T2 Corporate Return

The Canadian corporate income tax return. Filed annually by incorporated businesses, separate from the T1 personal return. T2 reports the corporation's revenue, expenses, retained earnings, and corporate tax owing.

For a self-employed file where the borrower is paid through their corporation (via salary, dividends, or both), the T2 is what shows the lender the business's actual cash flow. Without the T2, the lender only sees what flowed out of the corporation to the borrower personally (visible on the T1), not what the business itself generates. Some lenders factor retained earnings into qualifying income; others ignore them entirely. Some treat draws and dividends as equivalent to salary; others discount dividends.

The right packaging of T1 plus T2 plus business financials is what differentiates a clean approval from a stuck file. Walk-through: Self-Employed Mortgages in Canada: The Bank's Blind Spot.