Corporate Tax Return Toronto

Q: What is the corporate tax rate in Ontario in 2026?

Canadian-controlled private corporations (CCPCs) qualifying for the small business deduction pay a combined federal-provincial corporate tax rate of 12.2% in Ontario on the first $500,000 of active business income in 2026. Income above $500,000 is taxed at the general corporate rate of 26.5% in Ontario. Passive income earned inside a corporation is taxed at approximately 50.17%.

By Bronte Bay CPA Professional Corporation · Toronto & Vancouver · Updated June 2026

Short answer: Every Canadian corporation must file a T2 corporate income tax return within six months of its fiscal year-end. Bronte Bay prepares and files your T2 accurately and on time — with year-round planning that reduces what you owe. Ontario’s combined corporate rate is 12.2% on the first $500,000 of active income for qualifying CCPCs. Getting that rate wrong, or missing available deductions, costs thousands per year. T2 packages from $1,575.

Corporate tax return T2 filing Toronto — Bronte Bay CPA Professional Corporation

Every incorporated Canadian business — from a newly registered CCPC to a multi-entity holding structure — must file a T2 corporate income tax return with the CRA every year. The return is due within six months of your fiscal year-end. The tax payment is due sooner — within two months (or three months for qualifying CCPCs).

Filing the return is the last step. The work that actually determines how much you pay — salary/dividend optimization, CCA planning, SR&ED identification, income timing — happens throughout the year. Bronte Bay does both: the planning and the filing.

Ontario Corporate Tax Rates — 2026

Income Type	Federal Rate	Ontario Rate	Combined Rate
Active business income up to $500,000 (CCPC small business deduction)	9%	3.2%	12.2%
Active business income above $500,000 (general rate)	15%	11.5%	26.5%
Passive/investment income (inside corporation)	~38.67%	~11.5%	~50.17%
Canadian dividends received (inter-corporate)	Exempt (Part IV may apply)	Exempt	Generally 0%

📋 CPA Note: The 12.2% rate is one of the most valuable tax benefits available to incorporated Canadian business owners — but it requires specific conditions to maintain. As passive investment income inside the corporation grows above $50,000, the small business deduction begins to be clawed back at a rate of $1 for every $5 of passive income. At $150,000 of passive income, the CCPC loses the small business deduction entirely and pays 26.5% on all active income. This is one of the most important planning considerations for profitable CCPCs — and one Bronte Bay reviews for every client annually.

What Bronte Bay Does for Your T2 Corporate Tax Return

T2 Return Preparation and Filing

T2 corporate tax return preparation and filing Toronto — Bronte Bay CPA

We prepare your complete T2 corporate income tax return — including all required schedules, the General Index of Financial Information (GIFI), and any provincial forms — and file electronically with the CRA well before your deadline. You receive a copy of the filed return and your notice of assessment when it arrives.

T2 return prepared and filed electronically with the CRA
All required schedules — Schedule 1, Schedule 100, Schedule 125, Schedule 141, and others
Ontario provincial return (CT23) prepared simultaneously
GIFI financial data prepared and filed
Notice of assessment reviewed when received — discrepancies flagged immediately

Year-Round Tax Planning — Not Just Year-End Filing

The decisions that determine how much corporate tax you pay are made throughout the year — not at filing time. Bronte Bay provides year-round planning as part of every T2 engagement:

Planning Area	What We Do	Typical Annual Saving
Salary vs. dividend optimization	Model optimal owner compensation mix before year-end to minimize combined personal and corporate tax	$3,000–$15,000/year
Small business deduction protection	Monitor passive income levels; plan to maintain the 12.2% rate; avoid passive income clawback	$7,150+/year if threshold managed
Capital Cost Allowance (CCA)	Strategic timing of equipment purchases and CCA claims; Accelerated Investment Incentive (AII) applied on qualifying assets	$1,000–$8,000/year
SR&ED investment tax credits	Identify qualifying R&D activities; set up documentation; prepare T661 and Schedule 31; 35% refundable for CCPCs	$5,000–$100,000+ (varies)
Year-end income timing	Timing of invoices, expense payments, and bonuses before and after fiscal year-end to shift income between tax years	$1,000–$5,000/year
Tax instalment planning	Calculate and schedule quarterly corporate tax instalments to minimize interest without over-paying	Avoids interest charges

