How to Dissolve a Corporation in Canada: Steps and Forms

What Dissolving a Corporation in Canada Involves

Dissolution is the legal end of a corporation. In Canada, it takes effect when the registry that incorporated the company, either Corporations Canada or a provincial registry, issues a certificate of dissolution. Before that date the corporation pays its liabilities and distributes its property, and afterward it files a final tax return with the CRA.

It's natural to picture dissolution as a single filing, when it is a sequence that runs across the registry, the CRA, your creditors and your shareholders. The work runs in roughly this order:

1. Confirm where your corporation was incorporated, because a federal corporation files with Corporations Canada and a provincial one files with its province.
2. Approve the dissolution with a special resolution, which is a formal vote of the shareholders.
3. Pay what your company owes, then distribute the remaining property to the shareholders.
4. File articles of dissolution, the document that asks the registry to end the corporation.
5. File the final T2 corporation income tax return and close the CRA program accounts.
6. Keep your company's records for the period the CRA requires.

Your filing and its fee depend on the registry you started with. Fees below are in Canadian dollars.

Everything here is about Canadian corporations. If your company is a U.S. one, the steps are in our guide on how to dissolve a corporation, and the general order of a business closure for any kind of company is in how to close a business.

What Keeps a Canadian Corporation Alive After You Stop Operating

A Canadian corporation exists until its registry dissolves it, so the day you stop operating changes nothing on the public record. Most founders assume that once they stop operating, the business is effectively closed. While the corporation's status is active, though, its annual filings continue with both the registry and the CRA, and neither one reads silence as closure.

Federally, an active corporation files an annual return with Corporations Canada within 60 days of its anniversary date every year, including the years when it isn't operating. The online filing costs $12. The CRA takes the same view on tax. Until it has the articles of dissolution, it considers that the corporation still exists. The corporation has to file a T2 return even if there's no tax payable.

Dissolving a corporation feels final in a way that stopping operations does not, so founders often leave a company technically active to keep the option of coming back. The cost of waiting is the weight of an unfinished thing sitting in the background, with a return to file every year. If you've decided you won't go back, the dissolution filing is how the paperwork catches up with your decision.

What Founders Should Do Before Filing for Dissolution

Before the filing, a corporation needs to have no property and no liabilities left, and its dissolution needs to be approved. Corporations Canada's guide on dissolving a business corporation says a corporation can be dissolved only when its property has been distributed and its liabilities discharged. The process begins before any paperwork is filed. Incorporating created one legal entity, and closing it means unwinding the debts, contracts and property that entity picked up over its life.

Work from a written list rather than a mental checklist, because the contracts and subscriptions that renew on their own are the easiest to forget. For a federal corporation, the preparation looks like this:

1. Check your corporate record: confirm the registered office address and the directors' information are accurate, because you can no longer change them once the corporation is dissolved.
2. Get the approval on paper:
   • Shareholders approve the dissolution by special resolution.
   • If there's more than one class or group of shareholders, each one passes its own special resolution.
   • If no shares were ever issued, the directors can pass the resolution.
3. List what your company owes and what it owns, including loans, leases, unpaid invoices, tax balances, and the contracts and subscriptions that renew on their own.
4. Pay the liabilities first, then distribute the remaining property among the shareholders according to their rights.
5. Tell your employees, vendors, customers and investors before the filing goes in. Our startup wind-down checklist covers who to tell and when.

It's tempting to pay out leftover cash early, but a clean dissolution works in a specific order: resolve first, distribute second.

If you finish the list and the company still has property or liabilities, Corporations Canada's guide gives a federal corporation a way forward. Its shareholders can authorize the directors to liquidate first, then apply for dissolution once that's done. The other route is to file Form 19, Statement of Intent to Dissolve, and liquidate under a certificate of intent to dissolve. That certificate serves as public notice that the corporation has stopped carrying on its activities except as needed for the liquidation. Under a certificate of intent, the corporation must:

• notify its creditors of the intent to dissolve
• give notice in each province where it carries on activities
• collect its property, dispose of what won't be distributed in kind, and discharge its obligations
• distribute the remaining property among the shareholders

If the company has debt, talk to your lawyer before you choose a route.

How to Dissolve a Federal Corporation With Corporations Canada

You dissolve a federal corporation by filing Form 17, Articles of Dissolution, through Corporations Canada's Online Filing Centre. There's no filing fee, and Corporations Canada lists the processing time for the online filing as one day on its services, fees and processing times page. By the time you reach Form 17, the hardest decision is already made, and the form itself is short.

The federal forms list carries three dissolution forms for business corporations:

• Form 17, Articles of Dissolution: filed online, with no fee. Corporations Canada asks you not to send copies of the directors' or shareholders' resolutions with it.
• Form 19, Statement of Intent to Dissolve: also free. Online filing is open to registered intermediaries only, and the email or mail route is listed at 10 days.
• Form 20, Statement of Revocation of Intent to Dissolve: the form you file if you change course after a certificate of intent is issued and before the certificate of dissolution. The online filing costs $50.

