The Complete Guide to T2 Late Filing Penalties
How the percentage penalty is calculated, why a nil return is different, the paper and preparer penalties, and what an unfiled year costs. Nil T2 filing is $300.00 plus HST per tax year.
Written and reviewed by Sharad Gondaliya, CPA (Ontario), CPA Ontario Membership 61040184.
Last reviewed: October 22, 2026 · All nil T2 filing guides
On this page
- How the Percentage Penalty Is Calculated
- Why a Nil Return Is Different
- The Larger Penalty for a Repeated Failure
- The Paper Filing Penalty and the Preparer Penalty
- The Non-Resident Penalty of $25.00 a Day
- What a Demand to File Changes
- Arbitrary Assessment
- Interest, and What It Attaches To
- What an Open Year Blocks
- How Long an Unfiled Year Stays Open
- Filing the Missing Years
- What the Fee Covers
Gondaliya CPA Professional Corporation is a registered EFILE electronic filer. Returns are prepared and transmitted in Canada. Credentials are never shared and never used offshore.
How the Percentage Penalty Is Calculated
The late-filing penalty on a T2 is a percentage of the tax owing on the return. It is 5% of the unpaid tax, plus 1% of that unpaid tax for each complete month the return is late, to a maximum of 12 months.
| Element | Amount |
|---|---|
| Base penalty | 5% of the unpaid tax |
| Monthly addition | 1% of the unpaid tax per complete month late |
| Maximum months counted | 12 |
| Applied to | Tax owing on the return, not revenue and not assets |
Every figure above is a percentage of one number: the tax owing. That is the whole reason a nil return behaves differently.
Why a Nil Return Is Different
A true nil return carries no percentage late-filing penalty, because that penalty is a percentage of tax owing and the corporation owes $0.00. The unfiled year still stays open forever, invites a demand to file and an arbitrary assessment, blocks a clearance certificate and dissolution, and costs a non-resident-owned corporation $25.00 per day up to $2,500.00.
Both halves of that statement are true at once, and neither is useful on its own. A corporation owing $0.00 has nothing for the percentage to be a percentage of. The same corporation still has an open year on its record, and that is what the rest of this guide is about.
See whether a nil T2 can be filed late for the short answer.
The Larger Penalty for a Repeated Failure
Where the Canada Revenue Agency has already issued a demand to file, and a late-filing penalty was charged in any of the three preceding tax years, the penalty doubles.
| Situation | Base | Monthly | Maximum months |
|---|---|---|---|
| First late return | 5% | 1% | 12 |
| Repeated failure after a demand | 10% | 2% | 20 |
It is still a percentage of tax owing, so a nil year still produces $0.00 under it. A corporation that is nil in one year and trading in the next is the one this rule catches.
The Paper Filing Penalty and the Preparer Penalty
For tax years starting after 2023 electronic filing is mandatory for virtually all corporations. A paper T2 draws a $1,000.00 penalty plus a $100.00 per-return preparer penalty.
This is the one penalty on this page that is not a percentage of tax owing. It is a flat amount, and a nil return is not exempt from it. A corporation with no activity that files on paper is exposed to the full $1,000.00.
Returns are transmitted electronically here, by a registered EFILE electronic filer.
Nil T2 Filing, $300.00 plus HST per tax year
One price for every year and every province. CPA reviewed and transmitted electronically.
The Non-Resident Penalty of $25.00 a Day
A non-resident-owned corporation that fails to file faces a penalty built on days rather than on tax owing: $25.00 per day, to a maximum of $2,500.00.
Because it is not a percentage, a nil year reaches the maximum exactly as a trading year does. It is the single largest exposure a dormant non-resident-owned corporation carries.
What a Demand to File Changes
A demand to file is a formal written requirement to file a named return by a named date. It converts an overdue return into a legal obligation with its own deadline, and it starts the clock on the repeated-failure rate above.
The response is covered in full in the guide to responding to a CRA demand to file.
Arbitrary Assessment
Where a demand goes unanswered, the Canada Revenue Agency may assess the corporation on its own estimate of income. That assessment is a real debt, collectible, and it stands until it is displaced by a filed return.
An arbitrary assessment is how a corporation that owed $0.00 ends up owing a figure with interest running on it. The amount is an estimate the corporation did not provide and cannot be argued down without filing the actual return.
Interest, and What It Attaches To
Interest is charged on an unpaid balance, compounded daily. A nil return produces no balance, so there is nothing for interest to run on.
| Charge | Attaches to | On a true nil year |
|---|---|---|
| Percentage late-filing penalty | Tax owing | $0.00 |
| Interest | An unpaid balance | $0.00 |
| Paper filing penalty | The filing method | $1,000.00 if filed on paper |
| Preparer penalty | Each paper return prepared | $100.00 |
| Non-resident penalty | Days late | Up to $2,500.00 |
Read the table by column rather than by row. Two of the five charges ignore tax owing entirely.
