Financial statements: what to prepare at year-end?
At year-end, a Quebec business corporation prepares at least a balance sheet and an income statement, has them approved by its board of directors and presents them at the annual shareholders meeting.
These statements also serve the tax authorities: the corporation’s income tax return is filed within six months after the end of its taxation year, in Quebec as federally (Taxation Act, s. 1000; Income Tax Act, s. 150), and Revenu Québec requires the complete financial statements to be attached (guide CO-17.G, part 3.5.1). This guide relies on the Business Corporations Act (QBCA), sections 225 to 239, and on chapter 28 of Paul Martel’s reference work.
“Such return must be filed (…) in the case of a corporation, by or on behalf of the corporation within six months from the end of its taxation year”
What is a financial statement and what is it for?
A financial statement shows a business’s position and results at the end of its fiscal year; in a corporation, it is first how the board accounts for its management to the shareholders.
Revenu Québec defines the fiscal period as the period of one year or less at the end of which the business closes its books and prepares its financial statements (IN-155, part 3.1, in French). For a corporation, the tax statutes cap it at 53 weeks (Taxation Act, s. 7; Income Tax Act, s. 249.1).
“A fiscal period (…) may not end (…) in the case of a business or a property of a corporation, more than 53 weeks after the period began”
At every annual meeting, the board of directors must present the financial statements for the last fiscal year to the shareholders; every shareholder is then entitled to a copy on request (QBCA, s. 225). Martel sees it as the moment when the directors account for their management (para. 28-27). The Act does not require the shareholders to vote to approve them; approval does, however, make the statements, and the transactions they disclose, harder to challenge later (Martel, para. 28-46).
“At every annual shareholders meeting, the board of directors of a corporation must present the corporation’s financial statements (…)”
The accounting records behind these statements are kept for six years after the end of the fiscal year they relate to, along with the other corporate records described in our minute book guide.
“The corporation is required to retain all accounting records for a period of six years after the end of the fiscal year to which they relate.”
Financial statements in accounting: which standards apply?
The Business Corporations Act imposes no accounting framework on a private corporation, but the CPA who prepares or approves its financial statements must follow the standards of the CPA Canada Handbook.
The QBCA regulates the contents of financial statements from a distance: it sets a minimum, the balance sheet and the income statement (s. 226), without prescribing standards. According to Martel, generally accepted accounting principles are imposed by regulation on federal corporations and on Quebec corporations that are reporting issuers under the Securities Act. For a private corporation, it is the professional ethics of the chartered professional accountant that impose the standards of the CPA Canada Handbook, when he or she prepares or approves the financial statements or oversees their preparation (paras. 28-35 and 28-37).
“The directors of a corporation shall place before the shareholders at every annual meeting (a) prescribed comparative financial statements that conform to any prescribed requirements (…)”
A corporation is not even required to entrust its financial statements to a CPA: if it does not need a review or compilation engagement for purposes other than its internal administration, someone else can prepare them (Martel, para. 28-77).
A business’s financial statements: what must they contain?
In a business corporation: at least a balance sheet and an income statement, plus the statements and notes the board approves; a sole proprietor may provide financial statements instead of form TP-80.
“The financial statements of a corporation must include at least a balance sheet and an income statement.”
- Information required by the corporation itself. The board also presents any further financial information required by the articles, the by-laws or a unanimous shareholder agreement (s. 225).
- Board approval. The financial statements may not be issued, published or circulated until the board of directors has approved them; the signature of one or more directors evidences that approval, regardless of the means used to sign (s. 227).
- The auditor’s report. Audited statements are always accompanied by the auditor’s report (s. 230; see audited or certified).
“The financial statements of a corporation may not be issued, published or circulated unless they have been approved by the board of directors.”
Sole proprietorship. The QBCA does not apply. For the Quebec income tax return, the sole proprietor attaches form TP-80 (business or professional income and expenses); Revenu Québec specifies that separate financial statements may be provided instead (IN-155, part 1.2.1, in French).
Not incorporated yet? Start with the corporation — $497 all-in
A corporation’s financial statements come after its incorporation. Government fees of $397 included, articles of incorporation, initial declaration with the REQ: a form of about 20 minutes and your Quebec inc. is on its way. Still comparing? See the legal forms and when to incorporate.
