Tax Tip - Filing your T2 return electronically using certified software

·6 min read

OTTAWA, ON, Aug. 11, 2022 /CNW/ - The Canada Revenue Agency (CRA) is focused on making it simpler for you to find the information you need to file your taxes on time and to manage your tax affairs. Filing tax returns on paper always takes more time than filing electronically so why not join the over 90% of corporations that already file their returns electronically?

By filing electronically, corporations receive immediate confirmation that the CRA has received their return, enjoy faster processing and refunds, save on mailing costs, and help the environment by using less paper.

Who has to file a T2 return?

Generally, all resident corporations – including non-profit organizations, tax-exempt corporations, and inactive corporations – must file a T2 return every tax year, even if there's no tax payable. Non-resident corporations only have to file a T2 return if, at any time in the year, they carried on business in Canada, had taxable capital gains, and/or disposed of taxable Canadian property. This requirement applies even if non-resident corporations claim that any profits or gains realized are exempt from Canadian income tax due to the provisions of a tax treaty.

For more information on the criteria for resident and non-resident corporations and their tax obligations, please visit the T2 Corporation – Income Tax Guide web page.

Be sure to use certified software

If you are preparing your return using a tax preparation software, you must use CRA certified software, as other software may not meet the CRA's specifications. "Certified" tax preparation software means that the developer of the tax package has gone through a process with the CRA to establish that the particular package is compatible with the CRA's systems. Although the CRA certifies particular software, it does not endorse or recommend one product over any other.

Using certified tax preparation software allows you to complete all return and schedule information electronically within the software program, including financial statement information using the General Index of Financial Information (GIFI) codes. All corporations (except for insurance corporations) should prepare their financial statement information using the GIFI codes and file it with their T2 returns. Non-resident corporations can use the GIFI codes when they are reporting in unconsolidated Canadian funds.

Filing your T2 return electronically

To file your return electronically, we encourage you to use one of the following services:

What is T2 Auto-fill?

T2 Auto-fill is a secure service that lets you and/or your authorized representatives download information from the CRA to your certified tax preparation software. Using this service will ensure that certain return and account balances match the CRA's data. It is important to note, however, that it is not mandatory for certified software products to include T2 Auto-fill. If you want to know if a product includes this service, contact the software company.

What is T2 Attach-a-doc?

The T2 Attach-a-doc service allows corporations to attach supporting documentation, such as certificates, when they file their T2 return (or within 24 hours of filing). For more information on T2 Attach-a-doc, please visit our using tax preparation software web page. Currently, it is not mandatory for certified software products to include T2 Attach-a-doc. If you want to know if a product includes this service, contact the software company.

What is T2 Pre-Filing Validation?

The T2 Pre-filing validation service provides on-demand critical-error checks allowing software users to check their data against CRA systems (upfront validation) for any errors that would prevent the T2 return from being accepted electronically by the CRA. These checks occur prior to the return actually being filed and enable the user to fix error situations prior to filing the return. At the present time items checked and validated by the T2 Pre-Filing validation service include business number (BN), tax year start and end dates, corporation name, software approval code, e-file password or web access code, email address, corporation and books and records addresses and corporation type.

When is it mandatory to file a T2 return electronically?

All corporations with annual gross revenue of more than $1 million have to file their T2 return electronically, with the exception of insurance corporations, non-resident corporations, corporations reporting in a functional currency, and those exempt from tax payable under section 149 of the Income Tax Act. For more information, visit the T2 Corporation – Income Tax Guide.

Note: if you file through an electronic transmitter, you must authorize the transmitter by completing a T183CORP, Information Return for Corporations Filing Electronically, for each tax year. Do not send this form to us but keep it on hand in case we ask for it later.

What if you cannot file electronically?

If you cannot file electronically, you can print the T2 Bar Code Return and mail it to the CRA – faxes are not accepted. The bar codes contain your corporation's identification information, a summary of the financial data, bar codes and a certification area needed to assess your return.

NAICS codes and T2 tax returns

All certified tax preparation software for T2 returns uses self-identified North American Industry Classification System (NAICS) codes that provide common definitions and descriptions of industries and their business activities. Active corporations that file their T2 returns either online or on paper using 2D bar codes must choose the most appropriate code.

  • Corporations using the agency-provided return do not have to enter a NAICS code.

  • It is important that you select the most accurate business activity the first time, as the first year's code is carried forward to subsequent years.

  • For questions regarding NAICS codes, please call the Business Enquiries line at 1-800-959-5525.

Additional information on filing your T2 return

When you submit your return electronically, do not send in any additional paper copies of schedules or the client copy of your T2 return that is generated by the tax software. The client copy is for your records only.

While you do not need to submit your slips, receipts, and other documents with your T2 return, please keep all corporation documentation for at least six years starting from the end of the taxation year to which they relate, or if your tax return is filed late, for six years after the day you file the return.

For more information, please visit the using tax preparation software web page. You can also check out our T2 Corporation – Income Tax Guide web page for help with tax filing.

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SOURCE Canada Revenue Agency

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