T2 Corporation – Income Tax Guide – Chapter 8: Page 8 of the T2 return

From: Canada Revenue Agency

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Summary of tax and credits

In the "Summary of tax and credits" area of your return, summarize the amounts of federal and provincial or territorial tax payable, as well as the credits and refunds claimed to reduce total tax payable.

Federal tax

Line 700 – Part I tax payable

On line 700, enter the amount of Part I tax payable that you determined at amount L of page 7.

Line 708 – Part II surtax payable

Under Part II, tobacco manufacturers have to pay surtax equal to 50% of Part I tax on tobacco manufacturing profits for the year.

Note

This surtax is eliminated for tax years that start after March 22, 2017. For a tax year that includes March 22, 2017, the surtax is prorated based on the number of days of the year that are before March 23, 2017, and the number of days in the year.

File Schedule 46, Part II – Tobacco Manufacturers' Surtax, and attach it to your return. See the schedule for more details.

On line 708, enter the amount of Part II surtax payable.

Reference
Section 182

Line 710 – Part III.1 tax payable

A corporation that designates dividends as eligible dividends that exceed its capacity to pay such dividends is subject to Part III.1 tax. The tax is equal to 20% of the excessive eligible dividend designation.

Use Schedule 55, Part III.1 Tax on Excessive Eligible Dividend Designations, to calculate any Part III.1 tax payable and file it with your T2 return.

Note

Every corporation resident in Canada that pays a taxable dividend in the year, other than a capital gains dividend, must file this schedule.

In the case where an excessive eligible dividend designation is determined to be part of a tax avoidance scheme, the 20% tax plus an additional 10% tax will apply to the whole dividend designation.

Eligible dividend

An eligible dividend is any taxable dividend paid to a resident of Canada by a Canadian corporation that is designated by that corporation to be an eligible dividend. The corporation does the designation by notifying, in writing, each person or partnership at the time it pays them the dividend. For more information about the notification guidelines, go to Designation of Eligible Dividends.

A corporation is allowed to designate a portion of a taxable dividend (rather than the whole amount) to be an eligible dividend. Late designations are allowed, if they are made within three years after the day on which the designation was first required to be made and, in the opinion of the minister, it is just and equitable to do so (including to affected shareholders) in the circumstances. The designation is deemed to have been made on the day the designation was required to be made.

A corporation's capacity to pay eligible dividends depends mostly on its status.

General rate income pool (GRIP)

A CCPC or a deposit insurance corporation may pay eligible dividends to the extent of its GRIP – a balance generally reflecting taxable income that has not benefited from the small business deduction or any other special tax rate – without incurring Part III.1 tax. The GRIP is calculated at the end of the tax year. However, a corporation can pay eligible dividends over the course of the year as long as, at the end of the year, the eligible dividends paid do not exceed its GRIP.

Use Schedule 53, General Rate Income Pool (GRIP) Calculation, to determine the GRIP and file it with your T2 return. You should file this schedule if you paid an eligible dividend in the tax year, or if your GRIP balance changed, to ensure that the GRIP balance on our records is correct.

You can view GRIP balances using the "View return balances" service through:

Low rate income pool (LRIP)

A corporation resident in Canada that is neither a CCPC nor a deposit insurance corporation can pay eligible dividends in any amount unless it has an LRIP. The LRIP is generally made up of taxable income that has benefited from certain preferential tax rates. The corporation has to reduce its LRIP to zero by paying out ordinary dividends before it can pay an eligible dividend, or it will be subject to Part III.1 tax. The LRIP must be calculated at the time a dividend is paid or received or any other event occurs affecting the LRIP balance in the year.

Use Schedule 54, Low Rate Income Pool (LRIP) Calculation, to determine the LRIP, throughout the year. File the completed schedule with your T2 return. All other calculations including the worksheets should be kept with your records in case we ask for them at a later date.

Election not to be a Canadian-controlled private corporation

A CCPC can elect not to be a CCPC for purposes of the eligible dividend treatment. If it so elects, it is deemed not to be a CCPC for the tax year in which it makes the election and all later tax years, until it revokes the election. The CCPC will lose its entitlement to the small business deduction. However, no other benefits of CCPC status will be affected.

A corporation that revokes an election will become a CCPC again for the tax year that follows the tax year in which the revocation is made.

Use Form T2002, Election, or Revocation of an Election, Not To Be a Canadian-Controlled Private Corporation, to make or to revoke an election previously made, and file it by the due date of the T2 return. We will not accept an election or revocation of an election after the filing due date.

Note

A corporation that has previously revoked an election must get written consent from us to make or revoke another election.

Election to treat excessive eligible dividend designations as ordinary dividends

Corporations that make excessive eligible dividend designations may be allowed to elect to treat the excessive amounts paid as ordinary dividends. In order to do so, the corporation must have the concurrence of its shareholders who received, or were entitled to receive, the dividend and whose addresses are known to the corporation. For more information, go to Election to treat excessive eligible dividend designations as ordinary dividends.

Corporations cannot elect to treat excessive eligible dividend designations that are subject to the 30% Part III.1 tax as ordinary dividends.

References
Sections 185.1 and 185.2
Subsections 89(11) to (14)

Line 712 – Part IV tax payable

Use Parts 1 and 2 of Schedule 3, Dividends Received, Taxable Dividends Paid, and Part IV Tax Calculation, to calculate Part IV tax payable on taxable dividends you received.

Dividends subject to Part IV tax

The following types of dividends are subject to Part IV tax:

  • taxable dividends from corporations that are deductible under section 112 when you calculate taxable income
  • taxable dividends from foreign affiliates that are deductible under paragraphs 113(1)(a), (b), or (d), or subsection 113(2) when you calculate taxable income

Taxable dividends received are only subject to Part IV tax if the corporation receives them while it is a private or subject corporation. Taxable dividends received from a non-connected corporation are subject to Part IV tax.

Taxable dividends received from a connected corporation are subject to Part IV tax only when paying the dividends generates a dividend refund for the payer corporation.

The Part IV tax rate is 38 1/3% for tax years of a corporation that end after 2015 (previously it was 33 1/3%).

For tax years that end after 2015 and start before 2016, the following rules apply:

  • for assessable dividends received in the tax year and before 2016, the tax rate is 33 1/3%
  • for assessable dividends received in the tax year and after 2015, the rate is 38 1/3%
  • non-capital losses and farm losses applied to reduce Part IV tax will be used first to offset assessable dividends received after 2015 (that is, the assessable dividends that are subject to the higher 38 1/3% rate). Any excess will be used to offset assessable dividends received before 2016

Definitions

Private corporation

A private corporation is a corporation that is:

  • resident in Canada
  • not a public corporation
  • not controlled by one or more public corporations (other than a prescribed venture capital corporation)
  • not controlled by one or more prescribed federal Crown corporations
  • not controlled by any combination of prescribed federal Crown corporations and public corporations

Reference
Subsection 89(1)

Subject corporation

A subject corporation is a corporation, other than a private corporation, that is resident in Canada and is controlled by or for the benefit of either an individual other than a trust, or a related group of individuals other than trusts.

Reference
Subsection 186(3)

Connected corporation

A payer corporation is connected to the corporation that receives the dividends (the recipient) if the recipient controls the payer corporation. The payer and recipient corporations are also connected when both of the following apply:

  • the recipient owns more than 10% of the issued share capital (with full voting rights) of the payer corporation
  • the recipient owns shares of the capital stock of the payer corporation with a fair market value of more than 10% of the fair market value of all the issued share capital of the payer corporation

You determine control of the corporation by considering the actual ownership of shares, without taking into account any rights referred to in paragraph 251(5)(b).

For purposes of Part IV tax, a payer corporation is controlled by a recipient corporation if more than 50% of the payer's issued share capital (having full voting rights) belongs to the recipient, to persons with whom the recipient does not deal at arm's length, or to any combination of these persons.

References
Subsections 186(2) and (4)

Exempt corporations

The following types of corporations are exempt from Part IV tax:

A.   a corporation that was bankrupt at any time during the year

B.   a corporation that, throughout the year, was one of the following:

  • a prescribed labour-sponsored venture capital corporation
  • a prescribed investment contract corporation
  • an insurance corporation
  • a corporation licensed as a trustee
  • a bank
  • a registered securities dealer that was, throughout the year, a member of a designated stock exchange in Canada

Reference
Section 186.1

Exempt dividends

A corporation that is a prescribed venture capital corporation throughout the year does not have to pay Part IV tax on dividends it received from a prescribed qualifying corporation.

References
Section 186.2
Regulation 6704

Dividends not taxable

Any dividends that a corporation received from a capital dividend account are not taxable, as long as the payer corporation made an election under section 83. Therefore, if these non-taxable dividends are included as income, they should be deducted as an adjustment on Schedule 1.

Parts 1 and 2 of Schedule 3

In the following section we provide details on Parts 1 and 2 of Schedule 3. Parts 3 and 4 are explained under Parts 3 and 4 of Schedule 3.

Part 1 – Dividends received in the tax year

Complete Part 1 to identify dividends, both taxable and non-taxable, received during the tax year and to calculate Part IV tax before deductions. Public corporations (other than subject corporations) do not need to calculate Part IV tax.

Note

If more than one corporation paid dividends, you have to do a separate calculation for each payer corporation. If dividends were paid in different payer corporations' tax years, you have to do separate calculations for each of the tax years.

On line 320 of the return, enter the amount of taxable dividends deductible from taxable income under section 112, subsections 113(2) and 138(6), and paragraph 113(1)(a), (b), or (d).

Part 2 – Calculation of Part IV tax payable

Part IV tax otherwise payable on a dividend is reduced by any amount of Part IV.1 tax payable on the same dividend. See details.

You can reduce the amount of dividends subject to Part IV tax by using non-capital losses and farm losses incurred in the tax year or carried forward from prior years.

On line 712 of the return, enter the amount of Part IV tax payable on taxable dividends received

Reference
IT–269, Part IV Tax on Taxable Dividends Received by a Private Corporation or a Subject Corporation

Line 716 – Part IV.1 tax payable

Complete Schedule 43, Calculation of Parts IV.1 and VI.1 Taxes, to calculate Part IV.1 tax payable.

