How do I close my corporation properly?
Winding up is a sequence: settle up, file final returns, close your CRA accounts, then dissolve — and keep the records afterward. Skipping steps leaves the corporation undead.
A corporation does not die when you stop using it — it keeps existing, and keeps owing filings, until you dissolve it properly.
The sequence
Settle debts and distribute remaining assets (distributions have tax consequences worth planning). File a final T2 marked as the last return, and final HST and payroll filings. Close the CRA program accounts — HST, payroll, corporate tax — so nothing keeps demanding returns. Then file articles of dissolution with your incorporating jurisdiction.
The wind-up sequence at a glance
| Step | What it involves | Why the order matters |
|---|---|---|
| 1. Settle and distribute | Pay remaining debts, then distribute what is left to shareholders | Distributions have tax consequences worth planning before anything is filed |
| 2. File final returns | Final T2 marked as the last return, plus final HST and payroll filings | CRA expects filings right up to the end — gaps become penalties |
| 3. Close CRA program accounts | HST, payroll, and corporate tax accounts | Open accounts keep demanding returns after the business stops |
| 4. File articles of dissolution | Filed with your incorporating jurisdiction | This is the step that legally ends the corporation |
| 5. Keep the records | Books, minute book, and share records for two years after dissolution | CRA can still ask questions of a dissolved corporation’s directors |
The full checklist, step by step
- Decide formally. A directors’/shareholders’ resolution to wind up — it goes in the minute book and anchors the dates that follow.
- Stop taking on new business and set a target final day of operations.
- Collect receivables and sell or transfer assets. Distributions and transfers to shareholders have tax consequences — plan them before they happen, not after.
- Clear the shareholder loan account. An outstanding balance must be repaid or cleared as salary or dividends before wind-up — see the shareholder loan rules.
- Run the final payroll, remit the last source deductions, and issue final T4s.
- File the final HST return for the last reporting period, including HST on any assets kept personally.
- File the final T2, marked as the final return (details below).
- Request a clearance certificate from CRA before distributing what is left (details below).
- Distribute the remaining assets to shareholders as the final distribution.
- Close the CRA program accounts — payroll (RP), GST/HST (RT), and corporate tax (RC).
- File articles of dissolution with your incorporating jurisdiction (in Ontario, a $25 online filing), and cancel any extra-provincial registrations.
- Keep the records — the minute book and share records for at least two years after dissolution, longer for anything under dispute.
Before you distribute: the clearance certificate
Under section 159 of the Income Tax Act, whoever distributes a corporation’s assets without a clearance certificate can be personally liable for the corporation’s unpaid taxes, up to the value of what was distributed. The request is Form TX19 for income tax accounts (and Form GST352 for GST/HST); CRA will only issue it once every required return is filed and every balance paid. Budget real time for this: CRA asks you to allow at least 120 days after they have everything, and wind-ups commonly wait longer. For a corporation with anything meaningful left to distribute, skipping this step is how a closed business follows its directors home.
What is different about the final T2
Three things separate the last corporate return from every other one. First, it is marked as the final return, with a tax year that ends on the wind-up date rather than the usual year-end. Second, assets distributed to shareholders are treated as disposed of at fair market value, which can trigger gains inside the corporation on its way out. Third, the final distribution to shareholders is largely a deemed dividend under subsection 84(2) (the amount over the shares’ paid-up capital) — and if the corporation has a capital dividend account balance (the tax-free half of past capital gains, for example), an election on Form T2054 can pay that part out tax-free. That election is easy to miss and impossible to make retroactively cleanly — it is the single most common piece of money left on the table in do-it-yourself wind-ups.
Timeline and cost
| Step | Who does it | Typical timing | Government cost |
|---|---|---|---|
| Wind-up resolution, stop operations | You (with your lawyer or accountant) | Day one | — |
| Final payroll, HST, and T2 returns | Your accountant | Weeks 2–8, once the books are current | — |
| Clearance certificate (TX19 / GST352) | Your accountant requests; CRA processes | 120+ days after all returns are filed and paid | Free |
| Final distribution to shareholders | You, after the certificate arrives | Days | — |
| Articles of dissolution | You or your lawyer | Days (online in Ontario) | $25 in Ontario |
End to end, a clean wind-up commonly runs four to eight months, and most of that is waiting on CRA — which is why starting with current books matters: the clock on the clearance certificate does not start until every return is filed.
The step everyone skips
Records survive the corporation: keep the books, and especially the minute book and share records, for two years after dissolution (longer for anything under dispute). CRA can still ask questions of a dissolved corporation’s directors.
The zombie alternative
Just walking away means late-filing penalties stacking on a corporation you forgot, and eventually an involuntary dissolution with loose ends. If the business is done, finish it on purpose — it is usually one focused season of paperwork.
Closing because the paperwork won, not the business?
Some owners dissolve a working corporation because the filings buried them — books years behind, every deadline a surprise. That is fixable without closing. taxifi’s AI keeps the books current daily and a Canadian accountant handles the filings (here is how it works) for one flat monthly price, and switching to taxifi is free. Worth one call before you file the articles.
This is general information, not tax advice for your situation. Get started and a Canadian accountant will give you the answer for your business.
Common questions
Do I need CRA clearance before dissolving?
A clearance certificate protects whoever distributes the corporation's assets from personal liability for unpaid taxes. For corporations with anything left to distribute, it is the safe order of operations.
What happens to money left in the corporation when it closes?
It comes out to shareholders as a final distribution, with tax treatment that depends on the amounts and history involved. Planning the wind-up with an accountant often changes what you keep.
How long does it take to close a corporation in Canada?
A clean wind-up commonly runs four to eight months from decision to dissolution. The long pole is the CRA clearance certificate — CRA asks you to allow at least 120 days once every return is filed and every balance paid, and that clock does not start while the books are behind. The dissolution filing itself takes days.
How much does it cost to dissolve a corporation?
The government fees are small — articles of dissolution cost $25 online in Ontario, and the CRA clearance certificate is free. The real cost is the professional work: catching up the books, preparing the final T2, HST, and payroll filings, and planning the final distribution so it is not taxed worse than it needs to be.
My corporation never really operated. Can I just dissolve it?
Close, but not quite — CRA still expects a T2 for every tax year the corporation existed, even nil returns, and the program accounts still need to be closed. For a corporation with no assets and no activity the wind-up is genuinely simple, but “simple” still means filing the returns, then dissolving. Walking away instead leaves late-filing penalties accruing on a company you forgot.
Can CRA come after me personally after the corporation is dissolved?
Yes, in specific ways. Distributing assets without a clearance certificate makes the distributor personally liable for the corporation’s unpaid taxes up to the amount distributed, and directors can remain liable for unremitted payroll deductions and HST. That is why the sequence matters: file, pay, get the certificate, then distribute.