My corporation is inactive and I would like to dissolve it, what should I be aware of?

Take the following steps to dissolve your inactive corporation:

1. Before you can dissolve your corporation you have to make sure any outstanding tax liabilities such as HST (sales tax), corporate income taxes and payroll taxes are all paid to the CRA as of the dissolution date. The related tax returns must also have been filed by the dissolution date. You can confirm this by calling the CRA at 1-800-959-5525.
2. The second step is to ensure that all external liabilities that the corporation owes are also paid off. This includes amounts owing by the the shareholder to the corporation.
3. If the corporation has retained earnings, then the retained earnings must be distributed to the shareholders as per the articles of incorporation.
4. A resolution also needs to be passed authorizing the dissolution by all shareholders and signed off by the directors.
5. Once these major tasks are completed, it’s time to contact a professional who will obtain the consent letter to dissolve the corporation and remit it with the articles of dissolution to the Ministry of Government Services (or relevant authority) .
6. After the articles of dissolution are ‘stamped’ by the Ministry, your accountant will file the final T2 corporate income tax return with a year end ending on the dissolution date.

ABOUT THE AUTHOR

ALLAN MADAN

CA.CPA.CGA

Allan Madan is a CPA, CA and the founder of Madan Chartered Accountant Professional Corporation. Allan provides valuable tax planning, accounting and income tax preparation services in the Greater Toronto Area.

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