T2 Deadlines: Why You Shouldn’t Wait Until 6 Months After Year-End – Corporate Tax Payment Deadlines

Understanding the Critical Difference Between Filing and Payment Deadlines

Updated: November 2025

One of the most costly mistakes Canadian business owners make is confusing their corporate tax filing deadline with their corporate tax payment deadline. This confusion costs businesses thousands of dollars annually in unnecessary interest charges and penalties. Many entrepreneurs mistakenly believe they have six months to both file their T2 corporate income tax return AND pay any taxes owed. This misconception leads to delayed payments that trigger compound daily interest from the Canada Revenue Agency (CRA)—even when the return hasn’t been filed yet.

BOMCAS Canada has helped hundreds of Canadian corporations navigate T2 deadlines and recover from payment delays. This comprehensive guide explains the critical differences between these two deadlines, why they matter for your cash flow and compliance, and what you need to know to avoid costly penalties and interest charges.

The Two Critical T2 Deadlines Every Business Owner Must Understand

The T2 Filing Deadline: 6 Months After Fiscal Year-End

The T2 Corporation Income Tax Return filing deadline is 6 months after the end of your corporation’s fiscal year. This is the deadline by which your tax return must be submitted to the Canada Revenue Agency.

Examples of T2 Filing Deadlines:

Important Note: If your T2 filing deadline falls on a weekend or statutory holiday recognized by the CRA, the deadline automatically extends to the next business day.

Many business owners focus exclusively on this deadline because it’s the most visible and commonly discussed. However, this focus creates dangerous tunnel vision that causes them to overlook the earlier and more financially consequential payment deadline.

The T2 Payment Deadline: 2 or 3 Months After Fiscal Year-End

This is where the confusion begins. Any corporate income taxes owed are due 2 or 3 months after your corporation’s fiscal year-end—not 6 months. This payment deadline comes LONG BEFORE your filing deadline.

Payment Deadline Structure:

2-Month Payment Deadline:
Most Canadian corporations must pay their corporate income taxes within 2 months after their fiscal year-end. This applies to:

• Regular corporations
• Large corporations
• Corporations not claiming the small business deduction
• Any corporation that doesn’t qualify for the 3-month extension

3-Month Payment Deadline:
Canadian-controlled private corporations (CCPCs) that meet specific CRA criteria may qualify for a 3-month payment deadline instead of 2 months. To qualify, the CCPC must meet ALL of the following conditions:

• Be a CCPC throughout the entire tax year
• Have claimed (or be claiming) the small business deduction for the current or previous tax year
• Have taxable income for the previous tax year that did not exceed the small business limit (approximately $500,000 federal limit, though this varies by province)
• Not be associated with other corporations during the tax year

Examples of T2 Payment Deadlines:

The Critical Distinction:
Your corporation is legally required to PAY taxes owed by the 2 or 3-month deadline, even if your T2 return won’t be filed until the 6-month deadline. Waiting to file your return is not an acceptable excuse for delaying payment. The CRA charges daily compound interest on unpaid balances from the day after the payment deadline—regardless of whether you’ve filed the return yet.

Why This Distinction Matters: The Real Financial Impact

The Hidden Cost of Waiting Until the Filing Deadline

To understand why this matters, consider a concrete example:

Example Scenario:

• Corporation fiscal year-end: December 31, 2024
• Expected tax owing: $50,000
• Filing deadline: June 30, 2025
• Payment deadline: February 28, 2025

Incorrect Action (Common Mistake):
A business owner thinks “I have 6 months to file and pay, so I’ll deal with this after I close my books and prepare my financial statements in May.” The owner pays on June 1, 2025 (instead of February 28, 2025).

Financial Consequence:

• Late payment period: February 28, 2025 to June 1, 2025 = approximately 94 days
• CRA interest rate (as of November 2025): approximately 10.5% annually
• Daily interest: $50,000 × 0.105 ÷ 365 = approximately $14.38 per day
• Interest charged: $14.38 × 94 days = approximately $1,352

That’s $1,352 in unnecessary interest charges—on a single year’s late payment. This interest is not tax-deductible. Over multiple years, or with larger tax amounts, the costs become staggering.

Correct Action:
The business owner pays by February 28, 2025 and incurs zero interest charges. The return is filed by June 30, 2025 without any complications.

