Does my Canadian company file a T2 if it made no profit?
Yes. Every corporation resident in Canada files Form T2, profit or not, and a loss year or a nil year is still a filing year. The obligation is decided by the facts of incorporation and residence rather than by whether tax is owing, which is why a nil position does not remove it. In a cross-border group the nil year is often the one that matters most, because the schedule set that travels with the return — foreign income, foreign affiliates, payments to non-residents — still has to be completed and still has to agree with what the rest of the group has filed. We treat a nil year as a full return with a smaller figure at the bottom.
Is a Canadian subsidiary of a foreign parent required to file a T2?
Yes. A corporation resident in Canada files Form T2 whether its shares are held in Canada or abroad, so a Canadian subsidiary of a foreign group is in the same position as a company with Canadian owners. What differs is the schedule set. A subsidiary usually pays or receives something across the border — management charges, interest, royalties, dividends — and the return reports those payments alongside any foreign affiliates the Canadian company itself holds. Those schedules are read together with what the rest of the group has filed, so the figures have to be consistent. The practical work in a subsidiary's first year is usually mapping the group before the return is drafted.
Do we still file a T2 if all our income was earned abroad?
Yes. Where the corporation is resident in Canada, the return reports its income wherever it arose, and foreign operations are described on the schedules rather than left off. A treaty or a foreign tax credit may reduce what is ultimately payable in Canada, but the relief is claimed on the return — it is not a reason to skip it. That distinction is the one directors most often get wrong. If the income has already been taxed abroad, the filing sets out what was earned, what was paid, and on what basis the Canadian liability is reduced, so the position is documented rather than assumed.
Which schedules travel with a T2 when there are foreign operations?
It depends on what the corporation does abroad, and the set is built from the facts rather than from a standard list. A corporation holding shares in non-resident companies reports those affiliates. One paying amounts to non-residents reports those payments. One relying on a treaty sets out the position it is taking. The important point is that these schedules are read together, and against what the rest of the group has filed, so an inconsistency between them draws attention even where no tax is at stake. We map the corporation's cross-border facts first, decide the schedule set from that map, and only then draft the return.
Does a dormant holding company with foreign shares still file?
Yes. Dormancy is a description of activity, not a filing status, and a corporation resident in Canada files Form T2 for every year it exists. A dormant holding company is a common place for this to go wrong, because nothing happens in the accounts and the year passes without anyone thinking about it, while the shareholding in a non-resident company sits on the balance sheet throughout. The holding itself is reportable, so the years that were skipped usually have to be filed, and filed consistently with each other. Where several years have been missed we prepare them as one set rather than one at a time.
Can a treaty exempt our corporation from filing the return?
A treaty can change how much tax Canada collects on a particular item of income. It does not remove the requirement for a resident corporation to file. The claim itself is made on the return, which means the return has to exist before the relief can be taken, and the basis for the claim has to be stated rather than implied. In practice the question usually arrives in the form of advice given abroad, where the parent's advisers have concluded that no Canadian tax arises and treated that as the end of the matter. It is not. We file the return, state the treaty position on it, and keep the supporting analysis with the file.
Can I set up a trust that works in two countries?
You can, but the two systems classify and tax trusts differently enough that a structure which is efficient in one is often a reporting problem in the other — a Canadian family trust with a US beneficiary, or a US revocable trust holding Canadian property, are the classic pairs. Canada's twenty-one-year deemed disposition, the US grantor rules and each country's reporting have to be read together, before drafting rather than after. See cross-border wills and trusts.
What is double taxation in a corporation?
That is the economic form: the company pays tax on its profit, then the shareholder pays tax again on the dividend distributed out of that same after-tax profit. Domestic systems soften it with dividend credits or reduced rates on distributions; across borders it is compounded by withholding tax in the paying country. Which relief applies turns on the entity type and the treaty article covering dividends. See repatriating profits.
