How to Dissolve a Corporation in BC | The Tax Steps Most Owners Miss

To voluntarily dissolve a BC company, it must first have no assets and no liabilities (or adequate provision for every liability), be up to date on its BC annual reports, and have the dissolution authorized by the shareholders. A director swears an affidavit confirming this, and you file a Dissolution Application with BC Registries. On the tax side, you need to file a final T2, final GST/HST, PST and payroll returns, and close your CRA accounts. Dissolving the company doesn’t make its tax debts disappear. Directors can still be personally liable.

How to Dissolve a Corporation in BC: The Short Answer

Before You File: Clear Assets, Debts and the Shareholder Loan

BC Registries requires that the company has no assets and no liabilities (or adequate provision for each) on the day it dissolves. In practice, that means: Assets

• Collect all accounts receivable
• Sell equipment, vehicles and inventory, or distribute them to shareholders at fair market value
• Empty the bank account by paying debts and then distributing what’s left to shareholders

Liabilities

• Pay suppliers, lenders, landlords and credit cards
• Pay all CRA balances: corporate tax, GST/HST, payroll
• Pay BC PST and WorkSafeBC balances

Shareholder loan, the most missed step

• If you owe the company money, it has to be repaid, or the balance is often paid out as a dividend or written off, which can be taxable to you
• If the company owes you money, it can be repaid to you tax-free from the remaining cash

Tax on winding up

• Selling or distributing assets at fair market value can trigger capital gains or CCA recapture in the final year
• Distributing the remaining cash to shareholders is usually a taxable dividend (beyond the return of share capital and any capital dividend account balance). See capital dividend account.

Final Tax Returns and Closing CRA Accounts (T2, GST/PST, Payroll)

  Tip: Wait for the CRA’s notice of assessment on the final T2 before you close the corporate bank account, in case there’s a refund or a small balance owing.

Filing the Dissolution Application With BC Registries

Requirements:

• The dissolution is authorized under the Business Corporations Act (usually a shareholder resolution)
• A director swears an affidavit stating that the dissolution was authorized, the company has no assets, and it has no liabilities (or has made adequate provision for each one)
• The affidavit is kept in the company’s records office
• The company is in good standing, meaning all annual reports are filed

Filing:

• File the Dissolution Application online through BC Registries
• You can choose an effective date up to 10 days in the future (there’s an extra fee for future-dating)
• You’ll receive a Certificate of Dissolution after the effective date
• If the company was registered in Alberta or Saskatchewan under the NWPTA, those registrations are cancelled automatically

CRA Clearance Certificate: When You Need One

A clearance certificate is the CRA’s written confirmation that all taxes, interest and penalties owed by the company have been paid. When it matters: If you’re distributing the company’s property to shareholders as part of winding up, whoever makes the distribution can be personally liable for the company’s unpaid taxes up to the value of what was distributed. Getting a clearance certificate before the final distribution protects you. How: Apply through the CRA (the process for legal representatives and liquidators) after the final T2 has been assessed. Processing can take several months, so build it into your timeline. When you may not need one: If the company has very little left to distribute and you’re confident all returns are filed and assessed, some owners skip it. Get advice before you do.

Timeline and Costs

What Directors Can Still Be Liable For After Dissolution

Dissolving the company does not wipe out:

• Unremitted payroll deductions (CPP, EI and income tax withheld). Directors are personally liable
• Unremitted GST/HST. Directors can be personally liable
• Corporate taxes on distributions made without a clearance certificate
• Unpaid wages to employees (directors can be liable for up to 2 months’ wages in BC)
• Personal guarantees you signed for loans, leases or credit cards
• Debts you didn’t pay. Creditors can apply to restore the company, and shareholders who received property may have to give it back

Also: if a dissolved BC company later turns out to have assets, like a bank account you forgot, they generally go to the government. And a dissolved company can be restored if needed, but it costs more than doing it right the first time.

FAQ: Dissolving a BC Corporation

Can I just stop filing annual reports and let the company dissolve?

BC Registries can eventually dissolve a company for not filing, but the CRA still expects all tax returns, and directors remain liable. It’s the messy, expensive way to close.

Should I dissolve or just leave the company inactive?

If you might use it again, an inactive company is an option, but you still file a T2 and BC annual report every year. If you’re done with it, dissolving stops those costs.

Do I need to file a T2 for the year the company dissolves?

Yes. A final T2 covering the period up to the dissolution date.

What happens to money left in the company?

It’s distributed to shareholders before dissolution, usually as a dividend. You report it on your personal return.

Can a dissolved company be revived in BC?

Yes, through a restoration application, usually within 10 years. It’s more work and cost than closing correctly the first time.

Does dissolving cancel my GST and payroll accounts automatically?

No. You need to close each CRA program account yourself (form RC145 or My Business Account).

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