Penalties Compound the Problem

Beyond interest charges, late payment can also trigger additional penalties:

Late Payment Interest:
The CRA automatically charges compound daily interest on any unpaid balance from the day after the payment deadline is missed. This rate is set quarterly and currently hovers around 10.5% annually. Unlike business loan interest or credit card interest, CRA interest charges cannot be deducted as a business expense, making them exceptionally expensive.

Repeated Late Payment Penalties:
While the CRA doesn’t charge a specific “late payment penalty” in the same way they charge late filing penalties, repeated late payments trigger CRA scrutiny and may result in:

• Demand letters requiring immediate payment
• Restrictions on certain business tax relief programs
• Difficulty obtaining CRA payment arrangements if future issues arise
• Potential impact on credit ratings and business reputation

The Late Filing Penalty: A Separate But Equally Important Deadline

While paying by the 2 or 3-month deadline is critical for avoiding interest charges, you must also file your T2 return by the 6-month deadline to avoid additional penalties.

Late Filing Penalty Structure

If you fail to file your T2 return by the 6-month deadline, the CRA imposes escalating penalties:

Initial Late Filing Penalty:
5% of the unpaid tax balance as of the filing due date. This penalty applies even if you’ve already paid the tax—the penalty is based on what was owed on the deadline date.

Monthly Accumulating Penalty:
An additional 1% of the unpaid tax for each complete calendar month the return is late, up to a maximum of 12 months.

Maximum Initial Penalty:
5% + (1% × 12 months) = maximum 17% of unpaid tax for first-time offenders

Example:
If your corporation owed $50,000 in taxes and you file 6 months late:

• Base penalty: 5% × $50,000 = $2,500
• Monthly penalties: 1% × $50,000 × 6 months = $3,000
• Total late filing penalty: $5,500

Repeat Late Filer Penalties: They Get Much Worse

If you’ve received a late filing penalty from the CRA in any of the previous 3 tax years, or if you received a formal CRA demand to file and failed to comply, the penalties double:

Repeat Late Filer Penalty Structure:

• Initial penalty: 10% of unpaid tax (instead of 5%)
• Monthly penalty: 2% of unpaid tax per month (instead of 1%)
• Maximum duration: up to 20 months (instead of 12)

Maximum Repeat Penalty:
10% + (2% × 20 months) = maximum 50% of unpaid tax for repeat offenders

This is devastating. A $50,000 tax bill filed 8 months late by a repeat offender could trigger a penalty of $50,000 × (10% + (2% × 8)) = $50,000 × 26% = $13,000 in penalties alone, not counting interest charges.

Late Filing Penalty on Zero Tax Owing

A particularly harsh aspect of CRA rules: you can be penalized for filing late even if you owe no taxes. If your corporation had no tax liability for the year, you still must file the T2 return by the deadline, and you can still face penalties for late filing—though the minimum penalty will be lower than the calculations above.

Distinguishing Between Payment Deadlines and Filing Deadlines: Why They’re Different

The Policy Reason for Two Different Deadlines

The CRA sets a shorter payment deadline (2-3 months) than the filing deadline (6 months) for a strategic reason: they want to receive your tax payment before they review your return.

From the CRA’s perspective, waiting 6 months to receive payment would unnecessarily delay government revenue. The longer filing deadline accommodates the reality that many businesses need time to:

• Close their books
• Complete final accounting reconciliation
• Prepare detailed financial statements
• Work with their accountants to calculate exact tax liability

However, the CRA doesn’t want this process to delay payment. Therefore, corporations typically must make payments based on either:

• A conservative estimate of tax owing, or
• Previous year’s actual tax bill (for installment payments)

The Installment Payment System

Many corporations with significant tax bills are required to make installment payments throughout the year rather than a lump sum at year-end. Installment requirements depend on:

• Your previous year’s tax liability
• Whether you owe more than $3,000 in federal tax in the current or previous year
• Whether you choose monthly or quarterly installments

If you’re required to make installments:

• Monthly installments are due by the 9th of each month
• Quarterly installments are due by the 9th of March, June, September, and December
• Missing installment deadlines triggers the same interest and penalty consequences as missing the final payment deadline

Critical Differences: Filing vs. Payment for Different Corporation Types

Canadian-Controlled Private Corporations (CCPCs) with Small Business Deduction

CCPCs that claim the small business deduction receive favorable treatment:

Regular Corporations (No Small Business Deduction)

Regular corporations and corporations not eligible for the small business deduction:

Large Corporations with Complex Structures

Corporations with certain characteristics may face different requirements:

