Frequently Asked Questions About Tax Liability and Components of Corporations Tax
What are the components of corporations tax?
The components of corporations tax for small corporations are income tax and capital tax. Insurance corporations pay premium tax instead of capital tax.
Who is liable for Ontario corporate taxes?
All incorporated businesses, including those incorporated inside and outside Canada, that maintain a permanent establishment in Ontario are liable for Ontario corporate taxes. A permanent establishment can generally be described as a fixed place of business such as an office, farm, factory, branch, warehouse etc.
Unincorporated businesses are not required to pay Ontario corporations tax. These include sole proprietorships and businesses run by individuals as partnerships. Owners of unincorporated businesses are, however, subject to personal income tax on an individual basis.