T2 Filing Deadlines and Penalties

Corporate tax deadlines and CRA penalties Canada — Bronte Bay CPA Toronto

Obligation	Deadline	Penalty for Missing
T2 corporate tax return filing	6 months after fiscal year-end	5% of unpaid tax + 1%/month (max 12%); minimum $100 even if no tax owing
Corporate tax payment (most CCPCs)	3 months after fiscal year-end	Arrears interest at prescribed rate + 4% compounded daily
Corporate tax payment (other corps)	2 months after fiscal year-end	Arrears interest at prescribed rate + 4% compounded daily
Quarterly tax instalments	1st, 4th, 7th, 10th month of fiscal year	Instalment interest on underpayments
T4/T5 slips (payroll and dividends)	Last day of February	$100–$7,500 depending on volume and days late

Who Needs to File a T2 Corporate Tax Return in Canada

Every Canadian resident corporation must file a T2 return annually — regardless of whether the corporation earned income, had tax payable, or was even active during the year. This includes:

Active operating corporations — any incorporated business earning revenue
Inactive corporations — corporations that have not yet started operations or had no activity during the year
Holding companies — corporations holding investments, real estate, or shares in other corporations
Professional corporations — physicians, lawyers, dentists, engineers incorporated under their provincial regulator
Non-resident corporations carrying on business in Canada or disposing of taxable Canadian property

The only corporations exempt from T2 filing are registered charities and Crown corporations. If you are unsure whether your corporation must file, the answer is almost certainly yes.

Corporate Tax Packages — Pricing

Bronte Bay uses transparent fixed-price packages for corporate tax — no hourly billing, no surprise invoices. You know exactly what you pay before we start.

Package	Price	Includes
Basic	$1,575/year	T2 corporate income tax return only — for corporations with clean, current books
Starter	$3,124/year	T2 return + draft financial statements (P&L and Balance Sheet) + year-end adjustments
Growth	$4,174/year	T2 return + financial statements + year-end adjustments + CPA compilation engagement report (CSRS 4200)

→ View full year-end package details and select your plan

Frequently Asked Questions

When is my T2 corporate tax return due in Canada?

Your T2 corporate income tax return is due within six months of your fiscal year-end. For a corporation with a December 31 year-end, the T2 is due June 30. For a March 31 year-end, it is due September 30. The tax payment is generally due two months after year-end — three months for qualifying CCPCs. Late filing attracts a 5% penalty on unpaid tax plus 1% per month, plus a minimum $100 penalty even if no tax is owing.

What is the corporate tax rate in Ontario in 2026?

CCPCs qualifying for the small business deduction pay 12.2% combined federal-provincial corporate tax in Ontario on the first $500,000 of active business income in 2026. Income above $500,000 is taxed at 26.5%. Passive investment income inside a corporation is taxed at approximately 50.17%. Passive income above $50,000 also begins to claw back the small business deduction.

What is the difference between a T2 and a T1 tax return?

A T2 is the corporate income tax return filed by an incorporated business. A T1 is the personal income tax return filed by an individual — including the business owner. Incorporated business owners must file both. The two returns are connected — the salary or dividends the owner takes from the corporation appear on their T1, and the compensation strategy affects tax owing on both returns. Bronte Bay coordinates both returns as part of an integrated annual tax plan.

What is salary vs dividend optimization for a corporation in Canada?

As an incorporated business owner, you choose how to pay yourself — salary (which creates CPP obligations and generates RRSP room) or dividends (which have no CPP and are taxed at different personal rates). The optimal split depends on your total income, RRSP room, family situation, and corporate cash needs. Bronte Bay models the after-tax outcome of different mixes annually — typically identifying $5,000–$20,000 or more in annual tax savings compared to an unoptimized structure.

Does every corporation have to file a T2 return?

Yes. Every Canadian resident corporation — including inactive corporations and holding companies — must file a T2 every year, even if there is no tax payable and no business activity. The only exceptions are registered charities and Crown corporations. Failing to file attracts a minimum $100 penalty even if no tax is owing.

How much does corporate tax filing cost in Toronto?

Bronte Bay’s T2 corporate tax packages start from $1,575/year for the return only, $3,124/year with draft financial statements, and $4,174/year with a CPA-signed compilation engagement report. All are fixed-price — no hourly billing surprises. See our year-end packages for full details.

File Your Corporate Tax Return with Bronte Bay CPA

Whether you need your T2 filed for the first time, want to switch from your current accountant, or have years of unfiled returns to catch up on — Bronte Bay handles it. Fixed pricing, year-round planning, and a senior CPA who knows your file. Book a consultation to get started.

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