Capital Tax
Capital Tax is a 0.3 per cent tax charged on a corporation's taxable capital. It will be eliminated on July 1, 2010.
Starting January 1, 2005:
The $5 million deduction from taxable paid-up capital increased by $2.5 million each year until it reached $15 million on January 1, 2008. This resulted in over 13,000 more corporations no longer paying capital tax.
On January 1, 2009:
Capital tax rates will be reduced yearly until fully eliminated on July 1, 2010.
The government's plan to eliminate capital tax:
| Deduction ($M) |
Rates | ||||
|---|---|---|---|---|---|
| Regular Corporations |
Financial Institutions | ||||
| First $400M of Taxable Capital |
Taxable Capital above $400M | ||||
| Non-Deposit Taking |
Deposit Taking |
||||
| Jan. 1, 2004 | 5 | 0.3 | 0.6 | 0.72 | 0.9 |
| Jan. 1, 2005 | 7.5 | 0.3 | 0.6 | 0.72 | 0.9 |
| Jan. 1, 2006 | 10 | 0.3 | 0.6 | 0.72 | 0.9 |
| Jan. 1, 2007 | 12.5 | 0.285 | 0.57 | 0.684 | 0.855 |
| Jan. 1, 2008 | 15 | 0.285 | 0.57 | 0.684 | 0.855 |
| Jan. 1, 2009 | 15 | 0.225 | 0.45 | 0.54 | 0.675 |
| Jan. 1, 2010 | 15 | 0.15 | 0.3 | 0.36 | 0.45 |
| July 1, 2010 | Eliminated | ||||
* The deduction increases and tax rate cuts will be pro-rated for taxation years straddling the effective dates.
Further cuts planned for Capital Tax
In the 2007 Ontario Economic Outlook and Fiscal Review and the 2008 Budget, the government set out plans to:
- eliminate Capital Tax on January 1, 2008 for many manufacturing or resource companies
- accelerate the rate cuts set for January 1, 2009 to January 1, 2007.
For more information
For more information, please refer to:
- Information Notice 6025 - Proposed Changes to the Corporations Tax Act and the Taxation Act 2007
- Information Notice 6027 - Highlights from the 2008 Ontario Budget: Corporations Tax Act and the Taxation Act 2007
