What Happens If You Don’t File Your Annual Return? (How Your Corporation Can Be Dissolved) — CPA Firm Near You, Montreal

Introduction

Failing to file your annual return may seem like a small oversight, but for a corporation in Quebec, it can trigger serious legal and tax consequences. The Registraire des entreprises du Québec (REQ) and Corporations Canada require corporations to file annual returns to confirm that the company is active and compliant. Missing this obligation can result in penalties, loss of corporate status, frozen bank accounts, and even automatic dissolution. This guide explains what happens when your annual return is not filed, how dissolution occurs, and how a CPA near you in Montreal can help keep your corporation in good standing.

Legal and Regulatory Framework

Under the Quebec Business Corporations Act (QBCA) and the Canada Business Corporations Act (CBCA), corporations must file an annual return every year. The annual return confirms director information, shareholder structure, registered office, and corporate status. Missing the annual filing triggers administrative penalties, late fees, and eventual dissolution by the REQ or Corporations Canada. Dissolution does not eliminate tax obligations — T2, CO-17, GST/QST, and payroll filings remain required.

Key Court Decisions

Courts have ruled that corporations failing to maintain annual filings and corporate records can lose their legal status and have decisions invalidated. Judges have confirmed that REQ dissolutions can be enforced even when the corporation continues operating informally. In several cases, dissolved corporations entered contracts that were later nullified because they lacked legal existence. Courts emphasize that failure to file an annual return can undermine liability protection and tax planning structures.

Why CRA and Revenu Québec React to Missed Annual Returns

When a corporation does not file its annual return, CRA and RQ may suspect inactivity, non-compliance, or missing tax filings. Red flags include inconsistent GST/QST filings, missing T2/CO-17 returns, outdated minute books, incorrect shareholder information, unpaid payroll remittances, and irregular corporate activity. A dissolved corporation cannot legally issue invoices, declare dividends, open bank accounts, or sign contracts, increasing audit risk.

What Happens When You Don’t File Your Annual Return

Step 1: Late fees and penalties

The REQ charges late fees and administrative penalties immediately after the annual filing deadline is missed.

Step 2: “Notice of Intent to Strike Off”

The REQ issues a warning that your corporation will be dissolved if no action is taken.

Step 3: Automatic dissolution

If still no filing occurs, the corporation is dissolved and legally ceases to exist.

Step 4: Loss of limited liability

Once dissolved, directors and shareholders risk personal liability for corporate activities.

Step 5: Frozen ability to operate

A dissolved corporation cannot legally sign contracts, hire employees, issue dividends, or file a corporate tax return without reinstatement.

Step 6: CRA and RQ complications

Tax authorities continue assessing taxes even if the corporation is dissolved, creating compliance problems.

How to Fix a Dissolved Corporation

To restore a dissolved Quebec corporation, you must reinstate it with the REQ by filing all missing annual returns and paying penalties. Federal corporations require a revival application through Corporations Canada. Minute books and resolutions must be updated and aligned with the revived status.

Mackisen Strategy

At Mackisen CPA Montreal, we help corporations stay compliant by managing annual returns, preparing resolutions, updating minute books, monitoring deadlines, and coordinating GST/QST, payroll, and corporate tax filings. If your corporation is already dissolved, we handle the reinstatement process, correct missing filings, update corporate records, and restore full compliance with the REQ, CRA, and Revenu Québec.

Real Client Experience

A Montreal retailer ignored annual returns for three years and was dissolved by the REQ. The owner could no longer renew permits or open supplier accounts. We reinstated the corporation, filed missing T2/CO-17 returns, updated minute books, and recovered compliance. Another business owner had a dissolved corporation during an audit; we revived the entity, corrected filings, and avoided penalties.

Common Questions

How long before a corporation gets dissolved?

It varies, but dissolution typically occurs after several months of missed annual filings.

Does dissolution cancel my taxes?

No. CRA and RQ continue to assess corporate taxes even after dissolution.

Can I continue operating if dissolved?

No. All corporate operations become invalid until reinstatement.

Can a dissolved corporation be revived?

Yes. Most cases can be fully restored by filing missing returns and paying penalties.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps corporations avoid dissolution, maintain compliance, file annual returns on time, and restore dissolved corporations quickly and correctly. We protect your corporate status, legal structure, and ability to operate without interruption.