Part 4 of Schedule 43 – Calculation of Part IV.1 tax payable

Part 4 gives details on how to calculate Part IV.1 tax.

Public corporations and certain other corporations may be subject to the 10% Part IV.1 tax on dividends they receive on taxable preferred shares. A restricted financial institution is also subject to tax on dividends received on taxable restricted financial institution shares (see subsection 248(1) for definitions of these terms).

The issuer of taxable preferred shares can elect to pay a 40% rather than a 25% tax under Part VI.1 on dividends on taxable preferred shares when they complete Part 3 of this schedule. This election exempts the holder of these shares from the 10% tax under Part IV.1. No other form needs to be filed to elect. For details, see line 724.

Excepted dividends, which are defined in section 187.1, are not subject to Part IV.1 tax. For example, an excepted dividend is one the corporation receives on a share of another corporation in which the corporation had a substantial interest at the time it received the dividend.

On line 716, enter the amount of Part IV.1 tax payable that you calculated on line 340 of Schedule 43.

References
Sections 187.1 to 187.6
Subsection 191.2(1)

Line 720 – Part VI tax payable

You have to complete Schedule 38, Part VI Tax on Capital of Financial Institutions, to calculate Part VI tax.

Part VI levies a tax on a financial institution's taxable capital employed in Canada. Part VI tax is 1.25% of the taxable capital employed in Canada that is more than the $1 billion capital deduction for the year.

If the corporation is a member of a related group, you have to allocate the capital deduction among the members.

Use Schedule 39, Agreement Among Related Financial Institutions – Part VI Tax, to allocate the capital deduction. File this agreement with your return.

Note

Only one of the associated or related corporations needs to file Schedule 39 for a calendar year. However, if Schedule 39 is not already on file with us when we assess any of the returns for a tax year ending in the calendar year of the agreement, we will ask for one.

Under subsection 190.1(3), you can deduct Part I tax payable for the year from Part VI tax payable. This is called the Part I tax credit. You can deduct any unused Part I tax credits from Part VI tax in any of the three previous and seven following tax years.

To calculate the balance of unused Part I tax credits and to carry back this credit, you can use Schedule 42, Calculation of Unused Part I Tax Credit.

Financial institutions include banks, trust companies, life insurance corporations, certain holding corporations, and corporations that accept deposits and carry on the business of lending money on the security of real property or immovables, or investing in indebtedness on the security of mortgages on real property or of hypothecs on immovables.

File Schedule 38 with your return if you have Part VI tax payable, or would have, if not for the deduction of a Part I tax credit.

On line 720, enter the amount of Part VI tax payable that you calculated on line 890 of Schedule 38.

References
Sections 190, 190.1, and 190.11 to 190.15

Line 724 – Part VI.1 tax payable

Complete the following schedules if required:

See the following headings for more details.

Part 1 of Schedule 43 – Calculation of dividend allowance

Calculate the dividend allowance on Part 1 of Schedule 43.

Generally, the first $500,000 of dividends paid in the year on taxable preferred shares is exempt from Part VI.1 tax liability. This basic annual exemption is called the dividend allowance.

However, the $500,000 dividend allowance is reduced if you paid more than $1 million of dividends on taxable preferred shares in the previous year.

Part 2 of Schedule 43 – Agreement among associated corporations to allocate the dividend allowance

If you are a member of an associated group, you have to allocate the dividend allowance between the members. Part 2 provides an area for this allocation.

Part 3 of Schedule 43 – Calculation of Part VI.1 tax payable

Complete Part 3 of Schedule 43 to calculate Part VI.1 tax. Part VI.1 tax is levied on dividends (other than certain excluded dividends) you paid on short-term preferred shares and taxable preferred shares.

You are subject to a 40% tax on dividends you paid on short-term preferred shares that are more than the annual dividend allowance.

You are subject to a tax of 25% or 40% on dividends you paid on taxable preferred shares (other than short-term preferred shares) that are more than any remaining dividend allowance. Choosing the 40% rate will exempt the holder of these shares from the 10% tax under Part IV.1. This rate would apply to all future dividends paid on that class or series of shares.

See subsection 248(1) for definitions of the terms short-term preferred shares and taxable preferred shares.

Schedule 45, Agreement Respecting Liability for Part VI.1 Tax

Complete Schedule 45 to certify the transfer of Part VI.1 tax liability and send it to us with Schedule 43.

A corporation (the transferor) can transfer all or part of its Part VI.1 tax liability to another corporation (the transferee), if the corporations were related throughout the following tax years:

  • the transferor's tax year for which it owes Part VI.1 tax
  • the transferee's tax year that ends on or before the end of the above-mentioned transferor's tax year

You can deduct Part VI.1 tax payable from income. See line 325 for more information. Any Part VI.1 tax that is left over after the taxable income is reduced to zero is part of the non-capital loss for the year. See Part 1 – Non-capital losses for details.

On line 724, enter the amount of Part VI.1 tax payable you calculated on line 270 of Schedule 43.

References
Sections 191, and 191.1 to 191.4

Line 727 – Part XIII.1 tax payable

Every authorized foreign bank is subject to Part XIII.1 tax equal to 25% of its taxable interest expense for the year.

You have to show your calculations on a separate schedule. Identify these calculations as Schedule 92, Part XIII.1 Tax – Additional Tax on Authorized Foreign Banks, since we do not publish this schedule. For more information, see Part XIII.1 tax in the Income Tax Act.

On line 727 of the return, enter the amount of Part XIII.1 tax payable.

Line 728 – Part XIV tax payable

Every corporation that is non-resident in a tax year is subject to Part XIV tax.

Part XIV tax is 25%, but a tax treaty can reduce this percentage. In addition, a tax treaty may restrict the Part XIV tax to corporations that carry on business in Canada through a permanent establishment in Canada.

You have to complete Schedule 20, Part XIV – Additional Tax on Non-Resident Corporations, to calculate Part XIV tax. On line 728 of the return, enter the amount of Part XIV tax payable you calculated on Schedule 20.

Note

Corporations that are subject to Part XIV tax should file their return with the Sudbury Tax Centre. See Corporation Internet Filing and Where do you file your paper return?

Provincial and territorial tax

Quebec and Alberta administer their own corporation income tax systems. Corporations that earn income in these provinces have to file separate provincial corporation income tax returns.

All other provinces and territories legislate their corporation income tax provisions, but the CRA administers them. These provinces and territories do not charge income tax on the taxable income of corporations that are exempt from tax under section 149.

If the corporation has a permanent establishment in any province or territory other than Quebec or Alberta, you have to calculate provincial and/or territorial income taxes and credits, as well as federal income taxes and credits, on the return.

Note

Unless otherwise specified in the legislation, the credits are considered government assistance and must be included in income in the tax year they are received.

Reference
Paragraph 12(1)(x)

Permanent establishment

A permanent establishment in a province or territory is usually a fixed place of business of the corporation, which includes an office, branch, oil well, farm, timberland, factory, workshop, warehouse, or mine. If the corporation does not have a fixed place of business, the corporation's permanent establishment is the principal place in which the corporation's business is conducted.

If the corporation carries on business through an employee or an agent established in a particular place, it is considered to have a permanent establishment in that place if the employee or agent:

  • has general authority to contract for the corporation or
  • has a stock of merchandise owned by the corporation from which the employee or agent regularly fills orders received

A corporation that would not otherwise have any permanent establishment in a province or territory and/or a jurisdiction outside of Canada is deemed to have a permanent establishment at the place designated in its incorporation documents or bylaws as its head office or registered office. So, whether or not the corporation carries on a business in a province or territory, it is entitled to the 10% federal abatement, but subject to provincial or territorial taxation.

See Regulation 400(2) for a complete definition of permanent establishment.

References
Regulation 400(2)
IT–177, Permanent Establishment of a Corporation in a Province

Line 750 – Provincial or territorial jurisdiction

On line 750, give the name of the province or territory where you earned your income. Usually, this is where the corporation has its permanent establishment.

If you earned income in more than one province or territory, write "multiple" on line 750 and file Schedule 5, Tax Calculation Supplementary – Corporations, with your return. See instructions on how to complete Schedule 5.

Note

The Newfoundland and Labrador offshore area and the Nova Scotia offshore area are considered provinces.

By completing line 750, you ensure that the income taxes go to the correct province or territory. Complete this line even if no tax is payable, or if the provincial jurisdiction is Quebec or Alberta.

Reference
Subsection 124(4)

Line 760 – Net provincial and territorial tax payable

If your provincial or territorial jurisdiction is not Quebec or Alberta, and you do not need to complete Schedule 5, enter your provincial or territorial tax payable on line 760.

If you do need to complete Schedule 5, the net amount of provincial or territorial tax will be calculated on line 255 of the schedule. If this amount is positive enter it on line 760 of the return. If this amount is negative, enter it on line 812 of the return.

The following section explains when and how to complete Schedule 5.

Schedule 5, Tax Calculation Supplementary – Corporations

You have to complete Schedule 5 if one of the following applies:

  • there is a permanent establishment in more than one province or territory (complete Part 1), whether or not you are taxable (if taxable, also complete Part 2)
  • the corporation is claiming provincial or territorial tax credits, or rebates (complete Part 2) or
  • the corporation has to pay taxes other than income tax (see Part 2 of Schedule 5)

Note

The Newfoundland and Labrador offshore area and the Nova Scotia offshore area are considered provinces.

For information on the calculation of tax for each province and territory, see the sections that follow in this chapter.

Part 1 of Schedule 5 – Allocation of taxable income

You must complete Part 1 of Schedule 5 if you had a permanent establishment in more than one province or territory. Complete columns A to F for each province or territory in which you had a permanent establishment in the tax year. If there is no taxable income, you only have to complete columns A, B and D.

Note

This also applies to corporations with permanent establishments in Quebec or Alberta.

We assess provincial or territorial income taxes on the amount of taxable income allocated to each province or territory. For details on how to allocate taxable income, see Regulation 402 and the Provincial income allocation newsletters.

