CO-17 and T2 Returns: Corporate Income Tax in Quebec
A corporation files two income tax returns every year: the federal T2 and the Quebec CO-17, within six months after the end of its fiscal year, even with no activity.
They are separate from your personal returns: the corporation is a taxpayer in its own right. This guide explains which returns to file, how the tax is calculated and at what rate, and how to send the CO-17; each rule refers to the law or the Revenu Québec publication that sets it.
Business taxation: which taxes and duties apply?
A corporation pays income tax federally and in Quebec; once registered for sales taxes, it also collects the GST and QST; as an employer, it remits source deductions.
Quebec’s tax system is based on self-assessment: businesses report their own income and remit the amounts owed every year; once registered for the required files, they file their returns at the frequency set by law (Revenu Québec, IN-315, in French). Revenu Québec keeps one file per obligation (IN-202):
| Obligation | Who it applies to | What the corporation files |
|---|---|---|
| Corporation income tax | Every corporation with an establishment in Quebec | The CO-17 in Quebec, the T2 federally |
| GST and QST | A corporation registered for the sales tax files | Its sales tax returns; it collects and remits the taxes |
| Source deductions | A corporation that pays salaries | Deductions and employer contributions, RL-1 slips and the RLZ-1.S summary |
Income tax applies to the taxable income of each taxation year. A self-employed person, by contrast, reports business income on their own return (TP-1), while a corporation files the CO-17 (IN-314). For sales taxes, see our guide GST/QST numbers for a business.
“An income tax shall be paid, as required by this Act, on the taxable income for each taxation year of every person resident in Canada (…)”
A company’s income tax: which returns must it file?
A company files two income tax returns per taxation year: the T2 with the Canada Revenue Agency and the CO-17 with Revenu Québec, each within six months after the end of the year.
Federally, the Income Tax Act requires a return “in prescribed form”, without notice or demand, for each taxation year; for a corporation, it is filed by or on behalf of the corporation within six months after the end of the year. That form is the T2, the federal corporation income tax return. The corporation is a separate taxpayer that pays its own taxes: as a rule, its shareholders are not liable for them (Martel, para. 19-416).
“a return of income that is in prescribed form and that contains prescribed information shall be filed with the Minister, without notice or demand for the return, for each taxation year (…) in the case of a corporation, by or on behalf of the corporation within six months after the end of the year (…)”
In Quebec, the Taxation Act sets the same rule, with the same deadline: this is the Corporation Income Tax Return (CO-17). Both returns cover the same fiscal year: its end date sets the deadline for both.
“A fiscal return containing the prescribed information shall be filed with the Minister in prescribed form, without notice or demand therefor, for each taxation year in the case of a corporation (…) by or on behalf of the corporation within six months from the end of its taxation year”
CO-17 form: what is the corporation income tax return for?
The CO-17, the Corporation Income Tax Return, is the corporation’s annual fiscal return to Revenu Québec; it is also used to confirm its annual update with the enterprise register.
A corporation established in Quebec must file the CO-17 and its related forms in French; a return filed in English may be refused. When prepared with software, the CO-17 must show, at the top right of its first page, the authorization number Revenu Québec issued to the software developer, and the accuracy of the calculations remains the responsibility of the user and the developer (Revenu Québec, IN-417.A, in French).
The income tax return also serves the register: in it, the corporation declares whether its information in the enterprise register is up to date. If it is, the registrar records that it has met its annual updating obligation; if not, it files an updating declaration. The details (line 39, annual fee) are in our guide Annual updating declaration (REQ).
“A registrant who is required to file a fiscal return under section 1000 of the Taxation Act (…) may, during the period determined by regulation, declare in the registrant’s fiscal return whether the information (…) contained in the register concerning the registrant is up to date.”
