Schedule 23 Association Agreement Checker
Schedule 23 allocates the business limit between associated corporations. A nil year has no active business income to claim.
Written and reviewed by Sharad Gondaliya, CPA (Ontario), CPA Ontario Membership 61040184.
Last reviewed: November 5, 2026
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What Schedule 23 Allocates
Associated corporations do not each get their own business limit for the small business deduction. They share one between them, and Schedule 23 is the agreement that says who takes what share of it.
Which means the schedule has two conditions before it means anything, and a dormant corporation fails the second. There has to be a group, and there has to be active business income to claim the deduction against. A nil year has none.
Who It Reaches, and Who It Does Not
| The corporation | Associated | Active business income | Schedule 23 in issue |
|---|---|---|---|
| An operating corporation in a group | Yes | Yes | Yes |
| A dormant corporation in the same group | Yes | No | No |
| A corporation that stands alone | No | Yes | No |
| A dormant corporation standing alone | No | No | No |
The second row is the one that brings owners here. Being associated feels like it must create a filing, and on this schedule it does not: the allocation belongs to whichever corporation in the group has income to claim against.
Why a Nil Year Sits Outside It
A nil year has no active business income, so there is no small business deduction to claim, so there is no share of a limit to agree. The chain breaks at the first link and nothing downstream of it applies.
Being associated still matters elsewhere, and the mistake to avoid is reading this page as saying it does not. The relationship itself is reported on Schedule 9, which does reach a dormant corporation. What the dormant corporation is outside is the allocation, not the group. Nil T2 filing at $300.00 plus HST per tax year covers the dormant years either way.
Sitting inside a group and sitting outside this schedule are both true at once, and for a dormant corporation that is the ordinary position.
Frequently Asked Questions
My corporations are associated. Do I file Schedule 23?
Only where there is a business limit to allocate, which needs active business income and a small business deduction claim. A dormant corporation has neither.
Does being associated stop the year being nil?
No. Association is a relationship, and a relationship is not income. The year is tested on what the corporation did.
Which corporation files the agreement?
The allocation belongs with the corporations that have income to claim against. A dormant member of the group has no share to take.
What is the business limit?
It is the amount of active business income the small business deduction can be claimed on, and associated corporations share one between them rather than each having their own.
Is this the same as Schedule 9?
No. Schedule 9 reports that the relationship exists. Schedule 23 divides a limit between corporations that have income to apply it to.
My operating corporation claims the deduction and the holding company does not.
Then the allocation is a question on the operating corporation. The dormant or holding side has nothing to allocate.
Does a nil corporation reduce the limit for the others?
A corporation with no active business income has no claim to make. What the group agrees is a matter for the corporations making claims.
We never signed anything.
Then what is actually agreed is the question to settle, and it is a question for whoever prepares the return of the corporation claiming the deduction.
Does this page tell me the amount?
No. It tells you whether the question reaches your corporation at all. It calculates no limit and is not a filed return.
The corporation was dormant all year but associated. What do I file?
Not this. The relationship goes on Schedule 9, and what the corporation holds decides the GIFI schedules. The allocation does not arise.
Nil T2 Filing, $300.00 plus HST per tax year
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