Special rules for establishing a corporation's gross revenue and salaries and wages attributable to a jurisdiction are provided in cases where the corporation is a member of a partnership and the partnership had permanent establishments in more than one jurisdiction. See Guide T4068, Guide for the Partnership Information Return and prescribed Form T5013SCH5, Allocation of Salaries and Wages, and Gross Revenue for Multiple Jurisdictions – Schedule 5.

Generally, to allocate taxable income to each province or territory, you have to use a formula based on gross revenue, and salaries and wages. See Part 1 of Schedule 5 for details.

You will find the general rules on how to allocate gross revenue in Regulation 402.

Do not include any of the following amounts in gross revenue:

  • interest on bonds, debentures, or mortgages
  • dividends on shares of capital stock
  • rents or royalties from property that are not part of the principal business operations

Allocate gross salaries and wages paid in the year to the permanent establishment in which those salaries and wages were paid only to the extent they were paid to employees of the permanent establishment (the permanent establishment is not necessarily the permanent establishment in which those salaries and wages were paid). Do not include in gross salaries and wages any commissions paid to a person who is not an employee, unless that person renders services that would normally be performed by an employee of the corporation. The allocation of salaries paid through a central paymaster is subject to the deeming rules under Regulation 402.1.

See Regulations 403 to 413 for details on special methods for allocating taxable income for the following types of businesses:

  • insurance corporations (Regulation 403)
  • banks (Regulation 404)
  • federal credit unions (Regulation 404.1)
  • trust and loan corporations (Regulation 405)
  • railway corporations (Regulation 406)
  • airline corporations (Regulation 407)
  • grain elevator operators (Regulation 408)
  • bus and truck operators (Regulation 409)
  • ship operators (Regulation 410)
  • pipeline operators (Regulation 411)
  • divided businesses (Regulation 412)
  • non-resident corporations (Regulation 413)

In field 100, enter the regulation number that applies to attribute the taxable income.

Reference
Regulations 400 to 413.1

Part 2 of Schedule 5 – Provincial and territorial tax credits and rebates

Complete Part 2 of Schedule 5 if one of the following applies:

  • there is provincial or territorial tax (and a permanent establishment in more than one province or territory)
  • there is a claim for provincial or territorial tax credits or rebates
  • there is a claim for provincial or territorial refundable tax credits
Note

Corporations with a permanent establishment in Quebec or Alberta must complete the appropriate provincial corporation returns and schedules to report provincial tax and claim provincial credits and rebates.

Corporations with a permanent establishment in Ontario must also complete Part 2 of Schedule 5 if one of the three previous or five following conditions applies. The corporation:

  • is claiming the Ontario small business deduction
  • is claiming the Ontario credit union reduction
  • has an addition to Ontario basic income tax (such as a transitional tax debit)
  • has Ontario corporate minimum tax payable
  • has Ontario special additional tax on life insurance corporations payable

Corporations must also complete Part 2 of Schedule 5 if they have Newfoundland and Labrador capital tax on financial institutions payable.

On line 255 of Schedule 5, enter the net amount of provincial and territorial tax payable or the net amount of refundable credits. When the result is positive, enter the net provincial or territorial tax payable on line 760 of the return. When the result is negative, enter the refundable provincial or territorial tax credit on line 812 of the return. Attach to your return any forms you completed to claim provincial or territorial credits or rebates.

In the following sections, you will find information about provincial and territorial tax rates, foreign tax credits, and details on the provincial and territorial credits and rebates.

Dual rates of provincial and territorial income tax

Generally, provinces and territories have two rates of income tax: the lower rate and the higher rate.

The lower rate applies to the income eligible for the federal small business deduction. One component of the small business deduction is the business limit. Some provinces or territories choose to use the federal business limit. Others establish their own business limit.

The higher rate applies to all other income. For detailed information on the income eligible for each rate and the rates that apply to each province and territory, see the sections that follow in this chapter or go to Corporation Tax Rates.

Example 1

Corp X earned all of its income in 2018 from its permanent establishment in Newfoundland and Labrador. Corp X claimed the small business deduction when it calculated its federal tax payable. The income from active business carried on in Canada was $78,000.

The Newfoundland and Labrador lower rate of tax is 3%. The higher rate of tax is 15%.

Corp X calculates its Newfoundland and Labrador tax payable as follows:

Taxable income: $90,000

Subtract amount taxed at lower rate:

Example of dual tax rate calculation – Income earned in one province or territory
Description Amount
Least of lines 400, 405, 410, and 427 in the small business deduction calculation
(from the T2 return)
$78,000
Amount taxed at higher rate $12,000
Taxes payable at the lower rate:
$78,000 × 3% =
$2,340
Taxes payable at the higher rate:
$12,000 × 15% =
$1,800
Newfoundland and Labrador tax payable $4,140

When you allocate taxable income to more than one province or territory, you also have to allocate proportionally any income eligible for the federal small business deduction.

Example 2

Corp Y has permanent establishments in both Newfoundland and Labrador and the Yukon. Its tax year runs from July 1, 2017, to June 30, 2018.

Corp Y claimed the small business deduction when it calculated its federal tax payable.

The lower rate of tax for Newfoundland and Labrador is 3%, and the higher rate of tax is 15%.

To calculate its Newfoundland and Labrador income tax, Corp Y does the following calculations:

Example of dual tax rate calculation – Income earned in more than one province or territory
Description Amount
Taxable income allocated to Newfoundland and Labrador (from Schedule 5) $60,000
Taxable income allocated to the Yukon (from Schedule 5) $30,000
Total taxable income earned in Canada $90,000
Least of lines 400, 405, 410, and 427 in the federal small business deduction calculation
(from the T2 return)
$78,000
Income eligible for the federal small business deduction attributed to Newfoundland and Labrador:
($60,000  ÷ $90,000) × $78,000 =
$52,000
Taxable income earned in Newfoundland and Labrador $60,000
Subtract: Income eligible for the federal small business deduction attributed to Newfoundland and Labrador $52,000
Amount taxed at higher rate $8,000
Taxes payable at higher rate:
$8,000 × 15% =
$1,200
Taxes payable at lower rate:
$52,000 × 3% =
$1,560
Newfoundland and Labrador tax payable $2,760

 To calculate its Yukon income tax payable, Corp Y would repeat the same steps, using the rates that apply.

On the appropriate lines of Part 2 of Schedule 5, enter the gross amount of each provincial or territorial tax payable.

Provincial or territorial foreign tax credits

Every province and territory allows a corporation to claim a foreign tax credit for taxes it paid to another country on foreign non-business income. This credit reduces the provincial tax otherwise payable.

However, you cannot claim foreign tax credits for the provinces of Quebec and Alberta on the federal return, because these provinces collect their own income taxes.

The provincial or territorial foreign tax credit is available to a corporation that meets all of the following criteria:

  • it is resident in Canada throughout the tax year
  • it has a permanent establishment in the province or territory at any time in the tax year
  • it has foreign investment income for the tax year

For Ontario, an authorized foreign bank is eligible for the foreign tax credit if it performed Canadian banking business.

The tax credit can only be claimed if the foreign non-business income tax paid exceeds the federal foreign non-business income tax credit deductible for the year.

For each province or territory for which you are claiming a credit, you have to do a separate calculation. Also, if you paid tax to more than one foreign country you have to do a separate calculation for each country.

If dual rates of corporation tax apply, use the higher rate when you calculate the foreign tax credit. For Ontario, use the basic rate of tax.

To claim the foreign tax credit, complete Schedule 21, Federal and Provincial or Territorial Foreign Income Tax Credits and Federal Logging Tax Credit.

Note

If the tax rate has changed during the tax year, you have to prorate the calculation in Part 9 of Schedule 21 using the number of days in each period. For British Columbia, prorate the tax rate in each period, round off the prorated rates to the nearest one-thousandth of one percent (= 0.001%), and add the rounded percentages for the periods before multiplying by the foreign non-business income.

On the appropriate lines of Part 2 of Schedule 5, enter the applicable provincial and territorial foreign tax credits.

Newfoundland and Labrador

The lower rate of Newfoundland and Labrador income tax is 3%. This lower rate applies to taxable income earned in Newfoundland and Labrador that qualifies for the federal small business deduction.

The higher rate of income tax is 15%. This higher rate applies to taxable income earned in Newfoundland and Labrador that does not qualify for the federal small business deduction.

These rates also apply to taxable income earned in the Newfoundland and Labrador offshore area.

You can use Schedule 307, Newfoundland and Labrador Corporation Tax Calculation, to help you calculate the Newfoundland and Labrador tax before the credits are applied. You do not have to file it with your return. See the schedule for more details.

On line 200 and/or 205 of Schedule 5, enter the amount of tax calculated.

Newfoundland and Labrador capital tax on financial institutions

A provincial tax is levied on the taxable capital of financial institutions that have a permanent establishment in Newfoundland and Labrador. This tax applies to banks, and trust and loans corporations.

A capital deduction of $5 million is available to a corporation that is not a member of a related group and has a capital of $10 million or less. If the corporation is a member of a related group, a capital deduction of $5 million, to be allocated among members of the related group, is available as long as the combined capital of all members of the related group is $10 million or less.

Use Schedule 306, Newfoundland and Labrador Capital Tax on Financial Institutions – Agreement Among Related Corporations, to allocate the capital deduction. File this agreement with your return.

The tax is equal to 6% of the amount by which the corporation's taxable capital employed in the province for the year, including the offshore area, exceeds its capital deduction for the year.

Corporations that are liable to pay this tax have to file Schedule 305, Newfoundland and Labrador Capital Tax on Financial Institutions.

On line 518 of Schedule 5, enter the provincial tax on financial institutions payable.

A penalty applies to financial institutions that have to pay this tax and do not file the required return on time. For details, see Penalties for large corporations.

Instalment payment requirements for this tax are the same as for Part I tax. For details, see Instalment due dates.

The provincial capital tax cannot be reduced by any tax credits. However, you can deduct the capital tax payable when calculating federal income for tax purposes.

