Corporation name
Ensure that the name you enter matches the name on the Financial Statements and is the correct legal name of the corporation. Otherwise, the CRA may delay the assessment.
Business number (BN)
The program allows for the first nine characters of the BN to be entered. You are not required to enter the other characters as the two characters identifying the type of account always remain as “RC” and the program completes the field with the other four identification characters (0001). However, if the BN does not end with 0001, you need to enter the complete BN, including the letters “RC.” A BN whose last four digits of the program account identifier are 0000 (e.g. RC0000 or MT0000) is not a valid number.
How to get a BN or register for the CRA program accounts?
Business Registration Online (BRO)
Businesses that have simple registration requirements can get a BN using the Business Registration Online (BRO) service. The use of the BN as the standard identifier applies to most federal business programs. Businesses can use the BRO to get a BN to interact with other federal business programs. This service also allows you to register for the corporation income tax program account (RC) as well as for a few other program accounts.
By mail or by fax
Complete in Form RC1, Request for a Business Number and Certain Program Accounts and mail or fax it to your nearest tax service office or tax centre. If you only want to obtain a BN, use BRO instead.
By phone
To get a BN or to register for CRA program accounts by phone, call our Business enquiries line at 1-800-959-5525 during the hours of telephone service. If you only want to obtain a BN, use BRO instead.
Before calling, be ready to answer all the questions in Part A of Form RC1, and any other questions in the form about the CRA program accounts you want to open.
Type of corporation
There are several types of corporations for tax purposes, and you must select the one that accurately describes your corporation type at the end of the tax year. The choices are the following:
- Canadian-controlled private corporation (CCPC)
- Other private corporation
- Public corporation
- Corporation controlled by a public corporation
- Other corporation
In general, only a CCPC throughout the year (type 1) is eligible for the small business deduction (SBD). If a corporation other than a CCPC (type 5) is also eligible for the SBD (e.g., a co-operative or a credit union), answer “Yes” to the relevant question in the “General Information” section of Form Corporate Identification and Other Information (Jump Code: ID).
Non-profit corporations
When you select either box 1, 2 or 4 on line 085, If the corporations is exempt from tax under section 149, tick one of the following boxes, the program automatically adjusts the return to reflect the corporation's non-profit status. The federal and Alberta taxes are set to zero and the words “Exempt from Tax” will be printed at the top of the federal T2 return, and of the Alberta AT1, Alberta Corporate Income Tax return (Jump Code: AJ).
In the case of a Québec CO-17, Corporation Income Tax Return (Jump Code: QJ), the answer to the question Is the CO-17.SP return applicable? will be “Yes” and Form CO-17.SP, Information and Income Tax Return for Non-Profit Corporations (Jump Code: QJSP) will be applicable.
Calculation of taxable income
In cases where the difference between amount A and B in the “Taxable Income” section is negative, the net loss for tax purposes, together with the taxable dividends deductible under section 112, 113 or subsection 138(6) ITA (line 320), the deduction for Part VI. I tax (line 325), the amount deductible under paragraph 110(1)(d.2) ITA as prospector’s and grubstaker’s share (line 350) and the amount of an employer for non-qualified securities under an employee stock options agreement deductible under paragraph 110(1)(e) ITA (line a) are automatically updated to Part 1 “Non-Capital Losses” of Schedule 4, Corporation Loss Continuity and Application (Jump Code: 4).
Important fields
If information is incorrect or missing from the following fields, the return will not calculate properly.
- Province of Jurisdiction (line 750)
- Taxation Year (lines 060 and 061)
- Type of Corporation (line 040)
- Residency of Corporation (lines 080 and 081)
For example, if the corporation has a permanent establishment in Ontario and you do not enter the province of jurisdiction, the program will not perform any of the calculations for Ontario. In addition, if you do not enter the type of corporation, the program will not calculate the refundable Part I tax otherwise applicable for a type “1” corporation (CCPC).
When you create a new file, the taxation year defaults to a preset calendar year. If necessary, enter the correct year.
Summary of tax and credits
The provincial tax credits update automatically from Schedule 5 or from the applicable provincial schedules.
Even if you are not using Schedule 5 to calculate the allocation of taxable income, you must enter provincial political contributions or miscellaneous tax credits which are not in the program (e.g., the British Columbia small business venture capital tax credit) in Schedule 5.
Line 325 – Part VI.1 Tax Deduction
A corporation subject to Part VI.1 tax on dividends paid on taxable preferred shares can deduct a portion of its Part VI.1 tax from income. This deduction is equal to 3.5 times the Part VI.1 tax payable on line 724.