What are the different financial statements to produce?
The Act requires only two, the balance sheet and the income statement; with the income tax return, Revenu Québec requires complete statements: balance sheet, income, retained earnings, cash flows and notes.
Whether people speak of three, four or five financial statements, the rule is the same: the QBCA requires two, and the others become part of the financial statements as soon as the board of directors approves them.
“The financial statements must also include the other statements and the notes and other information usually included in audited financial statements, if such statements or information have been approved by the board of directors.”
| Document | Required by the QBCA | Attached to the CO-17 return |
|---|---|---|
| Balance sheet | Always (s. 226) | Always |
| Income statement | Always (s. 226) | Always |
| Statement of retained earnings | If approved by the board (s. 226) | Always |
| Cash flow statement | If approved by the board (s. 226) | Always |
| Notes | If approved by the board (s. 226) | Always |
| Auditor’s report | If the statements are audited (s. 230) | Where applicable |
Sources for the last column: Revenu Québec, Guide de la déclaration de revenus des sociétés (CO-17.G, version 2025-12, in French), parts 3.5.1 and 3.5.2. A corporation that was inactive during the year, with no commercial transactions, attaches only a balance sheet showing its financial position at year-end (part 3.5.1).
Annual or audited financial statements: when to produce them?
Every year, for the annual meeting; they are audited by an auditor appointed by the shareholders, unless all the shareholders of a private corporation decide not to appoint one.
- The calendar. The first annual meeting is held not later than 18 months after incorporation, then not later than 15 months after the previous one (s. 163). The board presents there the statements for the fiscal year ended not more than six months before the meeting (s. 225). Unlike the federal statute, the QBCA does not require the meeting to be held within six months of the fiscal year-end (Martel, para. 28-31); a late meeting calls for interim statements.
- Audit by default. The shareholders appoint an auditor at each annual meeting, by ordinary resolution (s. 231).
- The waiver. A corporation that is not a reporting issuer can do without one, by unanimous resolution of the shareholders, including those whose shares carry no voting rights. The decision has effect only until the next annual meeting and terminates the term of any auditor in office (s. 239).
“An annual meeting of shareholders entitled to vote at such a meeting must be held not later than 18 months after the corporation is constituted and, subsequently, not later than 15 months after the last preceding annual shareholders meeting.”
“The shareholders of a corporation other than a reporting issuer may decide not to appoint an auditor. The decision must be made by unanimous resolution of the shareholders (…)”
Martel sees in this a right of every shareholder to audited financial statements, of which he or she can be deprived only by his or her own waiver. A shareholder who has not waived can therefore demand them: the corporation can neither refuse nor make the shareholder pay the fees (paras. 28-76 and 28-78).
Audited or certified financial statements: what is the difference?
“Audited” means examined by an auditor, whose report accompanies the statements (QBCA, s. 230); the Act never speaks of “certified” statements, and review and compilation are less extensive engagements.
“If they have been audited, the financial statements presented at the annual shareholders meeting or otherwise issued, published or distributed must be accompanied by the auditor’s report.”
- Audit. In Quebec, it is reserved for chartered professional accountants holding a public accountancy permit, under the title of “auditor” (Martel, para. 28-59).
- Review engagement. The professional states whether anything has come to his or her attention suggesting that the financial statements do not comply with the applicable framework (Martel, para. 28-77).
- Compilation. Less demanding: the professional compiles the information provided by management, without expressing any assurance (Martel, para. 28-77).
The difference matters in court: unaudited statements, which rest solely on the representations of directors or officers, may be treated as hearsay (Martel, para. 28-49). When a bank or a buyer asks you for “certified” statements, ask which of the three engagements it expects.
Interim financial statements: what are they for during the year?
In a corporation, they are mainly needed when the annual meeting is held more than six months after the fiscal year-end: shareholders who ask must then receive more recent statements.
The statements presented at the annual meeting must cover a fiscal year ended not more than six months before it (QBCA, s. 225). According to Martel, this time limit is strict: the court cannot extend it. Failing a unanimous waiver by the shareholders, which the author considers possible, more recent interim financial statements must be submitted to the shareholders who ask for them (para. 28-36).
