Incorporated in Canada? Your Fiscal Year Choice Could Save (or Cost) You Thousands
What most business owners get wrong about fiscal year-ends—and how choosing the right one impacts corporate tax, GST, and cash flow.
How to Choose the Right Fiscal Year & Understand Your Tax Deadlines
Incorporating a business in Canada offers several advantages—lower corporate tax rates, limited liability, income deferral, and better long-term tax planning. However, one of the most overlooked but critical decisions during incorporation is choosing the corporation’s fiscal year-end.
This decision directly affects:
Corporate tax filing deadlines
When taxes are payable
GST/HST filing periods
Cash flow and tax planning opportunities
This article explains how fiscal years work, how to choose the right one, and compares two common fiscal year structures with examples and deadlines.
What Is a Fiscal Year for a Corporation?
A fiscal year is the 12-month period used to report income and expenses for tax purposes.
For Canadian corporations:
The fiscal year does not have to match the calendar year
It can end on any date, as long as:
The first fiscal year is no longer than 53 weeks
Once chosen, changes usually require CRA approval
Why Fiscal Year Choice Matters
Choosing the right fiscal year can help with:
Tax deferral (delaying when taxes are due)
Cash flow management
Aligning taxes with business cycles
Better planning for owner salary, dividends, and bonuses
Type 1: Fiscal Year Ending on a Date OTHER Than December 31
Example:
A corporation is incorporated on April 10, 2026
It chooses its fiscal year-end as March 31 every year
First fiscal year:
April 10, 2026 → March 31, 2027
Corporate Tax Filing (T2) – Non-Calendar Year
T2 Return Deadline
6 months after fiscal year-end
Example:
Fiscal year ends March 31, 2027
➡ T2 filing deadline: September 30, 2027
Corporate Tax Payment Deadline
2 months after year-end (most CCPCs)
3 months if eligible for the small business rate and other criteria
Example:
March 31 year-end
➡ Tax payable by May 31 or June 30
GST/HST Filing – Non-Calendar Year
GST filing periods are independent of the corporate year-end, but many businesses align them for simplicity.
Common GST Options:
Monthly
Quarterly
Annual
Example (Annual GST filer aligned with fiscal year):
GST period: April 1, 2026 – March 31, 2027
GST return due: June 30, 2027
If balance is owing: payment usually due by April 30, 2027
When a Non-December Year-End Makes Sense
Seasonal businesses
Businesses with uneven cash flow
Owner-managers wanting tax deferral
Businesses planning bonuses after year-end
Type 2: Fiscal Year Ending on December 31 (Calendar Year)
Example:
A corporation chooses December 31 as its fiscal year-end
Fiscal year:
January 1 → December 31
This is the simplest and most common option, especially for small businesses.
Corporate Tax Filing (T2) – December 31 Year-End
T2 Return Deadline
June 30 of the following year
Example:
Fiscal year ends December 31, 2026
➡ T2 due June 30, 2027
Corporate Tax Payment Deadline
February 28 or March 31, 2027, depending on eligibility
GST/HST Filing – December 31 Year-End
Annual GST filer (most small corporations):
GST period: January 1 – December 31
GST return due: June 15
GST payment due: April 30
Even if the return is due June 15, interest applies after April 30 if payment is late.
When a December 31 Year-End Makes Sense
Sole owner-managers
Businesses with simple operations
Owners who want personal and corporate taxes aligned
Easier bookkeeping and compliance
Quick Comparison Table
ItemNon-Dec Year-End (e.g., Mar 31)Dec 31 Year-EndFiscal flexibilityHighLowTax deferral potentialHigherLowerT2 filing deadline6 months after year-endJune 30Tax payment deadline2–3 months after year-endFeb / MarGST alignmentOptionalCommonSimplicityModerateVery high
Finally: How to Choose the Right Fiscal Year
There is no one-size-fits-all answer.
A corporation should consider:
Cash flow patterns
Growth plans
Owner’s personal income strategy
Bonus and dividend planning
GST/HST complexity
Once chosen, the fiscal year becomes a core tax planning tool, not just an administrative detail.