CO-17 or CO-17.SP? A non-profit corporation exempt from income tax files instead the Income Tax Return and Information Return of a Non-Profit Corporation (CO-17.SP), within six months after the end of its taxation year; it also pays its annual registration fee with it. It goes back to the CO-17 if it is not exempt, if it claims a tax credit or if it is subject to a tax other than income tax (IN-305; guide CO-17.SP.G, in French).
Your T2 and your CO-17, prepared together
You answer our questionnaire once; we prepare both of your corporation’s income tax returns for one fiscal year, the federal T2 and the Quebec CO-17. Your financial statements are still required: we tell you how to send them to us.
T2 corporation income tax return: who must file it?
Every corporation resident in Canada or carrying on business there files the T2 for each taxation year, even with no tax payable; a corporation incorporated in Canada is deemed to reside there.
The obligation arises as soon as, at any time in the year, the corporation is resident in Canada, carries on business there, has a taxable capital gain or disposes of a taxable Canadian property, or if tax is payable. And a corporation incorporated in Canada after April 26, 1965 is deemed to have been resident in Canada throughout the year: a Quebec inc. therefore files its T2 every year, even if it had no activity.
“is resident in Canada, (B) carries on business in Canada (…) a corporation shall be deemed to have been resident in Canada throughout a taxation year if (…) it was incorporated in Canada”
The law exempts a corporation that was a registered charity throughout the year. Revenu Québec also links the two returns: its CO-17.SP guide asks for the federal business number shown on the T2 and a fiscal year-end date identical to the one on the T2 (CO-17.SP.G, in French).
“the taxpayer is a corporation that was a registered charity throughout the year”
Corporate income tax in Quebec: how is it calculated?
Corporate income tax is calculated on the taxable income of the taxation year: the business’s profit, plus the additions and minus the deductions the law permits, not on revenue.
The starting point is profit: a corporation’s income from a business for a year is its profit from that business. Taxable income is that income, plus the additions and minus the deductions provided by law. The tax rate applies to that taxable income.
“a taxpayer’s income for a taxation year from a business or property is the taxpayer’s profit from that business or property for the year (…) The taxable income of a taxpayer for a taxation year is the taxpayer’s income for the year plus the additions and minus the deductions permitted by Division C.”
A corporation’s taxation year is not the calendar year: it is its fiscal period, which cannot exceed 53 weeks. A corporation whose fiscal year ends on June 30 therefore calculates its tax on the period from July 1 to June 30.
“in the case of a corporation or Canadian resident partnership, a fiscal period (…) in the case of a corporation, more than 53 weeks after the period began”
Quebec law follows the same logic: a corporation’s tax equals its taxable income multiplied by the basic rate, minus, if it was a Canadian-controlled private corporation (CCPC) throughout the year, a reduction calculated on part of its business income.
“the tax payable by a corporation for a taxation year is equal (…) the amount obtained by applying the basic rate determined in its respect for the year under section 771.0.2.3.1 to its taxable income for the year exceeds, if the corporation has been throughout the year a Canadian-controlled private corporation (…)”
Accounting supplies the material: the year-end financial statements accompany the return (see below, Sending the CO-17).
What tax rate applies to corporations in Quebec?
In Quebec, corporate income tax has a basic rate of 11.5% of taxable income since 2020; the federal basic rate, 38%, is not the rate paid: deductions reduce it.
Quebec’s basic rate fell by one tenth of a point per year from 2017 to 2020. For a taxation year that straddles two periods, each rate applies in proportion to the days of the year that fall in its period.
| Days of the taxation year | Quebec basic rate |
|---|---|
| From January 1, 2009 to December 31, 2016 | 11.9% |
| In 2017 | 11.8% |
| In 2018 | 11.7% |
| In 2019 | 11.6% |
| Since January 1, 2020 | 11.5% |
“the proportion of 11.5% that the number of days in the taxation year that follow 31 December 2019 is of the number of days in the taxation year”
Federally, the law sets a rate of 38% of the “amount taxable”, but this basic rate is then reduced by several mechanisms, including the general rate reduction (s. 123.4) and the small business deduction (s. 125). The federal rate actually paid is therefore well below 38%; have your accountant confirm your corporation’s rate.
