When a business ceases operations, its tax accounts do not automatically close. Authorities may continue to expect declarations, even if they are zero.

Therefore, you must choose a cancellation date, file final returns, pay balances, and obtain confirmation for each account.

Summary: File final returns, pay balances, and request the closure of GST, QST, and source deduction accounts only after processing the last assets, invoices, and payrolls. Cessation of operations or dissolution does not automatically close tax accounts.

Before closing accounts: confirm that the cessation is permanent

A temporary interruption is not a closure. A dormant business must generally continue to file returns and notify the CRA if it stops making payroll remittances.

Before requesting a definitive cancellation, verify:

• the date of the last taxable sale;

• outstanding invoices and credits;

• accounts receivable to be collected;

• assets still held;

• the last payrolls;

• expected tax refunds;

• the possibility of a sale or resumption of activities.

Do not dissolve the company before receiving its refunds. Recovering a credit afterwards can become complex.

Step 1: choose the tax cancellation date

The cancellation date generally corresponds to when taxable business activities cease.

At Revenu Québec, the cancellation of GST and QST registrations is generally requested at the same time. The last reporting period ends on the day preceding the effective date of the cancellation.

Example

A business makes its last sale on September 30 and requests the cancellation of its registrations on October 1. Its last tax period then ends on September 30. The final return must generally be filed within one month following the end of this period.

The date must be coordinated with asset sales. A business that still sells equipment after the chosen date might have to collect taxes or file an additional return.

Step 2: request cancellation from Revenu Québec

For a business operating in Quebec, form LM-1.A — Request for Cancellation or Amendment to Registration can be used to request the cancellation of:

• GST/HST and QST files;

• source deduction files;

• corporate tax files.

The form asks for identification numbers, the date, and the reason for the cancellation. Electronic signatures are accepted.

A corporation's tax account must be coordinated with its dissolution. It generally files its returns as long as it legally exists.

Tip: Keep the acknowledgement of receipt and then verify in My Account for Businesses that the expected periods correspond to the request.

Step 3: file the last GST and QST returns

The final return includes sales, taxes collected, ITCs, and QST refunds for the last period.

You also need to verify:

• bad debts and credit notes;

• taxes on asset sales;

• credits claimed for expenses related to a previous period;

• stocks and supplies still held;

• fixed assets retained by the business or transferred to the owner.

The closure can trigger deemed dispositions. Some assets may be deemed to have been sold at their fair market value; fixed assets follow specific rules.

Consult How to sell or transfer assets before closing a business? before completing this return.

Step 4: close source deduction accounts

Payroll files for Quebec and the federal government must be closed separately.

In Quebec

Form LM-1.A allows you to request the cancellation of the source deduction file. Upon complete cessation of activities, the last payment of source deductions and employer contributions is generally due within seven days of cessation.

Relevé 1 slips and Summary 1 must generally be submitted within 30 days of the closure.

Federally

Federal deductions and contributions are generally due seven days after complete closure.

T4 or T4A slips and final summaries must generally be filed within 30 days of the end of operations. The payroll deduction account can be closed in the CRA's online services or using form RC145 — Request to Close Business Number Program Accounts.

Records of Employment must also be produced according to Service Canada's deadlines. Consult How to close a business with employees in Quebec?.

Step 5: monitor notices after the request

After submission:

1. verify that all expected returns have been filed;

2. pay balances and interest;

3. cash refunds;

4. respond to notices of assessment;

5. confirm the closure of each account.

If a new period appears after the cancellation date, do not ignore it. Verify if the request has been processed or if an additional return is actually required.

Frequent errors

Believing that dissolution closes tax accounts

A corporation dissolved in the register may remain active in tax systems.

Cancelling taxes before selling assets

A sale made after cancellation can complicate the collection and reporting of taxes.

Filing a final zero return

Retained assets, transfers to shareholders, or final invoices can create amounts to be declared even without current sales.

Closing the bank account too early

The business may still receive a refund or need to make a payment after final returns are processed.

Tax closure checklist

• Confirm the definitive cessation date

• List sales, assets, and last payrolls

• File overdue returns and submit Form LM-1.A

• File final GST and QST returns

• Remit final deductions

• File Relevé 1, T4, and summaries

• Close the federal account, pay balances, and receive refunds

• Obtain and retain confirmations

A tax closure must be followed until confirmation

The work is not over when the forms are sent. Files must be monitored until returns are assessed, refunds received, and each account confirmed closed.

For an overview, see How to close a business in Quebec: concrete steps to follow.

Sources

• Revenu Québec, Cancellation of a GST and QST Registration

• Revenu Québec, Form LM-1.A

• Canada Revenue Agency, Close your GST/HST account

• Canada Revenue Agency, Closing program accounts

This article provides general information. Dates and adjustments must be confirmed according to the business's tax file.