T2057 is the CRA form a taxpayer and a taxable Canadian corporation use to jointly elect under subsection 85(1) when the taxpayer transfers eligible property to the corporation and gets shares of the corporation in return. It's how a sole proprietor can move a business, or an investor can move property, into a company at an agreed amount instead of fair market value. The election is due by the earliest return due date of any party.
Everything below comes from the CRA's T2057 form page and the 2025 version of the form, T2057 E (25), as of October 2026.
What the election does
The form describes itself plainly: it's used by a taxpayer and a taxable Canadian corporation to jointly elect under subsection 85(1) where the taxpayer has disposed of eligible property under subsection 85(1.1) to the corporation and receives shares of capital stock of the corporation as consideration. For each property, Schedule A records the fair market value and an agreed amount, and the gap between the two totals is also what the late-filing penalty is built on. No shares in the payment, no T2057.
Both sides are named on the form: the transferor in Part 1 with their account number, and the corporation, the transferee, with its business number and tax year. Co-owners of the same property are listed too, with their own account numbers.
Before you can file
- A CRA accepted account number is required at line 001. If you don't have one, apply first: a social insurance number, a business number, a trust account number or an individual tax number.
- The corporation needs its business number at line 016.
- Prepare Schedule A, which lists and describes each property transferred and its fair market value, with the consideration received shown opposite each property.
When it's due
The form says to file on or before the earliest date on which any party to the election has to file an income tax return for the tax year in which the transaction happened. That due date has to take account of any election under subsection 25(1) or 99(2), and the T2057 is filed separately from any other return, to the transferor's tax centre if you mail it. Where several co-owners transfer the same property, or several partners transfer partnership interests, the elections are processed together and filed to the transferee's tax centre.
The late-filing penalty
This is where people get caught. The T2057 can be filed up to three years after its due date if an estimate of the penalty is paid with it. After three years, or to amend it, filing is at the minister's discretion, with a written explanation and the estimated penalty. The penalty is the lesser of two amounts:
| Calculation | Formula |
|---|---|
| Amount 2B | Total fair market value minus total agreed amount, times one quarter, times 1%, times the number of months late |
| Amount 2C | $100 times the number of months late, capped at $8,000 |
| Penalty (line 320) | Whichever of 2B and 2C is less |
Each month or part of a month from the due date to the filing date counts, and daily compound interest at the prescribed rate applies to unpaid amounts, including the penalty. These figures are from the 2025 form, as of October 2026.
A worked penalty, using the form's formula
Take an election filed 4 months late. Amount 2C is $100 times 4, which is $400. Amount 2B depends on the gap between fair market value and the agreed amount: the bigger the gap, the bigger 2B gets, and the penalty is whichever of the two is smaller. So when the gap is small, 2B is usually the smaller figure and sets the penalty; when the gap is large, you pay the $100 a month in 2C, up to the cap of $8,000.
Questions the form asks
- Is there a written agreement relating to the transfer?
- Is there a valuation report, an independent assessment of the fair market value of the transferred property?
- Does a price adjustment clause apply to any of the properties?
- Do any persons other than the taxpayer own or control shares of any class of the corporation?
- Is there a non-arm's length transfer between two or more corporations, and if so, have all or substantially all, 90% or more, of the properties been transferred?
The form also notes you may need workings for the adjusted cost base of every property transferred and a summary of how you valued each one. For depreciable property, the minister can decide the order in which properties are disposed of unless you designate the order before the filing due date.
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Filling in the T2057
- Part 1: identify the transferor, whether they or their spouse are self-employed, whether they're non-resident, the tax year, a contact person, any co-owners and the corporation.
- Part 2: the late-filing penalty calculation, if it applies, and the amount enclosed.
- Part 3: answer the information questions.
- Schedule A: each property, its fair market value, the agreed amount and the consideration received, including the shares.
- File electronically through the CRA's online service, or mail one copy to the transferor's tax centre.
A non-resident transferor also enters their taxpayer identification number at line 020. If paying the penalty by cheque, write T2057, the transferor's name, account number and tax year-end on the back.
The verdict
If you're incorporating a business that already owns assets, the T2057 is the form that decides whether the move triggers tax now. Agree the amounts with your accountant before the transfer, get the account numbers sorted first, and file by the earliest return deadline of anyone involved: at $100 a month and up to $8,000, a late election is an avoidable cost. For a sole proprietor, the business you're rolling in was reported on Form T2125 until now.
Frequently asked questions
What is the T2057 form?
It's the joint election under subsection 85(1) for a taxpayer and a taxable Canadian corporation when the taxpayer transfers eligible property to the corporation and receives shares as consideration.
When is the T2057 due?
On or before the earliest date on which any party to the election has to file an income tax return for the tax year in which the transaction occurred.
What is the T2057 late-filing penalty?
The lesser of one quarter of 1% of the excess of fair market value over the agreed amount for each month late, or $100 for each month late up to $8,000.
Can I file a T2057 late?
Yes, within three years after its due date if you pay an estimate of the penalty when you file. After that it's at the minister's discretion, with a written explanation.
Do I need an account number to file a T2057?
Yes. A CRA accepted account number is required at line 001 before you can file it.
