What Happens at a Corporate Year-End in Alberta?

Your fiscal year-end is a choice, and it sets your deadlines

Every corporation has a fiscal year-end. It doesn't have to be December 31. Many owner-managed businesses pick a month that falls outside their busy season, or one that spreads accounting work across the year. Once chosen, it generally can't be changed without CRA's approval, and every corporate filing and payment deadline is counted from that date.

Step 1: Close the books

Before anything can be prepared, the year's bookkeeping needs to be complete and accurate. That usually means:

• Reconciling every bank, credit card and loan account to the statement balance at year-end
• Recording all sales and expenses, including those paid personally on the company's behalf
• Reviewing receivables and payables for amounts that are still owing
• Counting or valuing inventory, if you carry it
• Identifying new equipment, vehicles or other assets bought during the year
• Reconciling GST collected and paid with the returns you filed

The cleaner your organized books are going in, the less time year-end takes, and the lower the cost.

Step 2: Year-end adjustments

Your accountant then makes the adjustments that turn bookkeeping records into proper accounting records. Common examples include accruals for expenses incurred but not yet billed, prepaid expenses, capital cost allowance (tax depreciation) on assets, and shareholder loan balances. These adjustments matter for tax. A shareholder loan that isn't handled correctly, for example, can lead to an unexpected personal income inclusion.

Step 3: Financial statements

Most private corporations prepare compilation-level financial statements (sometimes called a Notice to Reader, now under CSRS 4200). These are prepared from your records without an audit or review. Lenders, investors or agreements sometimes require a higher level of assurance, such as a review engagement. Check your bank covenants, since it's best to know before year-end.

Step 4: The federal T2 return

Every resident corporation in Canada must file a T2 Corporation Income Tax Return each year, even if it had no income or tax payable. The T2 is generally due six months after your fiscal year-end. It includes the General Index of Financial Information (GIFI), which reports your financial statements to CRA, and any schedules that apply, such as the small business deduction or an SR&ED claim.

Step 5: The Alberta AT1 return

Alberta is one of the few provinces that administers its own corporate income tax. Corporations with a permanent establishment in Alberta generally must file an Alberta Corporate Income Tax Return (AT1) with Alberta's Tax and Revenue Administration (TRA), unless they meet an exemption. The AT1 is also due within six months of year-end, and Alberta now requires most corporations to file electronically. If you're used to provinces where everything goes through CRA, this is the step that most often gets missed.

Key deadlines

Note that the payment deadline comes before the filing deadline. Interest runs on unpaid balances from the payment due date even if the return isn't due yet. Exact rules depend on your situation; see CRA's and Alberta TRA's current guidance.

Other year-end items to consider

• Owner pay. Decide how much to take as salary or dividends before year-end, while there's still room to plan. See our article on salary vs. dividends.
• Instalments. If your corporation owed more than the threshold in tax, CRA and Alberta may expect instalments in the following year.
• GST/HST. Your annual GST return may be due on a different date than your income tax return.
• Minute book. Annual returns with Alberta Corporate Registries and shareholder resolutions (for example, approving financial statements and declaring dividends) should be kept current.

Common questions

This article is general information only and is not tax or accounting advice for your specific situation. Deadlines and requirements can change; refer to the Canada Revenue Agency and Alberta Tax and Revenue Administration for current details.