“The tax payable under this Part for a taxation year by a corporation on its taxable income (…) for the year is, except where otherwise provided, (a) 38% of its amount taxable for the year.”
Business income tax: how do you calculate what your company owes?
Multiply taxable income by the basic rate, then subtract the CCPC deduction: in Quebec, 8.3% of up to $500,000 of income, if the corporation reaches 5,500 remunerated hours.
In Quebec, the calculation has three steps:
- The fiscal year’s taxable income, determined from profit (previous section).
- The basic rate: 11.5% of that taxable income.
- The CCPC reduction: if the corporation was a Canadian-controlled private corporation throughout the year, it subtracts 8.3% of the least of three amounts: its income from a qualified business carried on in Canada, its (adjusted) taxable income and its business limit. On that portion, Quebec tax thus drops from 11.5% to 3.2% (11.5 − 8.3).
Two conditions limit this reduction. The business limit is $500,000, but it falls to zero if the corporation is associated with other CCPCs, unless they share the limit through an agreement filed with the Minister. And business income counts only if the employees’ remunerated hours exceed 5,000 in the year: the reduction is full at 5,500 hours and proportional between 5,000 and 5,500 (special rules apply to corporations in the primary and manufacturing sectors). A shareholder holding more than 50% of the votes is considered an employee: their unremunerated hours count if the corporation records them in a register.
“the proportion of 8.3% that the number of days in the taxation year that follow 25 March 2021 (…) the number of remunerated hours referred to in either of the following subparagraphs exceeds 5,000 (…) a corporation’s business limit for a taxation year is equal to $500,000”
Federally, the structure is the same: a CCPC deducts from its tax an amount calculated on the least of its income from an active business carried on in Canada, its taxable income and its business limit, also $500,000. A holding company that accumulates investments sees this federal limit reduced: see our guide Quebec holding company.
“There may be deducted from the tax otherwise payable under this Part for a taxation year by a corporation that was, throughout the taxation year, a Canadian-controlled private corporation (…) a corporation’s business limit for a taxation year is $500,000 (…)”
Sending the CO-17 by mail or online: how do you do it?
Online, almost always: every corporation must send its return over the Internet, whatever its gross revenue; mail is mainly for non-resident corporations or those filing in a functional currency.
The rules come from Revenu Québec’s publication IN-417.A (December 2025 edition, in French):
- Internet is the rule. The only exemptions are insurance corporations, non-resident corporations, those filing in a functional currency and certain tax-exempt corporations. A corporation that does not meet this obligation is liable to a $1,000 penalty. A return sent over the Internet must not also be sent on paper.
- Who sends it. The corporation’s authorized representative, through My Account for businesses, or a preparer (clicSÉQUR or ImpôtNet Québec).
- Online attachments. The Canada Revenue Agency’s General Index of Financial Information (GIFI, RC4088), in full with its notes, and, for a tax credit, the certificates and other supporting documents, in PDF if the software allows it.
- By mail. Non-resident corporations, those filing in a functional currency and those that cannot send an amended return over the Internet. Include every page, in the prescribed order, with the complete financial statements: balance sheet, income statement, statement of retained earnings, cash flow statement and notes.
- Payment. A balance owing can be paid with voucher COZ-1027.P; any payment over $10,000 must be made electronically, unless that is impossible.
- Assessment time. Revenu Québec aims to issue a notice of assessment within 100 days for a return with no tax credit claim, and within 180 days with one.
In all cases, the corporation keeps its records and supporting documents for a possible audit (see Bookkeeping).
How is a partnership taxed?
Its partners are the ones taxed: each includes in income their share of the partnership’s income, calculated as if the partnership were a separate person resident in Canada.
A general partnership, like a limited partnership, is a partnership. Its income is first calculated as if it were a separate person, over its fiscal period; it then becomes the income of each partner, to the extent of their share.
