What an Annual Return is and How it Differs from a Tax Return

There are a number of ongoing corporate filing requirements in order to preserve a corporation’s existence and one of them is filing an Annual Return.

An Annual Return is not the same as an income tax return, although, if you’re a corporation governed by the OBCA (see below) it may be filed with your income tax return. Filing an Annual Return is a corporate law requirement.

An Annual Return is required to be filed for every corporation incorporated, amalgamated or continued: (a) in Ontario under the Ontario Business Corporations Act (OBCA) and (b) in Canada under the Canada Business Corporations Act (CBCA). Foreign corporations with a licence endorsed under the Extra-Provincial Corporations Act to carry on business in Ontario must also file an Annual Return. Even small businesses not conducting business must file an Annual Return.

You will need to know certain information in order to file an Annual Return including the Corporation’s legal name, mailing address, taxation year end date, date of incorporation or amalgamation, corporation number (this can be found on the corporation’s certificate of incorporation or amalgamation), jurisdiction incorporated and information about the directors and officers of the corporation.

A corporation governed by the OBCA is required to file the Annual Return within six months after the end of its taxation year. In most cases this will be filed with your tax return but you can verify this with your accountant.

A corporation governed by the CBCA must file an Annual Return within 60 days following the corporation’s anniversary date, meaning the date of incorporation or the date the corporation amalgamated or continued under the CBCA. You do not need to file for the year the corporation was incorporated, amalgamated or continued, but you do need to file each year thereafter.

The information provided ensures federal and provincial databases are up to date. This information is available to the public with a fee with respect to OBCA corporations or for free with respect to CBCA corporations and allows investors, consumers, financial institutions among others to make informed decisions regarding your corporation. It is for this reason that the information must reflect the corporation’s most currently available information upon filing. For a CBCA corporation, this means you may not file your annual return prior to your anniversary date, and must do so only within the 60 day window. Early returns will not be accepted because they may not contain the most up to date information.

Failure to file an annual return could lead to a number of negative results including fines of up to $25,000. The corporation will not be held to be in good standing and a certificate of compliance or status may not be obtainable if asked for by investors, for example. Furthermore, your corporation may be dissolved (ie: legal end to its existence) for failing to file an annual return as it may be assumed that the corporation is not operating.