRA instalments work.

Ask a corporate owner in Toronto or Vancouver when their corporate tax is due and most will say "six months after year-end." That's the T2 filing deadline, and it's correct. It's also the reason so many small corporations pay arrears interest every year, because the tax itself is due months earlier.

The Canada Revenue Agency (CRA) runs three separate clocks for a corporation: instalments during the year, the balance-due day after year-end, and the T2 filing deadline. This guide explains each one, who qualifies for the longer three-month payment window and quarterly instalments, and a worked example with real dates for a December 31 year-end.

The three CRA deadlines for a corporation

When a due date lands on a weekend or a public holiday the CRA recognizes, a payment or return is on time if the CRA receives it, or it's postmarked, by the next business day.

The order matters. Payment comes first, then the paperwork. A corporation that files its T2 on time in June but paid nothing at the end of February or March has already been charged interest for three or four months.

Who gets three months to pay

The default balance-due day for corporate income tax is two months after the end of the tax year. A Canadian-controlled private corporation (CCPC) gets three months for its Part I tax (and Parts VI, VI.1 and XIII.1) when all of these are true:

1. It was a CCPC throughout the tax year.
2. It claimed the small business deduction for the year, or was allowed it for the previous year.
3. Its taxable income for the previous tax year was not more than its business limit for that year. If it's associated with other corporations, the test uses the combined taxable income and combined business limits of the group.

The previous-year income test uses taxable income before loss carrybacks. A corporation that misses any one condition is on the two-month clock, even if it's small. The common trap is the associated group: an operating company that's tied to a holding company or to a spouse's corporation can share one business limit, and the group total decides the question.

Do you have to pay instalments at all?

A corporation doesn't have to pay federal instalments if its tax payable (under Parts I, VI, VI.1 and XIII.1) for either the current year or the previous year is $3,000 or less. The same exemption applies to provincial and territorial tax collected by the CRA. You still pay whatever you owe by the balance-due day. See the CRA page Who has to pay in instalments.

Because the test passes if either year is under the line, a corporation in its first tax year generally has no instalments, since its previous-year tax is nil. Instalments usually start in the second year, once the first year's tax is over $3,000.

Monthly or quarterly

Corporations pay monthly by default. An eligible small CCPC can pay quarterly instead. Under the Corporation Instalment Guide, the corporation must, for the current or previous year:

• have taxable income of $500,000 or less (associated corporations combined),
• have taxable capital employed in Canada of $10 million or less (associated corporations combined),
• have claimed the small business deduction, and
• have a perfect compliance history for the 12 months ending when the last instalment was due, covering GST/HST, payroll source deductions (CPP and EI) and filing on time.

One late GST/HST return or a late payroll remittance can push a corporation back to monthly instalments.

The three ways to calculate them

Monthly and quarterly payers both choose from three options:

• Option 1: one-twelfth (or one-quarter) of the estimated tax for the current year.
• Option 2: one-twelfth (or one-quarter) of the tax payable for the previous year.
• Option 3: the first month (or quarter) is based on the tax from two years earlier, and the rest of the previous year's tax is spread over the remaining months (or quarters).

Option 2 is the simplest for a growing business, because the numbers come straight from last year's notice of assessment. If you pay on time using any of the options, the CRA doesn't charge instalment interest even when this year's tax turns out higher. You pay the difference by the balance-due day.

A worked example: a Toronto consulting corporation

Say you own an Ontario consulting corporation with a December 31 year-end. It's a CCPC, it isn't associated with any other corporation, it claims the small business deduction, and its 2025 taxable income was $180,000. It filed and remitted everything on time over the past year.

• Its 2025 combined federal and Ontario tax payable was $18,000. It expects $24,000 for 2026.
• It qualifies as an eligible small CCPC, so it pays quarterly.
• Using Option 2, each quarterly instalment for 2026 is $18,000 / 4 = $4,500, due March 31, June 30, September 30 and December 31, 2026.
• The 2026 balance is $24,000 minus $18,000 = $6,000. It qualifies for the three-month balance-due day, so the $6,000 is due March 31, 2027.
• The T2 return, including Ontario's Schedule 500, is due June 30, 2027.

Now the same corporation with one change: it's associated with a holding company whose income pushes the group's 2025 taxable income above the group's business limit. It no longer qualifies for three months, and it may not qualify for quarterly instalments either. Its 2026 balance becomes due on March 1, 2027 (the first business day after February 28), a full month earlier.

What late filing and late payment cost

Arrears interest runs on any balance unpaid after the balance-due day, compounded daily. Instalment interest runs on instalments that are late or short, also compounded daily, but the CRA uses an offset method, so paying early or paying extra later can reduce it. The instalment guide adds a penalty only when instalment interest for the year exceeds $1,000.

The late-filing penalty for a T2 is 5% of the unpaid tax at the filing deadline, plus 1% of that unpaid tax for each complete month the return is late, up to 12 months. For repeat cases (a demand to file plus a failure-to-file penalty in any of the three previous years), it's 10% plus 2% a month, up to 20 months. See Avoiding penalties.

The penalty is calculated on unpaid tax. If the Toronto corporation above pays its $6,000 balance by March 31, 2027, a T2 filed late would have no unpaid tax at the filing deadline, so the 5% penalty works out to zero. It still has to file, but paying on time removes most of the cost.

Common questions about T2 deadlines

Our year-end is March 31. When is everything due? The T2 is due September 30. The balance is due May 31, or June 30 if the corporation qualifies for three months. Quarterly instalments fall on June 30, September 30, December 31 and March 31.

Does an extension to file the T2 exist? No general extension. Plan for the six-month deadline and pay by the balance-due day.

We had a loss this year. Do we still file? Yes. A corporation resident in Canada files a T2 every tax year, even with no tax payable.

Is GST/HST on the same schedule? No. GST/HST returns follow your reporting period. Monthly and quarterly filers file and pay one month after each period. Annual filers file and pay three months after year-end.

Do I pay my own salary or dividends from the corporation on these dates? No. Payroll source deductions for your salary follow your remitter schedule, and T4 slips are due by the last day of February. Dividends are reported on T5 slips. These are separate from the corporation's T2.

This guide is general information based on CRA guidance published on canada.ca, including the Corporation Instalment Guide and the 2026 tax deadlines page, as of October 2026. Instalment and business-limit rules have detailed exceptions for amalgamations and associated groups, so confirm your corporation's position before choosing an option.

Keep the payment clock ahead of the filing clock

RKube Services handles bookkeeping and tax prep for small businesses across the US and Canada, including corporations in Toronto, Vancouver, Ottawa and Calgary. We keep your books closed monthly, so you know by January what the balance will be, pick the instalment option that keeps interest at zero, and track GST/HST, payroll remittances and the T2 deadline together. Start with a free scoping call and a 30-day trial: call (984) 234-7030 or visit rkubeservices.com.