“Partnerships are either general partnerships, limited partnerships or undeclared partnerships.”
“the partnership were a separate person resident in Canada (…) the amount of the income of the partnership for a taxation year from any source (…) were the income of the taxpayer (…) to the extent of the taxpayer’s share thereof”
Quebec applies the same rule. As for forms, an individual partner reports their share on their TP-1, a corporate partner on its CO-17, and the partnership files the TP-600 information return if it is required to (IN-314, in French). To choose between a partnership and a corporation, see Legal structures in Quebec.
“Each member of a partnership shall compute, for a taxation year, his income (…) as if (…) the partnership is a separate person resident in Canada”
FAQ — T2 and CO-17 returns: your questions
Do you have to file both the T2 and the CO-17 for the same corporation?
Yes: for each fiscal year, a corporation established in Quebec files the T2 with the Canada Revenue Agency and the CO-17 with Revenu Québec.
- Federal law requires a return of income for each taxation year, within six months after the end of the year (Income Tax Act, s. 150).
- Quebec’s Taxation Act requires every corporation to file a fiscal return for each taxation year, within the same six-month deadline (s. 1000).
Sources: Income Tax Act, s. 150; Taxation Act, s. 1000
How does corporate income tax work in the first year?
The first taxation year is the corporation’s first fiscal period, of at most 53 weeks; the T2 and the CO-17 are due within six months after it ends.
- A corporation’s taxation year is its fiscal period, and a corporation’s fiscal period cannot exceed 53 weeks (Income Tax Act, ss. 249 and 249.1).
- Revenu Québec assigns the corporation an income tax number when it registers for the corporation income tax file, when it registers with the enterprise register if it has a Quebec charter, or otherwise when it files its first return (IN-202).
Sources: Income Tax Act, ss. 249 and 249.1; Revenu Québec, IN-202 (2024-08, in French)
What is the income tax of legal persons?
It is corporate income tax: Quebec’s Taxation Act designates every legal person, whether or not established for pecuniary gain, by the word “corporation”.
- Legal persons are endowed with juridical personality (Civil Code of Québec, art. 298).
- The word “corporation” does not cover a partnership: a partner in a general partnership is taxed on their share of its income (Taxation Act, ss. 1.7 and 600).
Sources: Taxation Act, ss. 1.7 and 600; Civil Code of Québec, art. 298
What is corporate income tax?
It is the income tax a corporation pays, federally and in Quebec, on its taxable income for each taxation year.
- Federally, the tax payable by a corporation is levied on its taxable income (Income Tax Act, s. 123).
- In Quebec, it equals the basic rate, 11.5% since 2020, applied to taxable income, minus a reduction for a Canadian-controlled private corporation (Taxation Act, ss. 771 and 771.0.2.3.1).
- The corporation reports it itself every year: Quebec’s tax system is based on self-assessment (Revenu Québec, IN-315).
Sources: Income Tax Act, s. 123; Taxation Act, ss. 771 and 771.0.2.3.1; Revenu Québec, IN-315 (2026-04, in French)
How are dividends from a foreign corporation taxed?
They are included in income; a corporation resident in Canada that receives them from its foreign affiliate may, however, deduct the portion paid out of exempt surplus.
- In Quebec, any dividend received on a share of a corporation not resident in Canada is included in income (Taxation Act, s. 577).
- A corporation resident in Canada may deduct the portion of a dividend from its foreign affiliate prescribed to be paid out of exempt surplus (Taxation Act, s. 746); federal law provides the same deduction for a dividend from a foreign affiliate (Income Tax Act, s. 113).
- Calculating a foreign affiliate’s surplus accounts is technical: have it done by a tax specialist.
Sources: Taxation Act, ss. 577 and 746; Income Tax Act, s. 113
Your T2 and CO-17 returns, without filling them out yourself
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Your corporation’s T2 and CO-17, prepared for you
One questionnaire for both returns; a corporation with no activity answers fewer questions. Keep your financial statements at hand.