Newfoundland and Labrador political contribution tax credit

You can claim a tax credit on contributions made to registered political parties, registered district associations, or registered non-affiliated candidates, as defined under the Elections Act, 1991, of Newfoundland and Labrador.

The annual maximum credit is $500 and is calculated as follows:

  • 75% of the first $100 contributed

plus

  • 50% of the next $450 contributed

plus

  • 33 1/3% of the next $600 contributed

You do not have to file official receipts with your return. However, keep them in case we ask for them later. We can only accept photocopies if the issuer certifies them as true copies.

On line 891 of Schedule 5, enter the total amount of qualifying contributions, and on line 500, enter the amount of the credit you are claiming.

Newfoundland and Labrador venture capital tax credit

The Newfoundland and Labrador government will issue a certificate to corporations investing in qualifying venture capital funds. This non refundable credit is equal to 30% of the amount invested, to a lifetime maximum credit of $75,000.

This credit must be applied against tax otherwise payable. You can carry unused credits back to the three previous tax years or forward to the seven following tax years.

If you file your T2 return electronically, keep your certificate in case we ask for it later. Otherwise, file it with your paper T2 return.

To claim the credit, file a completed Schedule 308, Newfoundland and Labrador Venture Capital Tax Credit. See the schedule for more details.

On line 504 of Schedule 5, enter the amount of the credit.

Newfoundland and Labrador direct equity tax credit

You can claim this credit for an investment in eligible shares of a business with which you deal at arm's length.

There are two tax credit rates. For qualifying activities undertaken in the province outside the Northeast Avalon, a 35% rate applies. For qualifying activities undertaken within the Northeast Avalon, a 20% rate applies. In cases where qualifying activities are undertaken in both areas, a reasonable proration applies.

The maximum credit you can claim is $50,000 per year, including any amounts carried back or carried forward.

This credit must be claimed against tax otherwise payable. You can carry forward unused credits for seven years or back three years.

The province of Newfoundland and Labrador will issue Form NLDETC-1, Newfoundland and Labrador Direct Equity Tax Credit, for eligible investments. File this form with your T2 return.

To claim the credit, file a completed Schedule 303, Newfoundland and Labrador Direct Equity Tax Credit. See the schedule for more details.

On line 505 of Schedule 5, enter the amount of the credit.

Newfoundland and Labrador resort property investment tax credit

You can claim this credit if you make an investment in a qualifying resort development property in Newfoundland and Labrador within five years after the unit in the qualifying resort development property is first made available for sale. The corporation must not sell or transfer ownership in the unit for at least five years from the date of purchase.

The credit is equal to 45% of the amount invested to a lifetime maximum credit of $150,000. The maximum credit you can claim in the tax year is $50,000, including any amounts carried back or carried forward.

This credit must be applied against tax otherwise payable. You can carry forward unused credits to the seven following tax years or back to the three previous tax years.

The application for the credit must be made within 90 days after the sale of the unit. The Province of Newfoundland and Labrador will issue Form NLRPITC-1, Newfoundland and Labrador Resort Property Investment Tax Credit, for qualifying investments. File this form with your T2 return.

To claim the credit, file a completed Schedule 304, Newfoundland and Labrador Resort Property Investment Tax Credit.

On line 507 of Schedule 5, enter the amount of the credit you are claiming.

Newfoundland and Labrador research and development tax credit

You can claim this credit if you have a permanent establishment in Newfoundland and Labrador and if you made eligible expenditures for research and development carried out in Newfoundland and Labrador. The credit is equal to 15% of eligible expenditures.

The credit is fully refundable, but must first be applied against total taxes payable.

To claim the credit, file a completed Schedule 301, Newfoundland and Labrador Research and Development Tax Credit, with your return. See the schedule for more details.

On line 520 of Schedule 5, enter the amount of credit earned in the year.

Newfoundland and Labrador film and video industry tax credit

The minister of Finance for the Province of Newfoundland and Labrador will issue a tax credit certificate to a corporation that produces an eligible film or video in the province.

The amount of the credit is equal to the lesser of 40% of eligible salaries paid in the tax year to residents of the province or 25% of the total production costs for each eligible project.

The tax credit:

  • applies to eligible salaries incurred before January 1, 2019
  • is a maximum of $4 million for each eligible corporation, together with all corporations associated with that corporation, for all eligible films or videos begun in a 12 month period.

This credit is fully refundable, but must first be applied against total taxes payable.

To claim the credit, file the certificates (or a copy) with your return. Keep a copy for your records.

If there is only one certificate, enter the certificate number on line 821 of Schedule 5. If there is more than one certificate, complete Schedule 302, Additional Certificate Numbers for the Newfoundland and Labrador Film and Video Industry Tax Credit, and file it with your return.

On line 521 of Schedule 5, enter the amount of the credit earned in the current year.

Newfoundland and Labrador interactive digital media tax credit

You can claim this credit if you paid eligible salaries and remuneration for eligible interactive digital media projects in the province.

This refundable credit is equal to 40% of qualifying expenditures incurred on or after January 1, 2015. Qualifying expenditures are eligible salaries and 65% of eligible remuneration. The credit is limited to $40,000 per employee and $2 million per corporation or group of associated corporations per year.

The minister of Finance for the Province of Newfoundland and Labrador will issue a tax credit certificate to a corporation that produces an eligible interactive digital media project in the province.

To claim the credit, file the certificates (or a copy) with your return no later than 18 months after the end of the tax year for which you are claiming the credit. Keep a copy for your records. For most projects, the credit may be claimed for the year in which the expenses were incurred. For projects developed primarily for government, the whole credit may be claimed for the tax year during which the project was completed.

If there is only one certificate, enter the certificate number on line 840 of Schedule 5. If there is more than one certificate, complete Schedule 309, Additional Certificate Numbers for the Newfoundland and Labrador Interactive Digital Media Tax Credit, and file it with your return. See the schedule for more details.

On line 522 of Schedule 5, enter the amount of the credit you are claiming.

Prince Edward Island

The lower rate of Prince Edward Island income tax is 4.5%.

For tax years ending after December 31, 2017, the lower rate of Prince Edward Island corporation income tax decreases from 4.5% to 4%. It will further decrease to 3.5% effective January 1, 2019.

If the rate changes during the tax year, you have to base your calculation on the number of days in the year that each rate is in effect.

This rate applies to the taxable income earned in Prince Edward Island that qualifies for the federal small business deduction.

The higher rate of income tax is 16%. This rate applies to taxable income earned in Prince Edward Island that does not qualify for the federal small business deduction.

You can use Schedule 322, Prince Edward Island Corporation Tax Calculation, to help you calculate the Prince Edward Island tax before the credits are applied. You do not have to file it with your return. See the schedule for more details.

On line 210 of Schedule 5, enter the amount of tax calculated.

Prince Edward Island political contribution tax credit

You can claim a tax credit on contributions made to recognized Prince Edward Island political parties, and to candidates who were officially nominated under the Elections Act of Prince Edward Island.

The annual maximum credit is $500 and is calculated as follows:

  • 75% of the first $100 contributed

plus

  • 50% of the next $450 contributed

plus

  • 33 1/3% of the next $600 contributed

You do not have to file official receipts with your return. However, keep them in case we ask for them later. We can only accept photocopies if the issuer certifies them as true copies.

On line 892 of Schedule 5, enter the total amount of qualifying contributions, and on line 525, enter the amount of credit you are claiming.

Prince Edward Island corporate investment tax credit

Corporations that have acquired qualified property are eligible for this credit. Apply the credit to reduce the Prince Edward Island tax payable.

You can carry back an unused credit to the three previous tax years from the tax year that you acquired the property. You can also carry forward the unclaimed credit to the seven tax years that follow the tax year in which you acquired the property.

The credit can be renounced but must include all current year credits. Partial renouncements are not permitted. The renouncement must be filed on or before the filing due date of the income tax return.

To claim the credit, file a completed Schedule 321, Prince Edward Island Corporate Investment Tax Credit, with your return. See the schedule for more details.

On line 530 of Schedule 5, enter the amount of the credit you are claiming.

Nova Scotia

The lower rate of Nova Scotia income tax is 3%.

The income eligible for the lower rate is determined using the $500,000 Nova Scotia business limit. Before January 1, 2017, this business limit was $350,000.

If the business limit changes in the tax year, you have to base your calculations on the number of days in the year that each business limit is in effect.

The higher rate of income tax is 16%. This rate applies to taxable income earned in Nova Scotia that does not qualify for the lower rate.

These rates also apply to taxable income earned in the Nova Scotia offshore area.

You can use Schedule 346, Nova Scotia Corporation Tax Calculation, to help you calculate the Nova Scotia tax before the application of credits. You do not have to file it with your return. See the schedule for more details.

On line 215 and/or 220 of Schedule 5, enter the amount of tax calculated.

Nova Scotia political contribution tax credit

You can claim a tax credit on contributions made to candidates and recognized parties, as defined under the Nova Scotia Elections Act.

The annual amount of the credit is the lesser of:

  • 75% of the total contributions
  • $750

You do not have to file official receipts with your return. However, keep them in case we ask for them later. We can only accept photocopies if the issuer certifies them as true copies.

On line 893 of Schedule 5, enter the total amount of qualifying contributions, and on line 550 enter the amount of the credit you are claiming.

Nova Scotia corporate tax reduction for new small businesses

This tax reduction applies to the first three tax years of an eligible corporation if it is also eligible for a federal small business deduction for the tax year. An eligible corporation must apply to the Nova Scotia Department of Finance and Treasury Board and receive an eligibility certificate before claiming the tax reduction. Once the eligibility certificate is received, the corporation can claim this tax reduction to reduce Nova Scotia income tax otherwise payable.

An eligible corporation is a CCPC incorporated in Nova Scotia or a corporation incorporated outside the province, but inside of Canada, if it pays at least 25% of its wages to employees who are resident in the province and its head office is located in the province. An eligible corporation must also have at least two employees, one of whom must be full-time and not related to a specified shareholder of the corporation.