• Corporations with taxable capital employed exceeding certain thresholds
• Associated corporations
• Corporations that didn’t claim the small business deduction in the current or previous year

What Happens If You Miss the Payment Deadline

Immediate Consequences

Daily Compound Interest Accrual:
From the day after the payment deadline, the CRA begins charging daily compound interest on your unpaid balance. This interest:

• Accrues at approximately 10.5% annually (rate changes quarterly)
• Compounds daily (meaning you pay interest on the interest)
• Continues until the balance is paid in full
• Cannot be deducted as a business expense for tax purposes

Example of Interest Compounding:
If you owe $50,000 on a February 28 deadline but don’t pay until June 30 (4 months late):

• Simple calculation: $50,000 × 0.105 × (122 ÷ 365) = approximately $1,750
• Actual calculation (with daily compounding): approximately $1,800-$1,900

The difference grows substantially with larger amounts or longer delays.

CRA Collection Actions

If your payment remains outstanding, the CRA escalates collection efforts:

30-60 Days After Deadline:
You receive a payment reminder notice. This is not a penalty but a courtesy reminder.

60-90 Days After Deadline:
The CRA may send a formal demand letter requiring payment within a specific timeframe (typically 30 days).

Beyond 90 Days:
The CRA initiates collection procedures that may include:

• Garnishing bank accounts
• Seizing business assets
• Placing liens on property
• Freezing GST/HST accounts or other business accounts
• Pursuing legal action against directors (in some cases)

Impact on Business Reputation and Credit

Late corporate tax payments can damage your business in ways beyond direct financial cost:

• Credit rating impact (if your corporation has borrowed money)
• Difficulty obtaining new business financing
• Complications with supplier relationships (some suppliers check CRA payment compliance)
• Potential impact on contract bids (some government contracts require CRA compliance certificates)

Can You Get Relief From Late Payments and Penalties?

The CRA’s Taxpayer Relief Program

The Canada Revenue Agency operates a Taxpayer Relief Program that allows the Minister of National Revenue to waive or reduce penalties and interest in specific circumstances. However, relief is not automatic and requires:

Eligible Circumstances for Relief:
The CRA considers relief only when circumstances are:

• Beyond your control
• Documented with supporting evidence
• Exceptional in nature (not routine business challenges)

Eligible examples include:

• Serious illness or hospitalization
• Death in the immediate family
• Natural disasters (fire, flood, major weather events)
• Extraordinary business disruptions
• CRA errors in communication or processing

Not eligible examples:

• General business difficulties
• Cash flow challenges
• Failure to plan ahead
• Reliance on accountant without taking responsibility
• Standard business expenses

How to Request Taxpayer Relief

If you believe you have grounds for relief:

1. Contact the CRA at 1-800-959-5525 or visit your local CRA office
2. Explain your circumstances in writing with supporting documentation
3. Submit your request within the required timeframe (generally within 10 years of the tax year in question)
4. Provide evidence of the extraordinary circumstances
5. Wait for review (CRA typically responds within 60-90 days)

Important: Even if your request is denied initially, you may appeal to the CRA’s Appeals Division or seek recourse through the Office of the Taxpayer’s Ombudsman if you believe the denial was unreasonable.

Strategic Planning to Avoid Payment Deadline Confusion

Plan Your Cash Flow Around Payment Deadlines, Not Filing Deadlines

The most reliable way to avoid penalties and interest is to plan your corporate cash flow with the payment deadline as your priority:

Action Timeline:

Months 1-2 After Year-End (BEFORE Payment Deadline):

• Close your books
• Perform preliminary tax calculations to estimate tax owing
• Allocate funds to cover estimated tax payment
• Make payment by the deadline
• If your estimate is too high, you’ll receive a refund when you file

Months 2-6 After Year-End (Before Filing Deadline):

• Prepare detailed financial statements
• Work with your accountant to refine tax calculations
• File your T2 return
• Submit any supporting schedules or documentation
• Address any adjustments if your payment was over or under

This approach ensures you never miss a payment deadline while allowing ample time for precise financial preparation and return filing.

Use Installment Payments to Spread the Burden

If your corporation has a large tax bill:

• Request the installment payment option (if available)
• Make monthly or quarterly installments throughout the year
• Reduce the shock of a single large payment
• Maintain better cash flow management

Maintain Communication with Your Accountant

Your accountant should proactively:

• Calculate estimated tax liability early in the year
• Alert you to payment deadlines well in advance
• Recommend installment payments if appropriate
• Track deadlines in writing (not just verbal reminders)
• File returns on time to avoid additional penalties

Common Questions About T2 Payment and Filing Deadlines

“Can I File My T2 Return and Then Pay Later?”

