How Taxes are Calculated
For a T1 return, your taxes owing are calculated based on your marginal tax rate. This means that the more income you earn, the higher your taxes owing will be. For a T2 return, your taxes owing are calculated based on your corporate tax rate. This rate is usually lower than your marginal tax rate, meaning that corporations often owe fewer taxes than individuals.
For a T1 return, the deadline is usually April 30th of the year following the tax year. So, for example, if you’re filing your 2021 taxes, the deadline would be April 30th, 2022, in case of self employed individuals the deadline for filing T1 return is 15th of June. For a T2 return, the deadline is usually six months after the end of the tax year. So, using the same example, if you’re corporation year end is 31st Dec , the deadline would be June 30th, 2022.
Method of Filing
One final difference is that a T2 return must be filed electronically, while a T1 return can be filed electronically or by mail.
As you can see, a few key differences exist between a T1 and a T2 tax return. Understanding these differences is important to ensure you file the correct return for your situation. This article has covered all the details about Canada's T1 and T2 tax returns. Now that you understand the differences between these two types of returns, you’ll be able to ensure you file the correct return for your situation.