As announced in the 2017 Ontario Budget tabled on April 27, 2017, the government proposes to parallel changes made to the federal small business deduction that would reduce a company’s Ontario business limit by the same amount the federal business limit is reduced. This would apply if the company assigned any portion of its business limit to another company under certain circumstances.
Generally, corporations carrying on business through a permanent establishment in Ontario are subject to both federal and Ontario corporate income taxes. The tax rates apply to taxable income allocated to Ontario.
The province is harmonizing with the federal government and other provinces by eliminating the Ontario Resource Tax Credit and the Additional Tax on Crown Royalties. Effective April 23, 2015, Ontario will provide a deduction for royalties and mining taxes paid.
Accrued but unused Ontario Resource Tax Credit amounts will be eligible for carry-forward to offset Ontario income tax payable in the first five taxation years beginning after April 23, 2015.
The Ontario General corporate income tax rate is:
The tax is prorated based on the number of days in the year when the tax year straddles these dates.
The Ontario small business deduction (SBD) reduces the corporate income tax rate on the first $500,000 of active business income of Canadian-controlled private corporations (CCPCs), to 4.5 per cent.
For years ending before May 1, 2014, the SBD is available to all CCPCs. As announced in the 2014 Ontario Budget, effective for taxation years ending after May 1, 2014 the province will parallel the federal SBD phase-out where a CCPC’s (and associated groups of CCPCs) taxable capital is between $10 million and $15 million. CCPCs (and associated groups of CCPCs) with taxable capital of $15 million or more will no longer be eligible for the preferential corporate income tax rate of 4.5 per cent on the first $500,000 of active business income. The changes will be pro-rated for taxation years straddling May 1, 2014.
Corporations involved in manufacturing and processing, fishing, farming, mining and logging may qualify for a tax credit that reduces the corporate income tax rate to 10 per cent. Before July 1, 2010, the manufacturing and processing tax credit reduced the corporate income tax rate to 12 per cent.
The Canada Revenue Agency administers Ontario's corporate income tax, corporate minimum tax, and the special additional tax on life insurers. Contact the agency with your questions at 1 800 959-5525 or 1 800 665-0354 for teletypewriter (TTY).