Short answer: No. Absolutely not.

You must pay your taxes by the 2 or 3-month payment deadline regardless of whether your T2 return has been filed. Filing the return does not reset or extend the payment deadline. The payment deadline is independent of the filing deadline.

If you pay after the deadline but before filing your return, you’ve still missed the payment deadline and will owe interest from the day after the deadline date.

“What If I File Early But Pay Late?”

Filing your return early doesn’t grant relief from the payment deadline. The payment deadline is determined by your fiscal year-end, not by when you choose to file.

If you file in month 3 and pay in month 5, you’ve missed the month 2-3 payment deadline, regardless of your filing timing.

“Do Installment Payments Change My Filing Deadline?”

No. The T2 filing deadline remains 6 months after your fiscal year-end regardless of whether you’ve made installment payments.

However, making installments does affect your payment deadline calculation:

• If installments are due, you must make them by their specific dates (monthly by the 9th, or quarterly)
• Missing an installment date triggers the same interest charges as missing the final payment deadline
• Your final “balance due” payment (if any) is still due by the 2 or 3-month deadline for any remaining balance not covered by installments

“My Accountant Missed the Filing Deadline. Will the CRA Waive the Penalty?”

Accountant error does not automatically qualify for CRA penalty relief. While it’s possible to request relief citing extraordinary circumstances, the CRA typically holds business owners responsible for ensuring their returns are filed on time.

This is why it’s critical to:

• Choose an accountant you trust
• Establish clear written deadlines
• Request written confirmation that returns are submitted
• Maintain backup reminders yourself

If your accountant missed the deadline, contact them immediately about requesting CRA taxpayer relief and explore whether they should cover the penalty as a matter of professional liability.

“What’s the Difference Between My Tax Owing and My Payment Deadline?”

Tax owing is the amount of corporate income tax your company is legally required to pay for the year. The payment deadline is when that tax is due to the CRA.

Example:

• Tax owing: $50,000 (calculated on your financial statements)
• Payment deadline: 3 months after year-end
• Even if you haven’t calculated the exact amount of tax, you must make a payment (usually based on an estimate) by the deadline

“Can I Delay Payment if My Company Doesn’t Have the Cash?”

The CRA requires payment by the deadline. If you genuinely cannot pay by the deadline, you have options:

1. Request a Payment Arrangement – Contact the CRA to negotiate an installment payment plan that allows you to pay over time without triggering additional collection action (though interest still accrues)
2. Make a Partial Payment – Pay what you can by the deadline; this reduces the balance on which interest accrues
3. Secure Business Financing – Obtain a short-term business loan to cover the tax payment by the deadline

Do NOT simply ignore the deadline hoping for relief later. The interest and penalties will accumulate, and the CRA’s collection actions can be devastating to your business.

“I’m a CCPC. How Do I Know if I Qualify for the 3-Month Payment Deadline?”

You qualify for the 3-month payment deadline ONLY if ALL of the following apply:

1. Your corporation is a Canadian-controlled private corporation (CCPC) during the entire tax year
2. Your corporation claimed the small business deduction (or is claiming it) for the current or previous tax year
3. Your taxable income for the previous tax year did not exceed the small business limit (approximately $500,000 federally, varies by province)
4. Your corporation is not associated with any other corporation during the tax year

If ANY of these conditions are not met, you only have a 2-month payment deadline.

Ask your accountant to confirm your eligibility before relying on the 3-month deadline.

“What if My Year-End Payment Deadline Falls on a Weekend?”

The CRA extends any deadline that falls on a weekend or statutory holiday to the next business day.

Example:

• Year-end: December 31
• 2-month payment deadline: February 28 (but February 28, 2026 is a Friday)
• Actual deadline: February 28, 2026 (no extension needed)

However, if the deadline fell on Saturday, it would extend to Monday.