An eligible corporation must apply to the Department of Finance and Treasury Board and receive an eligibility certificate for each of the three tax years in order to claim the tax reduction each tax year.

Schedule 341, Nova Scotia Corporate Tax Reduction for New Small Businesses, is a worksheet to calculate the credit. You do not have to file it with your return.

To claim the tax reduction, file the original or a copy of the eligibility certificate issued by the Province with your return.

On lines 834 and 556 of Schedule 5, enter the certificate number and the amount of the reduction you are claiming.

Nova Scotia film industry tax credit

Note

This credit is ended for film and television productions that start principal photography after June 30, 2015. On July 1, 2015, the Nova Scotia Film & Television Production Incentive Fund began. This fund is not administered by the CRA. Productions that started principal photography before July 1, 2015, will receive the tax credit based on the previous rules (see below). All productions will continue to have 30 months from the end of the tax year in which the expenditures were made to file their application.

Previous rules

The minister of Finance and Treasury Board for the Province of Nova Scotia will issue a tax credit certificate to corporations producing an eligible film in the province when principal photography started before July 1, 2015.

The credit ranges from 50% to 65% of eligible salaries paid to employees who are residents of the province. An employee must be a resident of Nova Scotia for tax purposes during the production period.

When 50% or more of the days of principal photography of the production are in an eligible geographic area, the credit is equal to 60% of all eligible salaries paid to residents of the province.

When less than 50% of the days of principal photography of the production are in an eligible geographic area, the credit is equal to:

  • 60% of eligible salaries paid to residents of the province prorated for the number of days of principal photography that are inside the eligible geographic area over the total number of days of principal photography; plus
  • 50% of eligible salaries paid to residents of the province prorated for the number of days of principal photography that are outside the eligible geographic area over the total number of days of principal photography.

Production companies that shoot more than two films in the province over a two year period are eligible for an additional 5% of eligible salaries frequent film bonus on the third and subsequent films.

This credit is refundable, but must first be applied against total taxes payable.

To claim the credit, file the original or a copy of the certificate issued by the Province with your return.

If there is only one certificate, enter the certificate number on line 836 of Schedule 5. If there is more than one certificate, complete Schedule 345, Additional Certificate Numbers for the Nova Scotia Film Industry Tax Credit, and file it with your return.

On line 565 of Schedule 5, enter the amount of the credit earned in the current year.

Nova Scotia research and development tax credit

You can claim this credit if you have a permanent establishment in Nova Scotia and if you made eligible expenditures for research and development carried out in Nova Scotia. The credit is equal to 15% of eligible expenditures.

The credit is fully refundable, but must be applied first against total taxes payable.

You can renounce the research and development tax credit for eligible expenditures incurred during the year under subsection 41(7) of the Income Tax Act (Nova Scotia).

To calculate and claim the credit, file a completed Schedule 340, Nova Scotia Research and Development Tax Credit, with your return. See the schedule for more details.

On line 566 of Schedule 5, enter the amount of credit earned in the year.

Recapture of Nova Scotia research and development tax credit

A corporation that disposed of a property used in research and development, or converted the property to commercial use, may have to report a recapture of any Nova Scotia research and development tax credit previously calculated on that property. Any recapture will create or increase Nova Scotia tax otherwise payable.

To calculate the recapture, complete Schedule 340, Nova Scotia Research and Development Tax Credit. See the schedule for more details.

On line 221 of Schedule 5, enter the amount of recapture calculated.

Nova Scotia digital media tax credit

The minister of Finance and Treasury Board for the Province of Nova Scotia will issue a tax credit certificate to a corporation producing an eligible product in the province.

An eligible employee has to be a resident of Nova Scotia for tax purposes during the production period.

The credit is based on the qualifying expenditures incurred before January 1, 2021, and is limited by total expenditures.

The amount of the credit is the lesser of:

  • 50% of qualifying expenditures
  • 25% of total expenditures

A bonus of 10% of qualifying expenditures or 5% of total expenditures is available for developing an eligible product in a prescribed geographic area. An eligible corporation must have no less than 50% of eligible salaries paid to employees who normally report to a permanent establishment of the eligible corporation in the prescribed geographic area of the province.

This credit is refundable, but must be applied first against total taxes payable.

To claim the credit, file the original or a copy of the certificate issued by the Province with your return.

If there is only one certificate, enter the certificate number on line 838 of Schedule 5. If there is more than one certificate, complete Schedule 347, Additional Certificate Numbers for the Nova Scotia Digital Media Tax Credit, and file it with your return.

On line 567 of Schedule 5, enter the amount of the credit earned in the current year.

Nova Scotia digital animation tax credit

This credit provides incentive for digital-animation productions that start key animation after June 30, 2015, and before July 1, 2020.

An eligible employee has to be a resident of Nova Scotia on the last day of the calendar year just before the year for which you claim the tax credit. The maximum of an employee’s eligible salary is $150,000 per production.

Send a Part A application for an eligibility certificate to the Department of Finance and Treasury Board before the start of key animation of a digital animation production. After the production is completed, file a Part B application for a tax certificate.

The credit is the sum of:

  • 50% of qualifying expenditures deducted by total assistance
  • 17.5% of eligible digital animation labour expenditures

This credit is refundable, but must be applied first against total tax payable.

To claim the credit, file the original or a copy of the tax certificate issued by the Province with your return.

If there is only one certificate, enter the certificate number on line 839 of Schedule 5. If there is more than one certificate, complete Schedule 348, Additional Certificate Numbers for the Nova Scotia Digital Animation Tax Credit, and file it with your return.

On line 569 of Schedule 5, enter the amount of the credit earned in the current year.

Nova Scotia capital investment tax credit

An eligible corporation must submit a Part A application for an eligibility certificate to the Department of Finance and Treasury Board in order to find out if their project is eligible. Part B applications for tax credit certificates must then be submitted to the Department of Finance and Treasury Board after the end of each tax year in which qualified property is acquired.

An eligible corporation can claim this tax credit on qualified property acquired after December 31, 2014, and before January 1, 2025, for use in Nova Scotia as part of an approved project that is more than $15 million in total cost. The refundable credit equals 15% of the capital cost of qualified property.

The credit is available to corporations mainly in the manufacturing and processing, farming, fishing, and logging sectors.

To claim the credit, file the original or a copy of the tax credit certificate issued by the Province with your return.

On line 568 of Schedule 5, enter the amount of the credit you are claiming.

Nova Scotia food bank tax credit for farmers

Effective January 1, 2016, corporations that carry on a farming business in Nova Scotia may claim a non‑refundable tax credit equal to 25% of the amount of the qualifying donation that is deducted the same year under section 110.1 of the federal Income Tax Act for the donation. A qualifying donation is a donation of one or more agriculture products to an eligible food bank.

To claim the credit, file a completed Schedule 2, Charitable Donations and Gifts, with your return. For more details, see the schedule.

On line 570 of Schedule 5, enter the amount of the credit earned in the current year.

New Brunswick

The lower rate of New Brunswick corporation income tax is:

  • 2.5% as of April 1, 2018
  • 3%, as of April 1, 2017
  • 3.5% as of April 1, 2016

To determine the income eligible for the lower rates, use the New Brunswick business limit of $500,000.

The higher rate of New Brunswick income tax is:

  • 14% as of April 1, 2016
  • 12% before April 1, 2016

The higher rate applies to all income not eligible for the lower rates.

If the rate changes during the tax year, you have to base your calculation on the number of days in the year that each rate is in effect.

You can use Schedule 366, New Brunswick Corporation Tax Calculation, to help you calculate the New Brunswick tax before the application of credits. You do not have to file it with your return. See the schedule for more details.

On line 225 of Schedule 5, enter the amount of tax calculated.

New Brunswick political contribution tax credit 

Note

This credit is eliminated for political contributions made by corporations after May 31, 2017. The last year to which you can carry forward the credit is tax year ending May 30, 2018.

You can claim a tax credit on contributions made before June 1, 2017, to a registered political party, a registered district association, or a registered independent candidate, as defined under the New Brunswick Elections Act.

The annual maximum credit is $500 and is calculated as follows:

  • 75% of the first $200 contributed

plus

  • 50% of the next $350 contributed

plus

  • 33 1/3% of the next $525 contributed

You do not have to file official receipts with your return. However, keep them in case we ask for them later. We can accept photocopies only if the issuer certifies them as true copies.

On line 894 of Schedule 5, enter the total amount of qualifying contributions made before June 1, 2017, and on line 575 enter the amount of the credit you are claiming.

New Brunswick small business investor tax credit

You can claim a tax credit for investments in eligible small businesses in New Brunswick.

The non-refundable credit equals 15% of the amount you invested to an annual maximum of $75,000 (for investment of up to $500,000).

You can carry back an unused credit to the three previous tax years. You can also carry forward the unused credit to the seven following tax years.

The Province of New Brunswick will issue a certificate for qualifying investments. If you file your return electronically, keep your certificate in case we ask for it later. Otherwise, file it with your paper T2 return.

To claim the credit, file a completed Schedule 367, New Brunswick Small Business Investor Tax Credit, with your return. For more details, see the schedule.

On line 578 of Schedule 5, enter the amount of the credit you are claiming.

New Brunswick film tax credit

Note

The New Brunswick film tax credit is eliminated, except for projects for which the pre-approval application was made before April 6, 2011.

Previous rules

The New Brunswick minister of Finance had been issuing a tax credit certificate to corporations producing an eligible film in the province.

The amount of the credit cannot be more than 40% of the amount of eligible salaries paid in the tax year.

Since January 1, 2010, an additional 10% regional bonus is available for eligible productions for which more than 50% of the principal photography is done more than 50 kilometres from the city hall of Moncton, the city hall of Fredericton, and the city hall of Saint John.

The credit is subject to all of the following conditions:

  • the tax credit applies to eligible salaries incurred before January 1, 2020 (but the pre-approval application for the project must have been made before April 6, 2011)
  • an eligible corporation must, for each eligible project, pay at least 25% of its total salaries and wages to eligible employees
  • the tax credit applies only to that portion of eligible salaries that is not more than 50% of the total production costs of the eligible project less the amount of production costs funded by the province

This credit is fully refundable, but must first be applied against total taxes payable.

