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Ontario corporate minimum tax
The Ontario corporate minimum tax payable is equal to the amount by which the corporate minimum tax exceeds the Ontario corporate income tax.
Corporations subject to corporate minimum tax
For tax years ending after June 30, 2010, a corporation is subject to corporate minimum tax if its total assets are equal to or greater than $50,000,000 and its total revenue is equal to or greater than $100,000,000, except if it was, throughout the tax year:
- a corporation exempt from income tax under section 149 of the federal Income Tax Act;
- a mortgage investment corporation under subsection 130.1(6) of the federal Act;
- a deposit insurance corporation under subsection 137.1(5) of the federal Act;
- a congregation or business agency to which section 143 of the federal Act applies;
- an investment corporation referred to in subsection 130(3) of the federal Act; or
- a mutual fund corporation under subsection 131(8) of the federal Act.
For tax years ending before July 1, 2010, a corporation is subject to corporate minimum tax if its total assets exceed $5,000,000 or its total revenue exceeds $10,000,000.
Effective July 1, 2010, the corporate minimum tax rate is reduced from 4% to 2.7%. The rate is prorated based on the number of days in the year when the tax year straddles June 30, 2010.
In determining if the total assets or total revenue exceeds the limits, a corporation must include its share of the total assets and total revenue of a partnership in which it has an interest, any associated foreign or Canadian corporation, and any associated corporation's share of a partnership. If a corporation is associated it must complete and file Schedule 511, Ontario Corporate Minimum Tax - Total Assets and Revenue for Associated Corporations, to report the total assets and total revenue of all the associated corporations.
Calculating the tax
Calculate corporate minimum tax on Schedule 510, Ontario Corporate Minimum Tax.
File Schedule 510 with your T2 Corporation Income Tax Return if:
- the corporation is subject to corporate minimum tax for the tax year (Part 1 of the schedule);
- the corporation is not subject to corporate minimum tax in the year, but is deducting a corporate minimum tax credit or has a corporate minimum tax credit carryforward, corporate minimum tax loss carryforward, or current year corporate minimum tax loss (Parts 4 to 8 of the schedule); or
- the corporation has special additional tax on life insurance corporations payable in the year even if it is not subject to corporate minimum tax for the tax year (Part 4 of Schedule 510, and Schedule 512, Ontario Special Additional Tax on Life Insurance Corporations [SAT]).
Corporate minimum tax is based on the adjusted net income of a corporation. The adjusted net income is a corporation's net income calculated in accordance with Canadian generally accepted accounting principles or the International Financial Reporting Standards, with various adjustments. Report the adjustments on Part 2 of Schedule 510.
Accounting gains reported in the year from corporation reorganizations that are deferred for income tax purposes are deductible when calculating adjusted net income.
Accounting gains reported in the year on the transfer of property under section 85, section 85.1, section 97, subsection 13(4), subsection 14(6), and/or section 44 of the federal Act are deductible from adjusted net income. An election is required in order to claim this deduction. We will consider a corporation to have filed an election (and to not need to file another document) if it reports the deduction and has filed the election(s) required for corporate income tax purposes.
In addition, certain unrealized mark-to-market gains/losses and foreign currency gains/losses on assets that are not required to be included in computing income for income tax purposes are not included in adjusted net income. For additional information, see Ontario Regulation 37/09.
Reporting the tax
File a completed Schedule 510 with your return and, if applicable, Schedule 511.
For more information, see the schedules and sections 54 - 62 of the Taxation Act, 2007 (Ontario).
On line 278 of Schedule 5, Tax Calculation Supplementary - Corporations, enter the amount of the corporate minimum tax.
Forms and Publications
- Schedule 5, Tax Calculation Supplementary - Corporations
- Schedule 510, Ontario Corporate Minimum Tax
- Schedule 511, Ontario Corporate Minimum Tax - Total Assets and Revenue for Associated Corporations
- Schedule 512, Ontario Special Additional Tax on Life Insurance Corporations (SAT)
