Canadian corporate tax filings: Federal and provincial taxes must be filed separately; failing to file provincial taxes in Quebec or Alberta incurs a penalty of 5% of the tax owing plus 1% per month

In addition to filing a federal T2 return, corporations with a permanent establishment in Quebec or Alberta generally also need to file a separate provincial tax return with the provincial tax authority. Alberta uses the AT1 form, and this filing step is often overlooked. The general federal late-filing penalty is 5% of the tax owing plus 1% for each full month late, up to 12 months. If the CRA previously sent a demand to file and a penalty was assessed in any of the previous three years, the penalty increases to 10% plus 2% for each month, up to 20 months. Penalties and interest in Quebec and Alberta are governed by each province’s own tax authority rules; the federal standard cannot be applied.