What to do if the effective date of the change of corporation type is not within the taxation year ?

Hi,

Not sure what how the return is set up but, that is not a known issue. If there is a CRA approved change, try a date in the tax year.

My company lose CCPC status on July 28, 2022.  It caused a deemed tax year ending on July 27, 2022.  So I put July 27, 2022 as the period end and July 28, 2022 as the change of corporation type date in the T2 returns.  I can't e-file the tax returns because of the warning saying that the effective date of the change of corporation type is not within the taxation year.  I am not sure how to have the warning fixed.

Hi,

Looks like the date of change cannot be after the year end in this case. Changing it to July 27,2022, should resolve the warning and allow filing

Hi, the date of change is July 28, 2022 and the end of period is July 27, 2022.  Both dates are within the taxation period.

Based on this link  https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4012/t2-corporatio... I think (and I recommend that you check with CRA) that you just need to check mark the box deemed tax year end under section 249(3.1) on the info page of the return, and file the return.

then next year as it says... The next tax year is deemed to start on the date that the corporation type changed, and the corporation can choose any tax year-end within the next 53 weeks.

Line 066 – Is the date on line 061 a deemed tax year-end according to subsection 249(3.1)?

If at any time a corporation becomes or stops being a Canadian-controlled private corporation (CCPC) for any reason other than an acquisition of control, subsection 249(3.1) provides that the tax year of the corporation is deemed to end immediately before that change. You do not need the minister's approval for the changed tax year.

File a return for the tax year that ends immediately before the change. The next tax year is deemed to start on the date that the corporation type changed, and the corporation can choose any tax year-end within the next 53 weeks.

If the change occurs up to seven days after the end of an established tax year and there has not been an acquisition of control and the corporation has not become or stopped being a CCPC, within those seven days the corporation can choose to extend the tax year up to the time the change occurred. In this case, attach a letter to your return that says you are making an election under paragraph 249(3.1)(c).