Memorandum
- To:
- Canadian Corporation Owners
- From:
- NilTaxReturn · Filing Department
- Date:
- June 19, 2026
- Re:
- Dormant Corporation Tax Filing in Canada
Dormant Corporation Tax Filing in Canada
A dormant corporation is a Canadian company that legally exists but has no business activity, revenue, or expenses. The CRA still requires a T2 return every year — and getting this wrong is one of the most common (and most expensive) mistakes new owners make.
Reviewed by NilTaxReturn · Canadian tax professional · Updated June 16, 2026
When does a corporation count as dormant?
A corporation is generally treated as dormant when, during the entire fiscal year:
- It earned $0 in revenue
- It paid no expenses (including no rent, software subscriptions, professional fees, or interest)
- It had no payroll, T4s, T5s, or shareholder loans
- It bought or sold no assets
- Its share capital didn't change beyond the original incorporation
If even one of these is false — for example, you paid an annual corporate registry fee out of the corporation's account — the company is no longer dormant for that year and a regular T2 is required.
Common mistakes
1. Assuming "dormant" means "don't file"
The most expensive mistake. Dormant means inactive, not exempt. The CRA still requires the T2 every year, six months after fiscal year-end.
2. Mixing personal and corporate transactions
Any expense paid through the corporate bank account counts as activity. Many holding-company owners accidentally disqualify themselves from a nil return by paying the annual government fee from the corporate account.
3. Forgetting GST/HST de-registration
If you registered the corporation for GST/HST during incorporation, you may also need to file periodic GST/HST returns (typically nil) — separate from the T2.
4. Letting the corporation be dissolved involuntarily
After 1–2 years of missed filings the CRA shares this with the registry, which can dissolve your corporation. Restoring it later costs significantly more than catching up the returns.
Multi-year catch-up
If your dormant corporation has missed several years, you must file a separate T2 nil return for each missed year. NilTaxReturn handles multi-year catch-up filings — message us with how many years you need and we'll quote it.
§ Frequently Asked Questions
- What is a dormant corporation in Canada?
- A dormant corporation is a Canadian company that legally exists but has no business activity, revenue, or expenses during the fiscal year. It must still file a T2 return every year.
- Does a dormant corporation need to file taxes?
- Yes. A dormant Canadian corporation must file a T2 nil return every year, six months after its fiscal year-end. The CRA does not waive the requirement for inactive corporations.
- Does paying an annual registry fee disqualify me from a nil return?
- Often yes. If the fee was paid from the corporation's bank account, it counts as activity. Paying it personally and reimbursing nothing keeps the year truly nil.
- What if my dormant corporation also has a GST/HST number?
- GST/HST returns are separate from the T2. If you registered for GST/HST, you may still need to file periodic nil GST/HST returns until you de-register.
- How do I catch up on multiple years of missed nil filings?
- File a separate T2 nil return for each missed year. NilTaxReturn handles multi-year catch-up filings at a discounted per-year rate — most clients are caught up within a week.
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