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For corporate year-ends in Canada

A T2 engagement letter that separates the return from everything around it

The T2 is rarely the whole job. Financial statements, slips, a provincial return, a shareholder loan — the letter decides which of them the fee covers.

A corporate client thinks of the year-end as one piece of work. The firm knows it is several: financial statements compiled under CSRS 4200, the T2 and its schedules, T4 and T5 slips, perhaps an Alberta or Quebec return filed separately, and planning questions that are really advice.

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T2 engagement letter

The full letter in Word and PDF, written for Canadian practices, with the T183CORP, balance-due and related-filings clauses.

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Type in your firm, the client, the scope and the fee, and it writes a complete engagement letter for Canada, ready to print or save as a PDF. Nothing you type is stored.

Next step: send it to the client through FirmHello, where it stays on their record beside everything else they send you.

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The T2 engagement letter is where each of those is named, and named as in or out. It also sets down the dates a corporation actually lives by: a balance due two or three months after year end, not the six months the return itself is allowed.

What a T2 letter has to separate

Five things a corporate client will assume are one job unless the letter says otherwise.

  1. 1

    The return, and each schedule you prepare

    The T2 with its GIFI and Schedule 50, the provincial schedules, and any of the foreign reporting that applies: a T106 where non-arm's-length transactions with non-residents exceed $1,000,000, a T1134 for foreign affiliates, which is due ten months after year end rather than six.

  2. 2

    Financial statements are their own engagement

    A compilation under CSRS 4200 needs its own agreed terms. Either issue a separate letter or give it a clearly separate section, so the client knows they have engaged you for two things.

  3. 3

    The date the tax is due

    The return is due six months after year end; the balance is due two months after, or three for a Canadian-controlled private corporation that meets the conditions. Say which applies, and whether you calculate instalments.

  4. 4

    Slips and other returns, each with an owner

    T4 and T5 slips are separate information returns due at the end of February. An Alberta AT1 and a Quebec CO-17 are filed separately with the province. Name each one and who prepares it.

  5. 5

    The T183CORP and who signs it

    An authorized signing officer signs the T183CORP before the return is transmitted, and it is kept for six years. Most corporations must now file electronically, so the letter should say that nothing is filed until the signed form is back.

The T2 engagement letter

Written for Canada. The downloads are the same text, as a Word document to edit and a PDF to put on your letterhead.

[Firm letterhead]

[Date]

The Directors, [Corporation name]
[Address]

Dear [Client contact],

The engagement

We will prepare and electronically file the T2 corporation income tax return of [Corporation name] for the year ending [date], with its General Index of Financial Information, Schedule 50 and the [province] provincial schedules, from the financial statements and information you provide. [Where applicable: Form T106 / Form T1134.]

What is not included

This engagement does not include the preparation or compilation of financial statements, which [is the subject of a separate engagement letter / is set out in the separate section below]; T4, T5 or other information slips; [an Alberta AT1 / a Quebec CO-17 return]; GST/HST returns; shareholder remuneration or dividend planning; shareholder loan advice; reorganizations; or responding to any review, audit or reassessment by the Canada Revenue Agency. We will quote for any of these separately.

The corporation's responsibilities

The corporation is responsible for maintaining complete and accurate books and records, for the financial statements on which the return is based, and for telling us about transactions with non-residents, interests in foreign affiliates, and changes in its shareholders or control. We will rely on that information without auditing it.

We need the year-end records by [date]. Records received later may prevent us from filing by the deadline, and additional work caused by the delay is charged at [rate] per hour.

Filing and authorization

We will provide the completed return and Form T183CORP for signature by an authorized signing officer. We will not transmit the return until the signed T183CORP is returned to us, and the corporation and our firm will each keep a copy for six years.

The return is due within six months of the year end. The balance of tax is due [two / three] months after the year end, and interest runs on any amount unpaid after that date whether or not the return has been filed.

The limits of this work

This engagement is the preparation of a tax return. It is not an audit or review, and it will not necessarily detect errors or fraud in the records provided.

Fees

Our fee is [amount] in Canadian dollars, plus applicable GST/HST, invoiced when the return is ready for signature and payable within [number] days. Work outside this scope is charged at [rate] per hour and agreed with you first.

Confidentiality and your information

We keep the corporation's information confidential, hold it in accordance with PIPEDA or the provincial privacy law that applies to us, and retain our working papers for [number] years.

Agreement

Please have an authorized signing officer sign and return a copy of this letter.

Yours sincerely,
[Name], [Firm name]

Agreed for [Corporation name] by [Name, Title]:

Signature ______________________ Date ____________

Before you use this

Supplied as-is, with no guarantee. These templates are general information, not legal advice, and not a substitute for it. Have your own legal adviser review and adapt one to your practice and your jurisdiction before you put it in front of a client. FirmHello accepts no responsibility or liability for any use made of them.

Where T2 engagements go wrong

Paid at six months

The client files on time and pays with the return, four months after the balance was due. Put the balance-due date in the letter, not only the filing deadline.

The dividend that needed a T5

A dividend is declared in March and nobody issues the slip. Name the slips and who owns them, or the late-filing penalty lands on whichever side said nothing.

Statements nobody engaged for

The firm compiles the financial statements as a matter of course, and the letter only mentions the return. A compilation needs its own terms under CSRS 4200.

Other engagement letters

Accounting Accounting T1 personal return T1 personal tax Compilation Compilation

Questions about T2 engagement letters

Do I need one letter per corporation?

Usually yes. Associated corporations are separate taxpayers with separate returns, signing officers and year ends, and a letter covering several becomes awkward the moment one of them is sold or wound up.

Can the T2 and the financial statements share one letter?

They can, if the compilation has its own clearly separate section with the terms CSRS 4200 requires. Many firms find two letters simpler, because the two engagements have different standards and different reports.

Who should sign the engagement letter?

Someone with authority to bind the corporation — usually a director or officer — signing on its behalf. Address it to the corporation, not to the owner personally, because the corporation is the client.

Should the letter mention bare trusts?

If the corporation holds property for someone else, or someone holds it for the corporation, say whether trust reporting is in scope. The CRA waived bare trust filing for 2023 to 2025 and reporting resumes for later years under amended rules, so check its current guidance before you rely on a clause.

What changed

  • Added an editable Word (.docx) copy of the letter beside the PDF.

The letter is the easy half

Sending it, getting it back signed, and finding it again in two years is the half that eats the week. That is what the portal is for.

No card and no sales call. If you would rather tell us about your firm first, use the longer form.