Canada Revenue Agency
www.cra.gc.ca
Common menu bar links
Ontario transitional tax debits/credits
The Ontario transitional tax debits and credits provide a transition from the Corporations Tax Act (Ontario) for corporations with different income tax attributes for federal and Ontario purposes.
For tax years ending before 2009, a corporation's income and taxable income for Ontario purposes are determined based on its Ontario tax pools (for example, the undepreciated capital cost of depreciable property) under the Corporations Tax Act (Ontario).
For tax years ending after 2008, the corporation's income and taxable income for Ontario purposes are determined based on its federal tax pools under the Taxation Act, 2007 (Ontario).
Where the corporation's federal tax pools exceed its Ontario tax pools, the corporation has a transitional tax debit. A specified corporation subject to the Ontario transitional tax debit is generally required to pay additional Ontario corporate income tax over a five-year period beginning with its first tax year ending after 2008.
Conversely, where the corporation's Ontario tax pools exceed its federal tax pools, the corporation has a transitional tax credit. A specified corporation is generally entitled to a transitional tax credit over a five-year period beginning with its first tax year ending after 2008.
A specified corporation is defined under subsection 46(5) of the Taxation Act, 2007 (Ontario).
Calculating the debits and credits
Complete Schedule 506, Ontario Transitional Tax Debits and Credits, to calculate the corporation's transitional tax debits and tax credits and file it with your return.
Use Schedule 507, Ontario Transitional Tax Debits and Credits Calculation, to determine the amounts you enter in Part 3 of Schedule 506. You do not need to file Schedule 507 with your return.
On line 276 of Schedule 5, Tax Calculation Supplementary - Corporations, enter your total transitional tax debits.
On line 414 of Schedule 5, enter your transitional tax credits.
Forms and Publications
- Schedule 5, Tax Calculation Supplementary - Corporations
- Schedule 506, Ontario Transitional Tax Debits and Credits
- Schedule 507, Ontario Transitional Tax Debits and Credits Calculation
