What happens first? The dissolution or the tax return?
Dissolution is the process by which a company ceases to exist. We often get asked by clients who want to dissolve their company whether they need to file a final tax return before dissolving, and the answer is no.
In order to dissolve, you must ensure that your company has paid all of its liabilities and in Ontario, you require a consent from the Ministry of Finance to dissolve (the consent is issued if the company is up-to-date on its tax filings). You also want to ensure that there are no outstanding receivables because once dissolved, the company will no longer have a bank account or be able to accept payments. If there are other assets in the company, such as real estate, you want to make sure that these assets are distributed prior to the dissolution.
Once you are certain that all assets have been distributed, and the liabilities have been paid, the company can be dissolved by filing articles of dissolution with the appropriate jurisdiction. Once dissolved, a final tax return will need to be filed up to the date of dissolution.
So to answer the initial question, the dissolution comes first, then the final tax return.
If you have questions about dissolving your company, please contact us and one of our lawyers would be happy to assist you.