To claim the credit, file the original tax credit certificate (or a copy) with your return.

If there is only one certificate, enter the certificate number on line 850 of Schedule 5. If there is more than one certificate, complete Schedule 365, Additional Certificate Numbers for the New Brunswick Film Tax Credit, and file it with your return.

On line 595 of Schedule 5, enter the amount of the credit earned in the current year.

New Brunswick research and development tax credit

You can claim this credit if you have a permanent establishment in New Brunswick and you made eligible expenditures for research and development to be carried out in New Brunswick. The amount of the credit is equal to 15% of eligible expenditures.

The credit is fully refundable, but must first be applied against total taxes payable.

To claim the credit, file a completed Schedule 360, New Brunswick Research and Development Tax Credit, with your return. For more details, see the schedule.

On line 597 of Schedule 5, enter the amount of the credit you are claiming.

Recapture of New Brunswick research and development tax credit

A corporation that disposed of a property used in research and development, or converted it to commercial use, may have to report a recapture of any New Brunswick research and development tax credit previously calculated on that property. Any recapture will create or increase New Brunswick tax otherwise payable.

To calculate the recapture, complete Schedule 360, New Brunswick Research and Development Tax Credit.

On line 573 of Schedule 5, enter the amount of recapture calculated.

Ontario

The basic rate of income tax is 11.5%.

You can use Schedule 500, Ontario Corporation Tax Calculation, to calculate your Ontario basic income tax. Schedule 500 is a worksheet and you do not have to file it with your return.

On line 270 of Schedule 5, enter the amount of basic income tax calculated.

Ontario small business deduction

The deduction reduces the Ontario basic income tax of a corporation that was a CCPC throughout the tax year. It is calculated by multiplying the corporation's Ontario small business income for the tax year by the small business deduction rate (8%) for the year, resulting in a lower tax rate of 3.5%. Before January 1, 2018, the deduction rate was 7% and the lower tax rate was 4.5%.

If the deduction rate changes during the tax year, you have to base your calculation on the number of days in the year that each rate is in effect.

The Ontario small business deduction is phased out for CCPCs (including associated corporations) with taxable capital employed in Canada of more than $10 million in the previous tax year. It is completely eliminated when the taxable capital is $15 million or more in the previous tax year. This is referred to as the taxable capital business limit reduction.

Calculate a corporation's Ontario small business income for the tax year by multiplying its Ontario domestic factor by the least of the following amounts:

  • the income from an active business carried on in Canada (amount on line 400 of the T2 return)
  • the federal taxable income, less adjustment for foreign tax credit (amount on line 405 of the T2 return)
  • the reduced federal business limit on line 425, less the amount of the business limit you assigned under subsection 125(3.2) (amount on line 427 of the T2 return)
Note

Ontario small business income cannot exceed Ontario taxable income.

The corporation's Ontario domestic factor is the ratio of the corporation's Ontario taxable income to the corporation's taxable income earned in all provinces and territories.

You can use Part 3 of Schedule 500, Ontario Corporation Tax Calculation, to calculate the deduction. Schedule 500 is a worksheet and you do not have to file it with your return.

On line 402 of Schedule 5, enter the small business deduction amount.

Ontario transitional tax debits and 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 were 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.

Although the five-year period has ended, it is still possible to have a transitional tax debit since, after 2015, the corporation can continue to defer the transitional tax debits as long as it does not claim an SR&ED tax deduction and the SR&ED expenditure pool is not reduced by government assistance.

Conversely, where the corporation's Ontario tax pools exceeded its federal tax pools, the corporation had a transitional tax credit. A specified corporation was generally entitled to a transitional tax credit over a five-year period beginning with its first tax year ending after 2008. You can no longer claim this credit.

A specified corporation is defined under subsection 46(5) of the Taxation Act, 2007 (Ontario).

Complete Schedule 506, Ontario Transitional Tax Debits and Credits, to calculate the corporation's transitional tax debits. Use Schedule 507, Ontario Transitional Tax Debits and Credits Calculation, to determine the amounts to enter in Part 3 of Schedule 506.

File Schedule 506 with the return. Schedule 507 does not have to be filed with the return.

On line 276 of Schedule 5, enter the total transitional tax debits.

Ontario corporate minimum tax

The Ontario corporate minimum tax payable is equal to the amount by which the corporate minimum tax exceeds the Ontario corporate income tax.

A corporation is subject to corporate minimum tax if its total assets are $50 million or more and its total revenue is $100 million or more except if the corporation was, throughout the tax year, one of the following:

  • a corporation exempt from income tax under section 149 of the federal Income Tax Act
  • a mortgage investment corporation
  • a deposit insurance corporation under subsection 137.1(5) of the federal Income Tax Act
  • a congregation or business agency to which section 143 of the federal Income Tax Act applies
  • an investment corporation
  • a mutual fund corporation

The corporate minimum tax rate is 2.7%.

In determining if the total assets or total revenue exceeds the limits, a corporation must include its share of the total assets and total revenue of a partnership in which it has an interest, any associated foreign or Canadian corporation, and any associated corporation's share of a partnership. If a corporation is associated it must complete and file Schedule 511, Ontario Corporate Minimum Tax – Total Assets and Revenue for Associated Corporations, to report the total assets and total revenue of all the associated corporations.

File Schedule 510, Ontario Corporate Minimum Tax, with your T2 return if one of the following applies:

  • the corporation is subject to corporate minimum tax for the tax year (Part 1 of the schedule)
  • the corporation is not subject to corporate minimum tax in the year, but is deducting a corporate minimum tax credit or has a corporate minimum tax credit carryforward (see Ontario corporate minimum tax credit), corporate minimum tax loss carryforward, or current year corporate minimum tax loss (Parts 4 to 8 of the schedule)
  • the corporation has special additional tax on life insurance corporations payable in the year even if it is not subject to corporate minimum tax for the tax year (Part 4 of Schedule 510, and Schedule 512, Ontario Special Additional Tax on Life Insurance Corporations [SAT])

Corporate minimum tax is based on the adjusted net income of a corporation. The adjusted net income is a corporation's net income calculated in accordance with Canadian generally accepted accounting principles or the International Financial Reporting Standards, with various adjustments. The adjustments are reported in Part 2 of Schedule 510.

Accounting gains reported in the year from corporation reorganizations that are deferred for income tax purposes are deductible when calculating adjusted net income.

Accounting gains reported in the year on the transfer of property under section 85, section 85.1, section 97, subsection 13(4), subsection 14(6) and/or section 44 are deductible when calculating adjusted net income. An election is required in order to claim this deduction. We will consider a corporation to have filed an election (and to not need to file another document) if it reports the deduction and has filed the election(s) required for corporate income tax purposes.

In addition, certain unrealized mark-to-market gains/losses and foreign currency gains/losses on assets that are not required to be included in computing income for income tax purposes are not included in adjusted net income. For additional information see Ontario Regulation 37/09.

File a completed Schedule 510 with your return and, if applicable, Schedule 511.

On line 278 of Schedule 5, enter the amount of the corporate minimum tax.

References
Division C, Sections 54 – 62 Taxation Act, 2007 (Ontario)

Corporate minimum tax loss carryforward

A corporate minimum tax loss may be carried forward 20 years.

Upon amalgamation under section 87, only corporate minimum tax losses from predecessors who are not controlled by predecessors in the amalgamated group can be transferred to a new corporation. On a vertical amalgamation of a parent and subsidiary corporations, only the loss from the parent may be transferred to the new corporation. The subsidiary’s loss may not be transferred to the parent.

Upon winding up a subsidiary under subsection 88(1), the subsidiary’s corporate minimum tax loss may not be transferred to a parent corporation.

Calculate the carry-forward amount in Part 7 of Schedule 510, Ontario Corporate Minimum Tax.

Ontario special additional tax on life insurance corporations

A life insurance corporation carrying on business in Ontario at any time in the tax year is subject to the Ontario special additional tax on life insurance corporations.

The special additional tax payable for a tax year is equal to the amount by which:

  • 1.25% of the corporation's taxable paid-up capital multiplied by the number of days in the tax year divided by 365

exceeds

  • the total of the corporation's Ontario corporate income tax and corporate minimum tax payable for the year.

Use Schedule 512, Ontario Special Additional Tax on Life Insurance Corporations (SAT), to calculate the tax payable.

The special additional tax paid for a tax year is added to the corporation's corporate minimum tax credit carryforward. This credit may be deducted to reduce Ontario corporate income tax payable in future years. For more information, see Ontario Corporate Minimum Tax Credit. Enter the special additional tax payable for the tax year in Part 4 of Schedule 510, Ontario Corporate Minimum Tax.

Life insurance corporations that are subject to the special additional tax and related, at the end of the tax year, to another life insurance corporation carrying on business in Canada must use Schedule 513, Agreement Among Related Life Insurance Corporations (Ontario), to allocate the capital allowance among the members of the related group.

File Schedule 512 and, if applicable, Schedule 513, with your return.

On line 280 of Schedule 5, enter the amount of special additional tax payable.

Reference
Section 63, Taxation Act, 2007 (Ontario)

Ontario political contributions tax credit

Note

Effective January 1, 2017, this credit is eliminated for corporations. They have up to 20 years to claim their unused contributions.

You can claim a tax credit on contributions made before January 1, 2017, to Ontario registered parties, registered constituency associations, or registered candidates as defined under the Ontario Election Finances Act.

Generally, this non-refundable credit is calculated by multiplying the basic tax rate by the amount of Ontario political contributions, up to an annual maximum indexed according to the Election Finances Act. The credit is effective for tax years ending after December 31, 2008. It replaces the previous deduction for political contributions administered by the province.

You can carry forward unused contributions, including those from pre-2009 tax years, for up to 20 years. There are no carry-back provisions.

You do not have to file official receipts with your return. However, keep them in case we ask for them later. We can only accept photocopies if the issuer certifies them as true copies.

