Dissolution ends the company, but not automatically its tax obligations. Final T2 and CO-17 returns must generally be filed by the certificate date.

Several checks must be carried out before dissolution, as some credits may lose their usefulness afterwards.

Summary: After dissolution, file final T2 and CO-17 returns up to the certificate date, finalize taxes and payroll, pay balances, collect refunds, close program accounts, and keep records. However, several checks must take place before the certificate, particularly for losses, credits, and distributions.

Before dissolution: prepare the final tax balance sheet

Before the certificate, prepare a closing balance sheet including:

• cash and accounts receivable;

• inventory and fixed assets;

• debts, taxes, and duties payable;

• advances to shareholders;

• instalment payments;

• expected credits and refunds;

• available tax losses;

• tax accounts related to dividends.

Check the capital dividend account, refundable tax on hand, general rate income pool, and paid-up capital. Some choices must be made before dissolution.

A sum paid to the shareholder may constitute a loan repayment, a dividend, or a capital repayment. The accounting entry does not determine its tax treatment.

Step 1: Use the certificate date as the year end

The last year ends on the dissolution date, even if the company had another fiscal year end.

Example

A company whose fiscal year normally ends on December 31 is dissolved on September 18. Its last tax year covers the period beginning after the end of its previous fiscal year and ending on September 18.

The cessation of activities may be earlier, but the certificate closes the last fiscal year.

Step 2: File the final T2 return

The company generally files a T2 even if it was inactive or had no tax to pay.

In the final T2:

• use the dissolution date as the year end;

• answer “yes” to line 078 indicating that this is the final return up to dissolution;

• include applicable financial statements and schedules;

• report sales and asset transfers;

• record dividends and distributions made;

• apply available losses or credits where eligible.

The T2 must generally be filed within six months of the end of the tax year. However, the tax balance is due earlier, generally two months after the year end, or three months for certain Canadian-controlled private corporations that meet the conditions.

A copy of the certificate and other documents may be submitted to the CRA when required.

Step 3: File the final CO-17 return

Revenu Québec requires a CO-17 return for the year of dissolution, up to the date on the certificate.

The CO-17 reflects the same operations applying Québec rules:

• asset dispositions;

• recapture of depreciation and gains;

• remuneration or dividends;

• Québec tax credits;

• available losses;

• amounts receivable or payable.

It is generally due within six months. The balance must be paid earlier according to the applicable deadline.

If the liquidation lasts several years, returns may still be required annually.

Step 4: Finalize other returns

Depending on the company's activities, there may also be:

• a final GST and QST return;

• T4s, T4As, Relevé 1s, and summaries;

• records of employment;

• a T5 return or Relevé 3 for certain investment income;

• a T5018 return in the construction sector;

• returns related to specific taxes or permits.

These returns follow their own periods and deadlines. See How to close GST, QST, and source deduction accounts?.

Step 5: Close program accounts

Dissolution with the Registrar does not automatically close all tax files.

After the last filings:

1. submit the certificate of dissolution when requested;

2. use form RC145 or the CRA’s online services to close applicable federal accounts;

3. use form LM-1.A with Revenu Québec;

4. pay balances and interest;

5. monitor assessment notices;

6. keep confirmation of closure.

Monitor files until no period remains open.

Step 6: Ensure receipt of refunds

Ideally, receive refunds before dissolution. According to the CRA, a remaining credit generally becomes the property of the Crown, subject to refund mechanisms.

For voluntary dissolution, the CRA may request Form RC278 – Release and Indemnity, the certificate of dissolution, information on shareholders, and their authorization to pay the refund to a designated person.

Involuntary dissolution may require the company to be reinstated to obtain a refund.

Step 7: Keep records

Keep, among other things:

• the certificate of dissolution;

• T2, CO-17, and assessment notices;

• tax and payroll returns;

• financial statements and closing entries;

• asset sale agreements;

• resolutions and tax certificates;

• proof of distributions to shareholders;

• account closure confirmations.

The Registrar requires that the books of a Québec company be kept for at least five years after the certificate of dissolution. Federal tax rules generally require documents to be kept for six years from the end of the year concerned, and some records may need to be kept longer.

Final tax checklist

• Prepare the tax balance sheet before dissolution

• Check losses, credits, and dividend accounts

• Determine the treatment of distributions

• Use the certificate date as the year end

• File the final T2 and check line 078

• File the final CO-17

• Finalize taxes, payroll, and slips, then pay balances

• Receive refunds

• Close and monitor each program account

• Keep required records

Dissolution is not complete until after the final notices

The certificate confirms the legal end of the company, but the tax file remains to be completed. A successful closing is finalized when all returns are assessed, balances are paid, refunds are received, and accounts are closed.

See also How to dissolve a company in Quebec yourself? and the main guide How to close a business in Quebec.

Sources

• Revenu Québec, Dissolution of a company

• Canada Revenue Agency, T2 Guide – Line 078

• Canada Revenue Agency, Request for refund after dissolution

This article provides general information. The last year of a company should be prepared with its CPA or tax specialist.