How BOMCAS Canada Helps Avoid T2 Deadline Disasters

Proactive Deadline Management

BOMCAS Canada manages T2 deadlines for corporate clients with a systematic approach:

Early Calendar Planning:

• We calculate your specific payment and filing deadlines for each year
• We provide a written schedule well in advance
• We set internal reminders 60, 30, and 14 days before each deadline
• We alert clients to upcoming obligations months in advance

Estimated Tax Calculation:

• We calculate estimated tax liability early in your fiscal year
• We help you plan cash flow to ensure payment funds are available
• We recommend installment payment arrangements when appropriate
• We update estimates as the year progresses

Timely Payment Processing:

• We coordinate payment with your company’s financial team
• We ensure payments are processed before the deadline
• We confirm payment receipt from the CRA
• We maintain detailed records of all payment transactions

Precision T2 Filing

Beyond deadline management, BOMCAS Canada ensures your T2 return:

• Is filed with complete accuracy
• Includes all required schedules and documentation
• Reflects all applicable deductions and credits
• Complies with current CRA regulations
• Is filed well before the deadline to avoid last-minute complications

Penalty Recovery and Appeals

If your corporation has previously incurred late payment penalties or late filing penalties, BOMCAS Canada can:

• Assess whether your circumstances qualify for taxpayer relief
• Prepare a comprehensive relief request
• Submit the request to the CRA with supporting documentation
• Represent you through the CRA’s appeals process if needed
• Help recover funds if penalties are waived or reduced

Summary: The Critical Distinction and Your Action Plan

The Key Difference You Must Remember

Filing Deadline: 6 months after your fiscal year-end
Payment Deadline: 2 or 3 months after your fiscal year-end (MUCH earlier)
Critical Point: You must pay by the earlier deadline, even if you haven’t filed the return yet

Waiting until the filing deadline to pay is a costly mistake that triggers daily compound interest and potential collection action.

Your Action Checklist

Immediately:

• Determine your corporation’s fiscal year-end
• Calculate your payment deadline (2 or 3 months from year-end)
• Calculate your filing deadline (6 months from year-end)
• Mark both dates prominently in your calendar
• Determine if you’re a CCPC eligible for the 3-month deadline

60 Days Before Payment Deadline:

• Work with your accountant to estimate tax liability
• Plan your cash flow to ensure payment funds are available
• Set aside the estimated payment amount
• Confirm payment instructions with your accountant

30 Days Before Payment Deadline:

• Finalize your estimated tax calculation
• Arrange payment method (electronic funds transfer is fastest and most reliable)
• Confirm with your accountant that they’re on track to file your return by the 6-month deadline

On or Before Payment Deadline:

• Submit your payment to the CRA
• Maintain written confirmation of payment receipt
• Do NOT wait until the filing deadline to pay

By the Filing Deadline (6 months):

• Ensure your T2 return has been filed with complete accuracy
• Verify the CRA has received your return (check your CRA account)
• Address any CRA notices or requests for additional information immediately

After Filing:

• Review your Notice of Assessment when received
• Address any discrepancies or adjustments
• Plan next year’s payment strategy based on this year’s results

Conclusion: Don’t Let This Common Mistake Cost Your Business Thousands

The confusion between T2 filing deadlines and payment deadlines costs Canadian corporations millions of dollars annually in unnecessary interest charges and penalties. Many business owners genuinely don’t realize that the payment deadline comes far earlier than the filing deadline, and by the time they discover this distinction, they’ve already incurred substantial costs.

This doesn’t have to happen to your business. By understanding the critical difference between these two deadlines and implementing a systematic approach to meeting both, you can:

• Eliminate unnecessary interest charges
• Avoid late payment penalties
• Maintain a clean compliance record with the CRA
• Protect your corporation’s reputation and credit rating
• Free up cash flow by planning payments strategically

The stakes are high, but the solution is straightforward: Pay attention to the 2 or 3-month payment deadline, and file your return by the 6-month filing deadline. Miss either deadline, and your corporation faces costly financial consequences.

BOMCAS Canada specializes in helping Canadian corporations navigate these critical deadlines with precision and reliability. Whether you need assistance calculating your payment deadline, planning cash flow for your tax obligation, or recovering from previous penalties, our experienced corporate tax professionals are ready to help.

Don’t wait. Don’t guess. Don’t risk unnecessary penalties and interest. Contact BOMCAS Canada today to ensure your T2 deadlines are managed with the expertise and attention your business deserves.

This article is provided for informational purposes and reflects current CRA requirements and tax law as of November 2025. Tax rules and CRA procedures change regularly, and circumstances vary by corporation. For personalized advice specific to your corporation’s situation, please consult with a qualified accounting professional at BOMCAS Canada or contact the CRA directly at 1-800-959-5525.