Corporate Tax Services

If you’ve incorporated your business in Ontario, your tax obligations look very different from personal filing. Corporate tax in Canada means filing a T2 Corporate Income Tax Return — a separate return from your personal T1, with its own deadlines, deductions, and compliance requirements. For business owners in London, Ontario, understanding these rules is the difference between strategic tax savings and expensive surprises.

Whether you run a construction company near the 401, a tech startup downtown, or a medical clinic in the Wonderland Road corridor, this guide covers what you need to know about filing corporate taxes correctly and on time.

T2 Filing Deadlines: When Is Your Corporate Return Due?

Unlike personal tax returns, corporate deadlines are tied to your company’s fiscal year-end — not the calendar year. The CRA requires every Canadian corporation to file a T2 return within six months of the end of its fiscal year.

For most London businesses using a December 31 fiscal year-end, that means the T2 is due by June 30. But the payment deadline is shorter: any balance owing is typically due two months after year-end — so by the end of February for December year-end corporations.

There’s one important exception. If your company qualifies as a Canadian-Controlled Private Corporation (CCPC) and claimed the small business deduction in the previous year, you may get an extra month — making the payment deadline three months after year-end instead of two.

Late filing triggers a penalty of 5% of the unpaid tax, plus 1% for each full month the return is late, up to 12 months. If you’ve been penalized before, it gets steeper. The CRA charges compound daily interest on top of penalties, so delays get expensive fast.

The Small Business Deduction: How It Reduces Your Tax Bill

The small business deduction (SBD) is the most significant tax advantage available to Canadian-Controlled Private Corporations. It reduces the federal corporate tax rate on the first $500,000 of active business income from 15% down to 9%.

Combined with Ontario’s small business rate, qualifying corporations in London can pay a combined federal-provincial rate of approximately 12.2% on eligible income — compared to the general corporate rate of about 26.5%. That’s a meaningful difference for a growing business.

To qualify, your corporation must be:

• A Canadian-Controlled Private Corporation throughout the tax year
• Earning active business income (not passive investment income)
• Within the $500,000 business limit (which may be reduced if your associated group’s taxable capital exceeds $10 million)

Passive investment income above $50,000 also starts to erode your access to the small business deduction. This is where professional corporate tax planning makes a real difference — structuring your compensation, dividends, and retained earnings to protect your SBD access.

Salary vs. Dividends: The Owner Compensation Question

Every incorporated business owner in London faces this decision: how much to pay yourself in salary versus dividends. The answer depends on your specific numbers, but here’s the framework:

Salary advantages: Creates RRSP contribution room. Is a deductible expense for the corporation, reducing corporate taxable income. Builds CPP pensionable earnings. Allows you to claim childcare expenses.

Dividend advantages: No CPP contributions required (saves roughly 11.9% combined employer/employee). Eligible dividends receive a preferential personal tax rate through the dividend tax credit. Simpler to process — no payroll remittances required.

The optimal mix varies every year based on your corporate income, personal income from other sources, RRSP room, and family situation. A London corporate tax accountant runs the actual numbers rather than applying a generic rule.

HST Obligations for Ontario Corporations

If your corporation’s worldwide taxable revenues exceed $30,000 over four consecutive calendar quarters, you must register for HST. Once registered, you charge 13% HST on taxable goods and services, collect it from customers, and remit the net amount to CRA after claiming your Input Tax Credits (ITCs).

Filing frequency depends on your annual revenue:

• Under $1.5 million: Annual filing (with the option to file quarterly or monthly)
• $1.5 million to $6 million: Quarterly filing required
• Over $6 million: Monthly filing required

Many London businesses miss ITCs they’re entitled to — especially on vehicle expenses, office supplies, professional fees, and business meals (50% of the HST on meals and entertainment is recoverable). Proper bookkeeping throughout the year ensures these credits don’t slip through the cracks.

Year-End Tax Planning: What to Do Before Your Fiscal Year Closes

The weeks before your corporation’s fiscal year-end are your last chance to make moves that reduce your current-year tax bill. Effective planning includes:

Timing major purchases. If you need equipment, vehicles, or technology for your business, purchasing before year-end lets you claim Capital Cost Allowance (CCA) in the current year. The Accelerated Investment Incentive Program allows a larger first-year deduction on many asset classes.

Reviewing accounts receivable. If a customer’s invoice is genuinely uncollectable, writing it off as a bad debt before year-end creates a deduction.

Paying bonuses. Accruing a bonus to yourself or employees before year-end creates a corporate deduction — but the bonus must be paid within 180 days of year-end for the deduction to stand.

Managing passive investment income. If your corporation holds investments, keeping passive income below $50,000 protects your small business deduction. This might mean timing the sale of investments or adjusting your portfolio strategy before year-end.

Starting these conversations with your tax professional in October or November — not in March — gives you room to act on the recommendations.

File Smarter, Not Just on Time

Corporate tax filing is more than a compliance exercise. It’s an opportunity to structure your business finances for lower taxes, better cash flow, and long-term growth. But the rules are complex, the deadlines are firm, and the penalties for mistakes are real.

London Ontario Tax provides comprehensive corporate tax services for businesses across London and Southwestern Ontario — from T2 preparation to year-round tax planning. We work with corporations of all sizes, and your first consultation is on us.

📞 Call +1 226 559 1006 or book a free consultation to talk about your corporate tax strategy.