File a completed Schedule 525, Ontario Political Contributions Tax Credit, with your return.

On line 415 of Schedule 5, enter the amount of the credit you are claiming.

Reference
Section 53.2, Taxation Act, 2007 (Ontario)

Ontario resource tax credit

Note

As of April 23, 2015, to harmonize with the federal government and other provinces, the Ontario resource tax credit and the additional tax on Crown royalties are eliminated and replaced with a deduction for royalties and mining taxes. You can carry forward unexpired unused Ontario resource tax credits for the first five tax years beginning after April 23, 2015. The credit and the tax are calculated on a prorated basis for tax years that include April 23, 2015.

The Ontario resource tax credit and the Ontario additional tax re Crown royalties are based on the corporation's:

  • notional resource allowance for the year, as determined in subsection 7(3) of Ontario Regulation 37/09 to the Taxation Act, 2007
  • adjusted Crown royalties for the year, as defined in subsection 36(2) of the Taxation Act, 2007 (Ontario)
  • Ontario allocation factor, as defined in subsection 1(1) of the Taxation Act, 2007 (Ontario)

The Ontario resource tax credit is used to offset Ontario corporate income tax otherwise payable. Unused amounts (the resource tax credit balance at the end of the year) can be carried forward to the following year.

Complete Schedule 504, Ontario Resource Tax Credit and Ontario Additional Tax re Crown Royalties, if the corporation:

  • has a permanent establishment in Ontario at any time in the tax year
  • is not exempt from corporate income tax

and

  • owns a Canadian resource property as defined in subsection 66(15) of the federal Income Tax Act, or
  • produces in Canada petroleum, natural gas, related hydrocarbons, coal, sulphur, base or precious metals, certain minerals, or iron to the pellet stage from an oil or gas well, a mine, or tar sands in Canada

and

  • earned adjusted resource profits for the year and has a notional resource allowance for the year as determined in subsection 7(3) of Ontario Regulation 37/09 to the Taxation Act, 2007, or
  • paid or incurred an adjusted Crown royalty for the year as defined in subsection 36(2) of the Taxation Act, 2007 (Ontario)

File a completed Schedule 504 with the return.

On line 404 of Schedule 5, enter the amount of the credit you are claiming.

Reference
Section 37, Taxation Act, 2007 (Ontario)

Ontario tax credit for manufacturing and processing

You can claim the Ontario tax credit for manufacturing and processing if the corporation had both:

  • Ontario taxable income during the tax year
  • eligible Canadian profits from manufacturing and processing, farming, fishing, logging, mining, the generation of electrical energy for sale, or the production of steam for sale

You cannot claim this credit on the corporation's income that is subject to the Ontario small business deduction rate.

To claim the credit, file a completed Schedule 502, Ontario Tax Credit for Manufacturing and Processing, with the return.

On line 406 of Schedule 5, enter the amount of the credit you are claiming.

Reference
Section 33, Taxation Act, 2007 (Ontario)

Ontario credit union tax reduction

The Ontario credit union tax reduction allows credit unions a special deduction from income tax otherwise payable. It is designed to reduce their overall income tax rate to the same net rate paid by small business corporations that claim the Ontario small business deduction.

To be eligible to claim the Ontario credit union tax reduction, the credit union must meet the following criteria:

  • have been a credit union throughout the tax year
  • have had a permanent establishment in Ontario at any time in the tax year
  • have Ontario taxable income in the year

You can use Part 5 of Schedule 500, Ontario Corporation Tax Calculation, to calculate the Ontario credit union tax reduction. Schedule 500 is a worksheet and you do not have to file it with your return.

On line 410 of Schedule 5, enter the amount of the credit you are claiming.

Reference
Section 35, Taxation Act, 2007 (Ontario)

Ontario research and development tax credit

You can claim this credit if you have a permanent establishment in Ontario and you had eligible expenditures for scientific research and experimental development carried out in Ontario.

An eligible expenditure is all of the following:

  • an expenditure attributable to a permanent establishment in Ontario of a corporation
  • a qualified expenditure for the purposes of section 127 of the federal Income Tax Act for scientific research and experimental development carried on in Ontario
  • reduced by government assistance, non-government assistance or contract payments received, entitled to be received or reasonably expected to be received

The amount of the non-refundable credit is equal to 3.5% of eligible expenditures incurred by a corporation in a tax year that ends on or after June 1, 2016. The rate was previously 4.5%. 

If the credit rate changes during the tax year, you have to base your calculation on the number of days in the year that each rate is in effect.

The credit may be applied to reduce Ontario corporate income tax that you would otherwise have to pay. An unused credit can be carried back 3 years and can be carried forward 20 years.

Only corporations that are not exempt from Ontario corporate income tax and that have no exempt income can claim the credit.

To claim the credit, file a completed Schedule 508, Ontario Research and Development Tax Credit, with your return. Also attach completed copies of Form T661, Scientific Research and Experimental Development (SR&ED) Expenditures Claim, and Schedule 31, Investment Tax Credit – Corporations.

If the corporation is a member of a partnership and is allocated a portion of the credit as provided for in section 40 of the Taxation Act, 2007 (Ontario), attach a schedule showing the partnership's calculation.

On line 416 of Schedule 5, enter the amount of the credit you are claiming.

References
Sections 38 to 44, Taxation Act, 2007 (Ontario)

Recapture of Ontario research and development tax credit

A corporation that disposed of a property used in scientific research and experimental development, or converted it to commercial use, may have to report a recapture of any Ontario research and development tax credit previously calculated on that property. Any recapture will create or increase Ontario tax otherwise payable.

To calculate the recapture, complete Schedule 508, Ontario Research and Development Tax Credit.

On line 277 of Schedule 5, enter the amount of recapture calculated.

Reference
Section 45, Taxation Act, 2007 (Ontario)

Ontario corporate minimum tax credit

The Ontario corporate minimum tax credit that may be deducted from Ontario corporate income tax payable for the tax year is equal to the least of:

  • the corporate minimum tax credit available for the tax year
  • the Ontario corporate income tax payable (before the corporate minimum tax credit) minus the greater of the corporate minimum tax after foreign tax credit deduction and gross special additional tax on life insurance corporations for the tax year
  • the Ontario corporate income tax payable (before the corporate minimum tax credit) minus the total refundable tax credits for the tax year

The minimum tax credit carryforward at the beginning of the tax year is equal to the minimum tax and special additional tax paid in previous tax years less any minimum tax credit previously deducted or expired. Only special additional tax paid in a tax year ending after 2008 is included.

The minimum tax credits attributable to tax years ending after March 22, 2007, can be carried forward for 20 years.

For tax years ending after 2008, the carryforward of minimum tax credits attributable to tax years ending before March 23, 2007, is extended from 10 to 20 years if the credit did not otherwise expire before the beginning of the corporation's first tax year ending after 2008.

Complete Parts 4, 5, and 6 of Schedule 510, Ontario Corporate Minimum Tax, to calculate the corporate minimum tax credit carryforward and the credit deducted in the current tax year.

On line 418 of Schedule 5, enter the amount of the credit deducted in the current tax year.

References
Subsections 53(1) to 53(5), Taxation Act, 2007 (Ontario)

Ontario community food program donation tax credit for farmers

A non-refundable tax credit is available for farmers who donate to community food programs.

A qualifying donation is a donation of one or more agricultural products produced in Ontario by an eligible person and given after December 31, 2013, by an eligible person to an eligible community food program in Ontario.

The credit is equal to 25% of that part of the corporation’s qualifying donations for the year that the corporation deducted under subsection 110.1(1) of the federal Income Tax Act when computing its taxable income for the year.

You must claim the credit in the same year that you claim the deduction for charitable gifts under section 110.1 of the federal Income Tax Act for the donation. Charitable gifts are eligible for a five-year carryforward.

To claim the credit, file a completed Schedule 2, Charitable Donations and Gifts, with your return. For more details, see the schedule.

On line 420 of Schedule 5, enter the amount of the credit you are claiming.

Reference
Section 103.1.2, Taxation Act, 2007 (Ontario)

Ontario qualifying environmental trust tax credit

A corporation that is the beneficiary of a qualifying environmental trust located in Ontario can claim a qualifying environmental trust tax credit on income that is subject to tax under Part XII.4 of the federal Income Tax Act.

The amount of the tax credit is the corporation's share of the qualifying environmental trust tax paid by the trust.

The qualifying environmental trust will issue a letter to the corporation that is a beneficiary.

The credit is fully refundable but must first be applied against taxes payable.

You do not have to file the letter with your return. However, keep it in case we ask for it later.

On line 450 of Schedule 5, enter the amount of the credit you are claiming.

Reference
Section 87, Taxation Act, 2007 (Ontario)

Ontario co-operative education tax credit

You can claim this credit if you are a corporation that provided a qualifying work placement at a permanent establishment in Ontario for a student enrolled in a qualifying post-secondary co-operative education program.

To be a qualifying work placement, the work placement must meet all of the following conditions:

  • the student must perform employment duties for a corporation under a qualifying co-operative education program
  • the placement must be developed or approved by an eligible educational institution as a suitable learning situation
  • the terms of the placement must require the student to engage in productive work
  • the placement must be for a period of at least 10 consecutive weeks except, in the case of an internship program, the placement cannot be less than 8 consecutive months and not more than 16 consecutive months
  • the corporation must supervise and evaluate the job performance of the student
  • the institution must monitor the student's performance in the placement
  • the institution must certify the placement as a qualifying work placement
  • the student must be paid for the work performed

The credit is equal to an eligible percentage (25% to 30%) of the eligible expenditures incurred by the corporation for a qualifying work placement.

The maximum credit for each qualifying work placement is $3,000.

Eligible expenditures are equal to the following amounts:

  • salaries and wages (including taxable benefits) paid or payable to a student in a qualifying work placement
  • fees paid or payable to an employment agency for the provision of services performed by the student in a qualifying work placement

Keep a copy of the letter of certification from the eligible educational institution in Ontario to support your claim. The letter of certification must contain the name of the student, the employer, the institution, the term of the work placement, and the name/discipline of the qualifying co-operative education program.

