Yes! You can use AI to fill out T2 Corporation Income Tax Return

Filers often transpose digits, omit the 'RC' program identifier, or enter an outdated number in the Business Number field (line 001). This is a critical error because the BN is the primary identifier for the corporation. An incorrect BN will cause the Canada Revenue Agency (CRA) to reject the filing, leading to significant processing delays and potential late-filing penalties. To avoid this, meticulously double-check the full 15-character BN against official CRA documentation before submission.

A frequent mistake is incorrectly selecting the corporation's type on line 040, such as confusing a 'Canadian-controlled private corporation (CCPC)' with an 'Other private corporation'. This often stems from a misunderstanding of the specific legal and ownership criteria for each type. The consequences are severe, as classification determines eligibility for the Small Business Deduction, tax rates, and refund mechanisms, potentially leading to a major tax miscalculation and subsequent reassessment with interest. Always review the definitions in the T4012 guide to ensure the correct type is selected.

The 'Attachments' section on pages 2 and 3 acts as a checklist, but filers often answer 'Yes' to a question without attaching the corresponding schedule (e.g., Schedule 8 for Capital Cost Allowance or Schedule 50 for shareholder information). This renders the return incomplete, halting the assessment process and delaying any refunds until the CRA requests and receives the missing documents. To prevent this, use the section as a final checklist before filing. If working with a flat PDF, an AI tool like Instafill.ai can convert it to a fillable version and help ensure all required schedules are identified and included.

Corporations often forget to update their head office, mailing, or books and records addresses (lines 010-038) and fail to tick the 'Yes' box to indicate a change. This oversight can cause crucial CRA correspondence, including Notices of Assessment, audit requests, and refund cheques, to be sent to an old address. This can lead to missed deadlines, lost funds, and compliance issues. Always verify that the addresses are current and correctly flag any changes on the return.

As noted on the form, the $500,000 business limit (line 410) must be prorated for tax years shorter than 51 weeks, a rule that is commonly missed for a corporation's first or final return. Claiming the full, unprorated limit results in an inflated Small Business Deduction and an underpayment of tax. The CRA will correct this upon review, leading to a reassessment with interest and possible penalties. To avoid this, always calculate the prorated limit for short tax years by multiplying $500,000 by (days in tax year / 365).

A common error is entering a net income figure on line 300 that does not reconcile with the amount reported on the corporation's financial statements or General Index of Financial Information (GIFI). This discrepancy invalidates the entire taxable income calculation that follows. This leads to an incorrect tax liability, requiring an amendment and attracting interest on any underpaid amounts. Before proceeding, ensure the figure on line 300 is the final, reconciled net income for tax purposes.

Filers frequently make errors when transferring the prior year's ending Refundable Dividend Tax on Hand (RDTOH) balances to the current year's return (lines 520 and 535). Mistyping these figures directly impacts the calculation of the current year's dividend refund, causing the corporation to claim an incorrect amount. To prevent this, carefully transcribe the exact ending balances from lines 530 and 545 of the previous T2 return. AI-powered tools like Instafill.ai can help prevent such data entry errors by carrying forward data from previous forms.

A simple but costly oversight is forgetting to report the total amount of tax instalments paid throughout the year on line 840. When this amount is omitted, the final calculation will show a balance owing (or a smaller refund) that doesn't account for the payments already made. This can trigger an erroneous balance due notice from the CRA, along with arrears interest charges. Always confirm the total instalments paid and enter it accurately on line 840.

In the 'Additional information' section (lines 284-289), filers often provide a generic business description like 'services' or 'sales' without the required detail or revenue percentages. The CRA uses this data for statistical analysis and risk assessment, and vague information can trigger further inquiries to properly classify the corporation. To avoid this, provide a specific description of the principal activities (e.g., 'Residential plumbing services') and a reasonable estimate of the revenue percentage for each.

Forgetting to complete the 'Certification' section on page 9 is a critical error. An authorized signing officer must provide their name, title, signature, and the date (lines 950-955) for the return to be considered valid. An unsigned return is treated as not filed, which can lead to the CRA rejecting the submission and imposing significant late-filing penalties if the deadline passes before a corrected copy is received. Always perform a final review to ensure this section is fully and accurately completed.