Provincial and territorial corporation tax
You have to calculate and pay provincial and territorial income tax in addition to your federal income tax.
Provinces and territories legislate their corporation income tax provisions, but the CRA administers them, except for Quebec and Alberta. If the corporation has a permanent establishment in any province or territory other than these two, you have to calculate provincial and/or territorial income taxes and credits, as well as federal income taxes and credits, on the federal return.
Corporations from all provinces and territories should verify first if they have to complete Schedule 5. Of interest to corporations who need to complete schedule 5 is the Provincial Income Allocation Newsletter, a publication outlining the CRA's administrative positions and technical opinions on issues specific to provincial income allocation.
Generally, provinces and territories have dual tax rates. For information on the calculation of provincial and territorial credits, rebates and tax, see the following pages:
- British Columbia
- New Brunswick
- Newfoundland and Labrador
- Northwest Territories
- Nova Scotia
- Prince Edward Island
Reporting the tax and claiming the credit
If Schedule 5 is not required (and the provincial or territorial jurisdiction is not Quebec or Alberta), enter the provincial or territorial tax on line 760 of the T2 Corporation Income Tax Return.
If Schedule 5 is required (and the provincial or territorial jurisdiction is not Quebec or Alberta), enter the net amount of provincial and territorial tax payable or the net amount of refundable credits on line 255 of Schedule 5, Tax Calculation Supplementary – Corporations.
When the amount at line 255 is positive, enter the net provincial or territorial tax payable on line 760 of the return.
When the amount at line 255 is negative, enter the refundable provincial or territorial tax credit on line 812 of the return.
Requested forms – Attach to the return the forms you completed to claim provincial or territorial credits or rebates, where requested.
Forms and publications
- Schedule 5, Tax Calculation Supplementary – Corporations
- T2 Corporation Income Tax Return
- Guide T4012, T2 Corporation – Income Tax Guide
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