Canada Revenue Agency
www.cra.gc.ca
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Ontario capital tax
For tax years starting before July 1, 2010, corporations that have a permanent establishment in Ontario at any time in the tax year are liable for Ontario capital tax under section 64 of the Taxation Act, 2007 (Ontario).
These include both financial institutions and corporations other than financial institutions, except:
- a corporation that is liable for the special additional tax under section 74 of the Corporations Tax Act (Ontario);
- a deposit insurance corporation, as defined in subsection 137.1 of the federal Income Tax Act;
- a credit union;
- a corporation exempt from income tax under section 149 of the federal Act;
- a family farm corporation for the year, as defined in subsection 64(3) of the Taxation Act, 2007 (Ontario), other than a corporation for which a determination has been made under subsection 31(2) of the federal Act; and
- a family fishing corporation for the year, as defined in subsection 64(3) of the Taxation Act, 2007 (Ontario).
Note
The Ontario capital tax is eliminated effective July 1, 2010. For businesses mainly engaged in qualifying manufacturing and resource activities in Ontario, the capital tax is eliminated effective January 1, 2007.
Capital deduction
The taxable capital is reduced by a $15 million capital deduction.
Financial institutions
See Ontario capital tax on financial institutions for information on capital tax rates, foreign banks, and reporting the tax payable.
Other than financial institutions
See Ontario capital tax on other than financial institutions for information on capital tax rates, the capital deduction election, capital tax for manufacturers, and reporting the tax payable.
Reporting the tax
Within six months of the end of the tax year:
- Financial institutions complete Schedule 34, Taxable Capital Employed in Canada - Financial Institutions, and Schedule 514, Ontario Capital Tax on Financial Institutions, and file them with the T2 return.
- Corporations other than financial institutions complete Schedule 33, Taxable Capital Employed in Canada - Large Corporations, Schedule 515, Ontario Capital Tax on Other Than Financial Institutions, and, if applicable, Schedule 516, Capital Deduction Election of Associated Group for the Allocation of Net Deduction and file them with the T2 return.
On line 282 of Schedule 5, Tax Calculation Supplementary - Corporations, enter the Ontario capital tax payable.
Forms and Publications
- Schedule 5, Tax Calculation Supplementary - Corporations
- Schedule 33, Taxable Capital Employed in Canada - Large Corporation
- Schedule 34, Taxable Capital Employed in Canada - Financial Institutions
- Schedule 514, Ontario Capital Tax on Financial Institutions
- Schedule 515, Ontario Capital Tax on Other Than Financial Institutions
- Schedule 516, Capital Deduction Election of Associated Group for the Allocation of Net Deduction
- Schedule 517, Calculation of Ontario Capital Tax Investment Allowance for Financial Institutions