When the filing is accepted, Corporations Canada issues the certificate of dissolution. Keep a copy on hand for the tax steps that follow.

How to Dissolve a Corporation in Ontario or British Columbia

A provincial corporation files with its own province, and each registry sets its own form and fee. Ontario and British Columbia both take the filing online.

In Ontario, you file Articles of Dissolution through the Ontario Business Registry, and the fee is $25. Have these ready before you open the form:

• the corporation's name
• its Ontario Corporation Number (OCN)
• the effective date of dissolution
• Minister of Finance consent, if it applies to your corporation (the registry forwards the request to the Ministry of Finance automatically)

In British Columbia, the filing is the Application for Voluntary Dissolution, which the BC Registries fee schedule lists at $20. BC Registries' own guide to filing a voluntary dissolution shows a total of $21.50 at checkout. It has you complete these steps first:

• sign and date a resolution, and place it in the company's records book
• complete an affidavit, and place it in the records book as well
• name a custodian of records for the dissolved company

In that guide, you can have the dissolution take effect right away or pick a date up to 10 days out for an additional $100.

If you incorporated in another province or territory, that registry's own site carries the current form and fee.

Closing CRA Accounts and Filing the Final T2 Return

A corporation's last T2 return covers a tax year that ends on the date of dissolution. It's the return that answers yes at line 078, "Is this the final return up to dissolution?". The CRA's rule for when to file a corporation income tax return is within six months of the end of the tax year.

A common assumption is that tax responsibility ends when revenue stops. The CRA closes each program account on its own terms, so this is the slow part:

• Corporate income tax: once the corporation is dissolved, the CRA tells you to consult Form RC145, Request to Close Business Number Program Accounts, to see whether you need to complete it and send in a copy of the articles of dissolution.
• Payroll: the CRA lists what comes before the account closes:
  • remit all payroll source deductions
  • calculate the pension adjustment for former employees who accrued benefits under your registered pension plan or deferred profit-sharing plan
  • file the final payroll information returns
  • give T4 or T4A slips to your former employees or recipients
• GST/HST: you tell the CRA why you're closing the account and the cancellation date, then file a final GST/HST return and remit anything owing. You can close it online in My Business Account, or by mail on Part B of Form RC145, sent within 6 months of the date you signed it.

The T2 guide also covers the clearance certificate. The corporation's legal representative requests one on Form TX19, Asking for a Clearance Certificate, and the guide says the property is distributed only after the certificate arrives.

The registry and the CRA each describe their own part of this, so confirm the full filing list and its order with your CPA.

Even after the dissolution is accepted, one responsibility stays with you: the records. The CRA's rule is that a dissolved corporation keeps its records for two years after the date of dissolution. The general rule is six years from the end of the tax year the records relate to.

If Your Business Also Has a U.S. Entity

A Canadian dissolution ends the Canadian corporation only. If your business also runs through a U.S. company, such as a Delaware corporation set up beside the Canadian one, that entity has its own filing with its state and its own final returns with the IRS. Our guide on how to dissolve a corporation in Delaware walks through the state side.

Starcycle works with U.S. entities only, so the Canadian filings on this page stay with you and your advisers. For a U.S. company, we prepare and file the state dissolution paperwork, track your key dates and your contract and subscription cancellation timelines, and keep the documents in one place. We can also make intros to lawyers and accountants. If there's a U.S. company on your list, tell us about it, and we'll take that part off your plate.

Frequently Asked Questions

Can a corporation be dissolved if it owes money?

A federal corporation can apply to dissolve once its liabilities are discharged, so the debts get dealt with first. Under Corporations Canada's guide, a corporation that is bankrupt, has a trustee under a proposal or has an interim receiver under the Bankruptcy and Insolvency Act can't voluntarily dissolve. If your company has debt, talk to your lawyer.

What does it mean when a federal corporation is dissolved for non-compliance?

Corporations Canada can dissolve a federal corporation that stops filing its annual returns. Its stated policy is to do that after two years of non-filing. Before then, it sends a final notice by post that gives the corporation 120 more days to file. A voluntary dissolution on Form 17, by comparison, takes effect after the corporation has settled its accounts and filed on its own schedule.

Can a dissolved corporation still operate?

A dissolved corporation has no legal capacity to conduct business. A federal corporation can apply to be revived with Form 15, Articles of Revival, for a non-refundable $250 fee. Corporations Canada's policy on reviving a business corporation lists the usual grounds: the corporation is still operating, still has property to deal with, or is involved in a court proceeding.

How do you close a sole proprietorship in Canada?

Closing a sole proprietorship means closing the CRA program accounts the business used, such as GST/HST and payroll, and canceling its provincial business name registration. In Ontario, for example, you cancel the registration in the Ontario Business Registry, and there's no fee to do it.