What an Open Year Blocks
An unfiled year blocks a clearance certificate, and a clearance certificate is what a corporation needs before it can be wound up cleanly. It also stops a voluntary dissolution from completing.
The sequence is set out in the guide to the final T2 and dissolution.
How Long an Unfiled Year Stays Open
Indefinitely. There is no point at which an unfiled T2 year closes itself, and no number of later filings that settles an earlier gap.
This is why the cost of an unfiled nil year is almost never the penalty. It is the demand, the arbitrary assessment, the blocked clearance certificate and the dissolution that cannot complete.
Filing the Missing Years
Unfiled years are filed oldest first, each on its own return for its own tax year. Five unfiled nil years are five returns, and they can be prepared and transmitted together.
A holding corporation with investment income, a rental corporation and a corporation that paid or received a dividend are not nil. Those are handled by Gondaliya CPA Professional Corporation at gondaliyacpa.ca at $350.00 plus HST per year.
See the guide to catching up on unfiled corporate tax returns.
What the Fee Covers
The fee is $300.00 plus HST per tax year, covering one nil T2 return for one corporation for one tax year:
| Included | Detail |
|---|---|
| The T2 return | Including the T2 Short where the corporation qualifies |
| GIFI Schedules 100, 125 and 141 | Where they are required |
| Schedule 24 | On a first return |
| Schedule 50 | For every shareholder at 10% or more |
| Schedule 8 and loss continuity | Recorded |
| Form T183CORP package | With single-use secure e-signing |
| CPA review | Before transmission |
| Electronic transmission | By a registered EFILE electronic filer |
| One corrected transmission | If the Agency rejects the first one |
| CRA confirmation | Emailed within 3 business days |
See the full nil T2 filing cost.
Frequently Asked Questions
Is There a Penalty for Filing a Nil T2 Late?
A true nil return carries no percentage late-filing penalty, because that penalty is a percentage of tax owing and the corporation owes $0.00. The unfiled year still stays open forever, invites a demand to file and an arbitrary assessment, blocks a clearance certificate and dissolution, and costs a non-resident-owned corporation $25.00 per day up to $2,500.00.
How Is the T2 Late-Filing Penalty Worked Out?
5% of the unpaid tax, plus 1% of that unpaid tax for each complete month the return is late, counted to a maximum of 12 months. Every component is a percentage of tax owing.
What Is the Penalty for Filing a T2 on Paper?
For tax years starting after 2023 electronic filing is mandatory for virtually all corporations. A paper T2 draws a $1,000.00 penalty plus a $100.00 per-return preparer penalty. A nil return is not exempt from either.
When Does the Penalty Rate Double?
Where the Canada Revenue Agency has issued a demand to file and a late-filing penalty was charged in any of the three preceding tax years. The rate becomes 10% plus 2% per complete month, to 20 months.
What Happens if I Ignore a Demand to File?
The Canada Revenue Agency may assess the corporation on its own estimate of income. That arbitrary assessment is collectible and stands until the actual return displaces it.
Does an Unfiled Year Ever Close on Its Own?
No. An unfiled T2 year stays open indefinitely, and later filings do not settle an earlier gap.
Questions Answered in Full
- Can I File a Nil T2 Late Without a Penalty?
- What Happens if I Don’t File a Nil T2?
- What Happens if I Don’t File My T2 for Five Years?
- What Happens if I Don’t Respond to a CRA Demand to File a T2?
- Can I File Five Years of Nil T2 Returns at Once?
- Do I Need to File a T2 Every Year if My Corporation Is Inactive?
The Other Nil T2 Filing Guides
- The Complete Guide to Responding to a CRA Demand to File
- The Complete Guide to Inactive Holding Company Filing
- The Complete Guide to T2 Schedules on a Nil Return
- The Complete Guide to Shelf Corporation Compliance
- The Complete Guide to T2 Filing Deadlines
- The Complete Guide to Zero-Activity Corporate Tax Returns
- The Complete Guide to Corporate Tax Arrears and Interest
- The Complete Guide to Winding Up an Inactive Corporation
- The Complete Guide to Small Business Corporate Filing
- The Complete Guide to the Corporate Compliance Calendar
- The Complete Guide to Numbered Company Maintenance
- The Complete Guide to Mandatory T2 Electronic Filing
Nil T2 Filing, $300.00 plus HST per tax year
Type your corporation name, pick your unfiled years, pay, and sign Form T183CORP on a secure screen. Your CRA confirmation is emailed within 3 business days.