“(…) present the corporation’s financial statements for the fiscal year ended not more than six months before the meeting.”
Example: fiscal year ended December 31, annual meeting in September. The annual statements are more than six months old; without a waiver by all the shareholders, more recent interim statements are required.
Consolidated financial statements: when should they be prepared?
When the corporation has subsidiaries, a holding company for example: as a general rule, their financial statements are consolidated with its own, and it keeps each subsidiary’s statements at its head office (QBCA, s. 228).
According to Martel, subsidiaries’ financial statements are as a general rule consolidated with those of the corporation; a private corporation may, in certain circumstances, notably if all its shareholders consent, present unconsolidated statements (para. 28-39). This is the typical situation of a holding company that owns an operating company.
“A corporation must keep the financial statements of each of its subsidiaries, and of each other legal person whose accounts are consolidated in the financial statements of the corporation (…)”
- Where. At the head office or at any other place within Québec designated by the board of directors (s. 228). The word “subsidiaries” also covers sub-subsidiaries (Martel, para. 28-40).
- Who may examine them. Any shareholder, on request, during the usual office hours, with free extracts (s. 228).
- The Quebec exception. The corporation may refuse when the assets, revenues and income before taxes of the subsidiary each represent less than 10% of the corresponding amounts in its own statements; the shareholder has 15 days to ask the court to review the refusal (s. 228; Martel, para. 28-41).
- Prohibition. The corporation may also ask the court, within 15 days of the request, to prohibit the examination if it shows the prejudice it or a subsidiary could suffer (s. 229).
FAQ — Financial statements: your questions
Does a cooperative prepare different financial statements?
In part: their form and tenor are determined by government regulation (Cooperatives Act, s. 131). The board of directors approves them and two directors authorized for that purpose certify the approval (s. 133). They are part of the annual report, which the board prepares within six months after the close of the fiscal year, together with the auditor’s report (s. 132). The cooperative appoints an auditor at each annual meeting, unless exempted by regulation (s. 135).
What are summary financial statements?
Quebec law does not use that expression: it speaks of financial statements, which include at least a balance sheet and an income statement, plus the other statements and notes approved by the board of directors (Business Corporations Act, s. 226). With the income tax return, Revenu Québec requires complete statements: balance sheet, income statement, statement of retained earnings, cash flow statement and notes (guide CO-17.G, part 3.5.1).
Where can I find financial statement templates that meet CPA standards?
No statute provides any: the Business Corporations Act only sets minimum contents (s. 226). The reference is the CPA Canada Handbook, whose standards the chartered professional accountant who prepares or approves financial statements must follow (Martel, para. 28-37). For compliant statements, consult a CPA.
Sources
- Business Corporations Act (CQLR, c. S-31.1), ss. 34, 163, 225 to 231 and 239, official English version, updated to June 10, 2026.
- Cooperatives Act (CQLR, c. C-67.2), ss. 131 to 133 and 135, official English version, updated to June 10, 2026.
- Taxation Act (CQLR, c. I-3), ss. 7 and 1000, official English version, updated to June 10, 2026.
- Income Tax Act (R.S.C. 1985, c. 1 (5th Supp.)), ss. 150 and 249.1, current to June 21, 2026.
- Canada Business Corporations Act (R.S.C. 1985, c. C-44), s. 155, current to March 31, 2026.
- Revenu Québec, Les revenus d’entreprise ou de profession (IN-155, version 2025-12, in French), parts 1.2.1 and 3.1.
- Revenu Québec, Guide de la déclaration de revenus des sociétés (CO-17.G, version 2025-12, in French), parts 3.5.1 and 3.5.2.
- Paul Martel, La société par actions au Québec, vol. 1, Les aspects juridiques, Wilson & Lafleur, paras. 28-27, 28-31, 28-35 to 28-41, 28-46, 28-49, 28-59 and 28-76 to 28-78 (update 117, February 2026).
The corporation first, the financial statements second
The year-end obligations described here are those of a business corporation. Still hesitating? Our guide When to incorporate in Quebec? puts numbers on the thresholds. Decision made? Incorporation costs $497 all-in, government fees of $397 included.
Your Quebec inc. for $497, government fees included
Articles of incorporation, initial declaration with the REQ and numbered company: everything is included.