I have a client for whom I have to dissolve his corporation. The situation is that there is no income or expense in the current F.Year 2026 has a negative opening retained earnings.
Due to the Director $687
Common Class A Shares $100
Retained Earnings ($787)
How to proceed with the dissolution process and clean the Balance Sheet in TaxCycle?
I don’t think you need to clean anything here. You dissolve the corporation and file final T2 as is.
That is what I do. I have done several dissolutions and I would just file the amounts like you have. Never had any problem. Just make sure that in the Info Tab, under the Filing section you say Yes to “Is this the final tax year before dissolution?”.
You need to obtain a dissolution date from the Government of Ontario before filing the T2.
I never advise my clients to go through the official procedure unless they don’t mind spending the money. Here in N.S., the RJSC will “strike off” a corp that hasn’t renewed their registration in a number of years. There’s no specified time. Might be 8 years, might be 20. Once it’s “struck off” it no longer exists and CRA will stop pestering for a T2. Once I file a T2 indicating the corp is inactive, I tell my client they will receive compliance letters and then phone calls. Their response to CRA should be:
“I don’t know how to do a T2”
“There’s no money to pay an accountant to file one”
“What do you want me to do?”
So, will CRA send out an auditor? They’d just be beating a dead horse.
Sometimes they just harass people for the next 10 years or so for a meaningless return…
Correct. I should have mentioned that. That will give you the date “yearend” date for the T2.
So to save a couple hundred bucks, you advise your clients to pursue a course that will result in being harrassed by CRA for missing tax returns, and advising them to not file those tax returns even though they are obligated to file them? Yikes.
Might not be a big deal if it’s just a small CCPC with a sole shareholder and only small balances left (as in the original post by @centuryact ), but I’ve had a few clients where there were other, arms-length shareholders who contributed large sums, or suppliers who were owed payment, or even unpaid taxes owed to CRA. I’ve warned such clients that if they don’t do a proper dissolution, and get a clearance certificate, they leave themselves open to legal action against them personally (i.e. director liability).