Political Contribution Tax Credit for Corporations

Corporations who participated in the provincial political process by making a financial contribution to an Ontario candidate, constituency association, or political party may be able to claim a tax credit.

How much money could I receive?

The amount of this non-refundable tax credit generally depends on the corporation’s total eligible contributions and its Ontario income tax payable for the tax year.

For tax years ending in 2009 to 2013, the maximum tax credit that a corporation can claim in a year was $2,139. This was based on maximum allowable annual contributions of $18,600.

For tax years ending in 2014 to 2018, the maximum tax credit that a corporation can claim in a year is $2,294. This is based on maximum allowable annual contributions of $19,950.

Unused contribution amounts can be carried forward for up to 20 years.

Eligible contributions

An eligible contribution is made to an:

  • Ontario registered candidate
  • Ontario registered constituency association
  • Ontario registered political party.

You can claim the tax credit, if the corporation:

  • makes eligible contributions
  • has a permanent establishment in Ontario
  • is not exempt from corporate income tax.

The tax credit cannot be claimed for contributions to municipal or federal elections.

Contribution limits

Under the Ontario Election Finances Act, there are contribution limits.

The contribution limits for the 2009 to 2013 calendar years were:

  • $9,300 per calendar year for any one registered party
  • $9,300 per campaign for any one registered party
  • $1,240 per calendar year for any one constituency association
  • $6,200 per calendar year for all constituency associations of any one registered party
  • $1,240 per campaign for any one registered candidate
  • $6,200 per campaign for all registered candidates of any one registered party.

The contribution limits for the 2014 to 2018 calendar years are:

  • $9,975 per calendar year for any one registered party
  • $9,975 per campaign for any one registered party
  • $1,330 per calendar year for any one constituency association
  • $6,650 per calendar year for all constituency associations of any one registered party
  • $1,330 per campaign for any one registered candidate
  • $6,650 per campaign for all registered candidates of any one registered party.

Read on: Elections Ontario – Subsidy, Contribution and Expense Amounts

Calculating the tax credit

The tax credit is equal to the least of:

  • the corporation’s eligible contribution balance × the basic tax rate
  • $15,000 × the indexation factor × the basic tax rate
  • the corporation’s Ontario income tax payable.

Eligible contribution balance

The corporation's eligible contribution balance is the total of the eligible contributions made in the current tax year and any available carry forwards from the previous 20 tax years.

Basic tax rate

Basic tax rate Applicable to proportionate number of days in the tax years that are:
12% after June 20, 2010 and before July 1, 2011
11.5% after June 30, 2011

Indexation factor

The indexation factor, under the Ontario Election Finances Act, is adjusted every five years based on the Consumer Price Index. The indexation factor for the 2009 to 2013 calendar years was 1.24. The indexation factor for the 2014 to 2018 calendar years is 1.33.

For a tax year straddling January 1, 2014, the indexation factor is 1.33 and is applicable to all eligible contributions made in the tax year, including those made in the 2013 calendar year.

Ontario income tax payable

The corporation’s Ontario income tax payable is determined before deducting the:

  • political contribution tax credit
  • Ontario research and development tax credit
  • corporate minimum tax credit
  • refundable tax credits.

Ontario allocation

The tax credit is not adjusted for situations where the Ontario allocation is less than 100 per cent.

Short tax years

The tax credit is not adjusted for tax years that are less than 365 days.

Claiming the tax credit

Corporations may claim the tax credit on Schedule 525 and file it with their T2 corporation income tax return.

Download Schedule 525, Ontario Political Contributions Tax Credit

Get the Corporation Income Tax return, also known as the T2, from the Canada Revenue Agency

Note: It is important to file your return as a completed package. Incomplete returns generate delays in processing.

Receipts

Political contribution receipts do not have to be attached to your corporate income tax return. However, a breakdown should be provided in order to verify that the political contributions have not exceeded the maximum limits. Keep all official receipts in case you are asked for them later during an audit.

Recommended for you

Ontario political contribution tax credit for individuals

Canada Revenue Agency – Ontario political contributions tax credit

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