The Ultimate Guide to the T2 Short Return That Will Save You Hours

Is the CRA deliberately keeping one of its biggest time-saving secrets from Canadian business owners?

While that might be an exaggeration, the fact that so few small business owners know about the T2 Short Return is nothing short of shocking. This simplified corporate tax filing option exists right under our noses, yet the CRA doesn't advertise it. But we're here to give you the details.

If your corporation meets specific criteria (which many Ontario small businesses do), you could slash your tax preparation time by 30-40% without sacrificing compliance or accuracy. That's precious hours reclaimed from mind-numbing paperwork and redirected to actually growing your business.

This no-nonsense guide breaks down everything Ontario small business owners need to know about the T2 Short Return – from eligibility requirements to practical filing tips. By the time you finish reading, you'll know whether this hidden option is right for your business and exactly how to take advantage of it this tax season.

What Is the CRA T2 Short Return and Why Does It Matter?

The T2 Short Return (officially called the T2SHORT) is a simplified version of the standard T2 corporate tax return specifically designed for eligible Canadian-controlled private corporations (CCPCs) with straightforward tax situations.

Here's what makes the T2 Short Return so valuable:

• It contains fewer schedules than the standard T2 form

• It's designed specifically for small businesses with simpler tax situations

• It can significantly reduce your tax preparation time

• It provides the same legal compliance as the standard T2

• It's recognized and accepted by the CRA just like the regular T2

  
  

Based on our work with hundreds of small business clients across Ontario, we've found that owners typically spend 10-15 hours preparing their corporate tax returns. When eligible for the T2 Short Return, most report saving 3-5 hours in preparation time – valuable hours you could reinvest in growing your business instead of wrestling with tax forms.

Is Your Business Eligible for the T2 Short Return?

Not every corporation can use the T2 Short Return. To qualify, your business must meet ALL of the following criteria:

1. Be a Canadian-controlled private corporation (CCPC) throughout the entire tax year

2. Have a permanent establishment in only one province or territory

3. Not claim any non-refundable tax credits other than the small business deduction

4. Not have taxable income subject to a provincial/territorial tax rate different from the lower small business rate

5. Not be a member of a partnership or a beneficiary of a trust during the tax year

6. Not claim refundable tax credits (except for the refundable investment tax credit for qualifying expenditures)

7. Have total assets at the end of the tax year that do not exceed $1,000,000

8. Have gross revenue for the tax year that does not exceed $1,000,000

   
   

If you've read through this list and every point applies to your business, congratulations –you're eligible to save hours on your corporate tax filing (that's if you prepare it yourself of course)!

The CRA provides detailed information about eligibility on their T2 Corporation Income Tax Guide webpage.

Source: Canada Revenue Agency Website

T2 Short Return vs. Regular T2: What's the Difference?

Understanding the key differences between these two forms will help you decide which is right for your business:

Structural Differences

Source: Canada Revenue Agency Website

What Stays the Same

Despite the differences, both forms share these important characteristics:

• Same filing deadlines (six months after your tax year-end)

• Same payment requirements and due dates

• Same legal weight and recognition by the CRA

• Both can be filed electronically or on paper

• Both require accurate financial reporting

How to File the CRA T2 Short Form (Step-by-Step)

Ready to take advantage of this time-saving option? Here's a straightforward process to follow:

1. Verify Your Eligibility Double-check that your business meets all the criteria outlined in section 2 above.

2. Gather Your Documentation: Collect all relevant financial statements, shareholder information, and business details.

3. Choose Your Filing Method: You can file the T2 Short Form:

   • Electronically using NETFILE or EFILE services

   • On paper by printing the forms from the CRA website

4. Complete the Required Information: Fill out the general corporate information, financial details, and complete the required schedules.

5. Review Before Submitting: Double-check all figures and ensure you've included all necessary information.

6. Submit and Keep Records: File your return and maintain copies of all submitted documents and supporting materials.

   
   

Common Mistakes to Avoid

Watch out for these pitfalls when using the T2 Short Form:

• Assuming Eligibility: Don't automatically assume you qualify just because you did last year – check the criteria each time.

• Missing Asset or Revenue Changes: If your business grows beyond the thresholds during the tax year, you'll need to use the regular T2.

• Overlooking Provincial Requirements: While the T2 is federal, ensure you're also meeting any Ontario-specific filing requirements.

• Incomplete Information: The form may be shorter, but all required information must still be accurate and complete.

• Filing Late: The simplified form doesn't change the filing deadline—six months after your tax year-end.

  
  

Closing Thoughts

Understanding and correctly utilizing the CRA T2 Short Return can save your small business valuable time each tax season. If you've been overlooking this opportunity to streamline your corporate tax filing, now's the time to check your eligibility!

Having a good system in place all year long for tracking your financial information will make tax time even less stressful. A couple-hour project now can save you significant time when you file.

For businesses that don't qualify for the T2 Short Return, check out our detailed guide on How to Complete the Standard T2 Corporate Tax Return for comprehensive instructions on navigating the full version.

Feeling overwhelmed by corporate tax requirements?  Contact us today, and we'll help you determine if the T2 Short Return is right for your business and assist with maximizing your tax efficiency!