Calculation of line 415 and subsection 256(2) ITA
The calculation on line 415 takes into account the taxable capital of the third corporation that makes an election under subsection 256(2) ITA. In such a situation, the third corporation remains associated with each of the other corporations for the purpose of applying the $15 million taxable capital limit.
Refundable dividend tax on hand (for tax years starting after 2018)
For taxation years that start after 2018, the RDTOH has been split into two separate accounts:
Eligible refundable dividend tax on hand (ERDTOH)
The ERDTOH recognizes a corporation’s tax paid under Part IV in respect of eligible dividends received from non-connected corporations and taxable dividends received from connected corporations to the extent that such dividends cause the payer corporation to receive a dividend refund from its ERDTOH. The “connected corporation” status is determined according to the rules in section 186 ITA.
A corporation’s ERDTOH will be reduced by dividend refunds for a preceding taxation year in respect of its ERDTOH, as provided for in subparagraph 129(1)(a)(i) ITA.
Non-eligible refundable dividend tax on hand (NERDTOH)
The NERDTOH recognizes the refundable Part I tax in respect of the investment income of a Canadian-controlled private corporation and Part IV tax paid by a corporation in respect of dividends other than those described under the ERDTOH.
A corporation’s NERDTOH will be reduced by dividend refunds for a preceding taxation year in respect of its NERDTOH, as provided for in subparagraph 129(1)(a)(ii) ITA. Such dividend refunds can only arise upon the payment by the corporation of non-eligible dividends.
2019 transitional RDTOH
Subsection 129(5) ITA provides rules to transition a corporation’s existing RDTOH into the new ERDTOH and NERDTOH regime for its first taxation year starting in 2019. If a corporation is a Canadian-controlled private corporation (CCPC) in its first taxation year under the new regime and its preceding taxation year, and it does not have an election under subsection 89(11) ITA in effect for either of those years, the net RDTOH balance of such a corporation for its preceding taxation year is allocated to the ERDTOH to the extent of 38 1/3% of its general rate income pool (GRIP) net of eligible dividends paid in that year (line 520). The remainder is allocated to its NERDTOH (line 535). The net RDTOH balance of any other corporation is allocated entirely to its first year’s ERDTOH.
When rolling forward a client file for a private corporation's first taxation year starting in 2019, the program will calculate the ERDTOH at the end of the previous tax year and the dividend refund for the previous tax year, which will be entered as rolled forward data on lines 460 and 465 of the T2 return respectively. Then, the program will calculate the ERDTOH (line 520) and the NERDTOH (line 535).
Dividend Refund (for tax years starting after 2018)
A private corporation or a subject corporation may be eligible for a dividend refund if it paid taxable dividends to shareholders in the taxation year and has either an amount of eligible refundable dividend tax on hand (ERDTOH) or an amount of non-eligible refundable dividend tax on hand (NERDTOH) at the end of the taxation year.
For more information, consult the CRA Web page Dividend refund rules.
Line 602 – ITC recapture
For more information on this subject, consult the CRA Web page, Recapture of SR&ED Investment Tax Credit Policy.
Line 712 – Corporations subject to Part IV tax
Corporations (other than private corporations) resident in Canada and controlled, whether because of a beneficial interest in one or more trusts or otherwise, by or for the benefit of an individual or a related group of individuals are subject to Part IV tax in the same manner as private corporations.
Line 920 - Is this return prepared by a tax preparer for a fee, provide their EFILE number
When the answer to the question, Was the return prepared by a tax preparer for a fee? on the Identification Form (Jump code: ID) is “Yes,” the EFILE number entered by the program is:
- the electronic filer number indicated in Form T183, when this form has been modified using an override (whether or not the form is applicable); or
- the EFILE number indicated in the options and settings under Electronic Services/Identification/Federal.
For more information, consult the CRA Web page, Mandatory electronic filing for tax preparers.
Filing of a copy of Schedule 200 with the Québec return
As per Revenu Québec requirements, a copy of Schedule 200 must be filed with the Québec return when a corporation assigns a portion of the business limit to another CCPC under subsection 125(3.2) ITA. When the corporation has a permanent establishment in Québec and an amount is indicated on line K in the “Small business deduction” section of Schedule 200:
- A copy of this schedule is automatically attached to the Québec return when this return is electronically filed;
- A copy of this schedule is printed for the Québec return with the “Client,” “GOVT RSI, Bar Codes,” and “Office” print formats.
See also
Corporate Identification and Other Information
T2 Corporation - Income Tax Guide