How to Pay T2 Corporate Tax Return

Running a corporation in Canada means staying compliant with the Income Tax Act and meeting your annual filing and payment obligations to the Canada Revenue Agency (CRA). One of the most important requirements is filing and paying your T2 Corporate Tax Return on time. Doing so keeps your business in good standing, avoids penalties and interest, and ensures accurate tracking of your tax liability under federal law. 

This guide explains how to pay your T2 corporate tax, when it’s due, and the best ways to make secure electronic payments through the CRA website or your financial institution. 

Compliance with the Income Tax Act and T2 Corporate Tax Return Requirements 

In Canada, all incorporated businesses must file a T2 Corporate Tax Return annually under the Income Tax Act (RSC 1985, c. 1 (5th Supp.)). Filing this return reports your corporation’s income, expenses, and tax payable (or refundable amount) to the CRA, regardless of whether you owe tax. 

Timely filing and payment are critical. Missing deadlines can trigger interest that compounds daily and late-filing penalties that grow quickly, especially for repeat offenders. 

What Is a T2 Corporate Tax Return? 

A T2 return is a comprehensive filing that: 

• Reports your corporation’s financial performance for the fiscal year 

• Determines whether tax is payable or a refund is due 

• Includes multiple schedules required by the CRA, such as: 

• Schedule 8: Capital Cost Allowance (depreciation) 

• Schedule 50: Shareholder Information 

• Schedule 1: Net Income for Tax Purposes 

• Must be filed within six months of the fiscal year-end, even if your corporation owes no tax 

These schedules help the CRA confirm accuracy and ensure transparency regarding corporate ownership and deductions claimed. 

Important Deadlines for T2 Filing and Payment 

• Filing deadline: Six months after your fiscal year-end 

• Payment deadline: Two months after year-end for most corporations, or three months for Canadian-controlled private corporations (CCPCs) that claim the small business deduction (SBD) 

Example: 

If your fiscal year ends on December 31, you must file by June 30 and pay any tax owing by March 31 (three months after year-end if your business qualifies as a CCPC claiming the SBD). 

Missing either of these deadlines can result in penalties under the Income Tax Act, even if your return shows a loss or no tax owing. 

Understanding Tax Instalments 

If your corporation consistently owes tax each year, the CRA may require you to make tax instalments throughout the year, monthly or quarterly, rather than paying a lump sum at year-end. 

These instalments act as advance payments toward your tax liability and are generally based on your prior years’ tax amounts. They help businesses avoid large year-end payments and minimize interest charges. 

You can monitor your tax instalments paid and outstanding balances anytime through your CRA My Business Account or by reviewing your Notice of Assessment after filing. 

How to Pay Your T2 Corporate Tax 

You can make your payments to the CRA using several convenient and secure methods. 

1. Online Banking

Set up CRA (Revenue) – Corporation Tax Payments – T2 as a payee through your financial institution’s online portal. 

Enter your 15-character business number (BN) ending in RC0001, and select the correct payment instrument; for example, instalment, balance due, or arrears. This ensures your payment is applied to the right taxation year. 

2. CRA My Business Account

Through the CRA website, you can make payments using My Payment or pre-authorized debit (PAD). 

Steps: 

1. Log in to your CRA My Business Account
2. Select “Corporate Income Tax (T2)”
3. Choose the appropriate year and payment type (instalment, arrears, or balance due)
4. Complete your electronic payment via debit or PAD 

This method provides instant confirmation, showing your payment date and transaction details. 

3. Pre-Authorized Debit (PAD)

Ideal for predictable monthly or quarterly instalments, PAD lets you schedule automatic withdrawals directly from your business bank account. 

You can set, modify, or cancel PAD agreements in My Business Account anytime before the scheduled withdrawal. This helps prevent missed payments and ensures your tax obligations are met automatically. 

Confirming Your Payment 

Once your payment is made, confirm receipt through your CRA My Business Account under “View and pay account balance.” You’ll see: 

• Payment date and amount 

• Payment type (instalment, balance due, or arrears) 

• Updated balance or credit 

Always retain payment receipts or confirmation emails for reconciliation with your Notice of Assessment. 

Consequences of Missing a Payment or Filing Deadline 

Failing to file or pay on time can lead to: 

• Interest charges on unpaid amounts beginning the day after the due date, compounded daily 

• Penalties for late filing or missing instalment payments 

• CRA applying your GST/HST credits or future refunds to unpaid balances 

Even if you cannot pay the full balance, partial payments help reduce accumulating interest. 

For small corporations, failure to file on time can cost $25 per day, up to a maximum of $2,500. Repeat or prolonged non-compliance may trigger steeper penalties or collection action. 

Best Practices for Staying Compliant 

• Mark tax deadlines on your calendar and set up automated reminders 

• Use electronic payments to ensure secure, timely processing 

• File early to avoid last-minute payment issues 

• Regularly review your tax instalments and account balance in CRA My Business Account 

• Work with your CPA to review key filings such as Schedule 8 (Capital Cost Allowance) and Schedule 50 (Shareholder Information) before submission 
• Keep detailed records of all payments, correspondence, and CRA notices 

Key CRA Forms and Resources 

• Form T2 – Corporation Income Tax Return 

• Form RC159 – Remittance Voucher for Corporations 

• CRA My Business Account portal – access your balance, payment history, and notices: 
• Sign in to your CRA account  

Additional Details 

The Income Tax Act requires all corporations, including inactive ones, to file a T2 annually, even if no income or tax is owed. 

The small business deduction (SBD) can extend your payment deadline by one month and reduce your effective tax rate on the first $500,000 of active business income. 

Schedule 8 determines your depreciation (capital cost allowance) claim, which affects your taxable income. 

Schedule 50 ensures transparency by listing shareholder ownership and related transactions, allowing the CRA to monitor compliance and prevent misuse of shareholder loans. 

Final Takeaway 

Paying your T2 Corporate Tax Return correctly and on time is essential for compliance under the Income Tax Act. Using electronic payment options through your bank or the CRA’s My Business Account is the fastest and most reliable way to stay on top of obligations and avoid unnecessary penalties. 

Regularly monitoring your tax instalments, reviewing your Notice of Assessment, and keeping your Schedules 8 and 50 accurate all contribute to a stronger financial position and fewer CRA issues down the line. 

If you need help setting up payments, calculating instalments, or reconciling your corporate return, Mesa CPA can help. We specialize in corporate compliance, year-end filings, and CRA payment planning for Canadian businesses. 

Book a free consultation today to make your next corporate tax season efficient, compliant, and stress-free.