To claim the credit, file a completed Schedule 550, Ontario Co-operative Education Tax Credit, with your return. For more details, see the schedule.

On line 452 of Schedule 5, enter the amount of the refundable credit you are claiming.

Reference
Section 88, Taxation Act, 2007 (Ontario)

Ontario apprenticeship training tax credit

Note

This credit is eliminated for apprenticeship programs in which the training agreement or contract of apprenticeship is registered after November 14, 2017.

You can claim this refundable credit if you are a corporation that provided a qualifying apprenticeship at a permanent establishment in Ontario for a student enrolled in a qualifying skilled trade.

To be a qualifying apprenticeship, the apprenticeship must meet the following conditions:

Note

Only certain skilled trades qualify for the Ontario apprenticeship training tax credit. For a full list of qualifying skilled trades, go to Apprenticeship Training Tax Credit.

The following table summarizes the change in the rates and maximums of the credit for each qualifying apprenticeship for which the training agreement or contract of apprenticeship was registered before November 15, 2017, depending on the date it started:

Rates and maximums for qualifying apprenticeship
Date  General rate Small business rate  Maximum yearly credit  Maximum number of months  Maximum lifetime credit 
After 2015-04-23  25%  30%  $5,000  36 $15,000 
Before 2015-04-24  35%  45%  $10,000 48  $40,000 

For eligible expenditures incurred for a qualifying apprenticeship starting after April 23, 2015, the general rate of this credit is 25%. The rate for small businesses (with salaries or wages of $400,000 or less per year) is 30%. The maximum credit for a qualifying apprenticeship is $5,000 per year, to a maximum of $15,000 over the first 36 months of the apprenticeship program.

Previously, the general rate was 35% and the rate for small businesses was 45%. The maximum credit for a qualifying apprenticeship was $10,000 per year to a maximum of $40,000 over the first 48 months of the apprenticeship program.

Eligible expenditures are equal to the following amounts:

  • salaries and wages (including taxable benefits) paid to an apprentice in a qualifying apprenticeship
  • fees paid to an employment agency for the provision of services performed by an apprentice in a qualifying apprenticeship

Keep a copy of the training agreement or contract of apprenticeship to support your claim. If you have lost or misplaced this document, request a copy from the apprentice or from the Ontario Ministry of Training, Colleges and Universities (MTCU) if you are an original party to the contract.

If you are employing an apprentice who previously registered a contract with the MTCU, you must get a copy of the original contract of apprenticeship or training agreement from the apprentice, or get written consent from the apprentice before contacting the MTCU.

Note

If you are unable to provide this documentation when we ask for it, your claim may be denied.

To claim the credit, file a completed Schedule 552, Ontario Apprenticeship Training Tax Credit, with your return. For more details, see the schedule.

On line 454 of Schedule 5, enter the amount of the credit you are claiming.

Reference
Section 89, Taxation Act, 2007 (Ontario)

Ontario computer animation and special effects tax credit

The Ontario computer animation and special effects tax credit is a refundable tax credit equal to 18% of the qualifying labour expenditures for eligible computer animation and special effects activities, incurred by a qualifying corporation in a tax year for an eligible production.

Qualifying labour expenditures equal the corporation's Ontario labour expenditures for the tax year less any assistance reasonably related to these expenditures, other than excluded government assistance. The Ontario labour expenditures are the sum of the salaries and wages and the remuneration incurred in a tax year that are directly attributable to computer animation and special effects activities performed in Ontario and paid to certain persons or entities, within 60 days of the end of the tax year.

To be eligible for the credit, a corporation must meet certain criteria, including all of the following:

  • be a Canadian corporation
  • perform eligible computer animation and special effects activities for the eligible production at a permanent establishment in Ontario for the tax year
  • not be exempt from tax under Part III of the Taxation Act, 2007 (Ontario) for the tax year
  • not be controlled directly or indirectly, at any time in the tax year, in any way, by one or more corporations, all or part of whose taxable income is exempt from tax under section 57 of the Corporations Tax Act (Ontario) or Part III of the Taxation Act, 2007 (Ontario)
  • not be a prescribed labour-sponsored venture capital corporation at any time in the tax year
  • for productions starting after April 23, 2015, receive the Ontario production services tax credit or the Ontario film and television tax credit

Before claiming the credit, you must apply online to the Ontario Media Development Corporation (OMDC) for a certificate of eligibility. If the production is eligible, the OMDC will issue a certificate indicating the estimated amount of the tax credit. Only one certificate of eligibility is issued for all of the eligible productions for the tax year.

To claim the credit, file the following with your return for the year:

If you file your return electronically, see information on T2 Attach-a-doc.

If you file a paper return, send the return and required attachments to your tax centre.

On line 456 of Schedule 5, enter the total amount of the credit you are claiming.

Reference
Section 90, Taxation Act, 2007 (Ontario)

Ontario film and television tax credit

The Ontario film and television tax credit is a refundable tax credit based on the qualifying labour expenditures incurred by a qualifying production company for eligible Ontario productions. The amount of credit depends on whether the eligible production is:

  • a first-time production
  • a small first-time production
  • other than a first-time production

If the eligible Ontario production is a first-time production, you can claim a credit equal to:

  • 40% of the labour expenditures, for the first $240,000 for the production and 35% on the balance
  • an additional 10% of the labour expenditures if the production is a regional Ontario production

If the eligible Ontario production is a small first-time production, you can claim a credit equal to the lesser of:

  • the labour expenditures
  • $20,000 if the production is a regional Ontario production or $15,000 if it is not a regional Ontario production. These amounts are reduced by any Ontario film and television tax credits previously received for the production

The total labour expenditure for a small first-time production cannot be more than $50,000 at the time the production is completed.

If the eligible Ontario production is other than a first-time production, you can claim a credit equal to:

  • 35% of labour expenditures
  • an additional 10% of labour expenditures if the production is a regional Ontario production

The qualifying labour expenditures equal the corporation's Ontario labour expenditures less assistance reasonably related to these expenditures. Some exceptions apply: for example, effective March 14, 2017, assistance that is a payment from the 2015 Ontario Production Services and Computer Animation and Special Effects Transition Fund ("Transitional Grant") to a qualifying corporation is not considered government assistance. See Schedule 556 for more exceptions.

The qualifying labour expenditures are determined without reference to any equity investment held by a person prescribed under section 1106(10) of the federal regulations.

The Ontario labour expenditures are the sum of the salaries and wages and remuneration incurred in a tax year that are directly attributable to the eligible Ontario production, performed in Ontario and paid to certain persons or entities, within 60 days of the end of the tax year.

To be eligible for the credit, a corporation must meet certain criteria, including all ofthe following:

  • be a Canadian-controlled corporation throughout the tax year as determined under sections 26 to 28 of the Investment Canada Act
  • have a permanent establishment in Ontario throughout the tax year
  • be primarily engaged in the carrying on of a Canadian film or video production business through a permanent establishment in Canada in the tax year
  • not be exempt from tax under Part III of the Taxation Act, 2007 (Ontario) or Part I of the federal Income Tax Act for the tax year
  • not be controlled, at any time in the tax year, directly or indirectly, in any way, by one or more persons, all or part of whose taxable income was exempt from tax under Part I of the federal Income Tax Act
  • not be a prescribed labour-sponsored venture capital corporation at any time in the tax year

You cannot claim the Ontario film and television tax credit if you claim the Ontario production services tax credit for that same production for any tax year.

Before claiming the credit, you must apply online to the Ontario Media Development Corporation (OMDC) for a certificate of eligibility. If the production is eligible, the OMDC will issue a certificate indicating the estimated amount of the tax credit.

To claim the credit, file the following with your return for the year for each eligible production:

If you file your return electronically, see information on T2 Attach-a-doc.

If you file a paper return, send the return and required attachments to your tax centre.

On line 458 of Schedule 5, enter the total amount of the credit you are claiming.

Reference
Section 91, Taxation Act, 2007 (Ontario)

Ontario production services tax credit

The Ontario production services tax credit is a refundable tax credit based on qualifying production expenditures incurred for eligible productions by a qualifying corporation in a tax year.

The credit is equal to 21.5% of qualifying production expenditures incurred, including qualifying labour expenditures as well as the purchase or rental of qualifying tangible properties, such as equipment and studio rentals.

The qualifying production expenditures include the sum of:

  • eligible wage expenditures
  • eligible service contract expenditures
  • eligible tangible property expenditures
  • reimbursements to the parent company of eligible wage and service contract expenditures

less

  • assistance reasonably related to these expenditures (some exceptions apply—see next and Schedule 558)

Effective March 14, 2017, assistance that is a payment from the 2015 Ontario Production Services and Computer Animation and Special Effects Transition Fund ("Transitional Grant") to a qualifying corporation is not considered government assistance.

The eligible expenditures incurred in the tax year must be reasonable and directly attributable to the eligible production, performed in Ontario and paid to certain persons or entities, within 60 days of the end of the tax year.

Ontario labour expenditures (including labour under a service contract) must amount to at least 25% of the total expenditures. Otherwise, the corporation’s qualifying production expenditure limit for a tax year cannot be more than four times the Ontario labour expenditures (including labour under a service contract). Expenditures incurred through non arm’s length contracts are limited to expenditures that would have been eligible if incurred directly by the corporation. Only expenditures incurred after the final script stage to the end of the post production stage are eligible for the credit.

To be eligible for the credit, a corporation must meet certain criteria, including all of the following:

  • be primarily engaged, in the tax year, in the carrying on of a film or video production business, or a film or video production services business, through a permanent establishment in Ontario
  • not be exempt from tax, for the tax year, under Part III of the Taxation Act, 2007 (Ontario) or Part I of the Income Tax Act
  • not, at any time in the tax year, be controlled directly or indirectly, in any way, by one or more persons, all or part of whose taxable income was exempt from tax under Part I of the Income Tax Act
  • not be a prescribed labour-sponsored venture capital corporation at any time in the tax year

You cannot claim the Ontario production services tax credit if you claim the Ontario film and television tax credit for that same production for any tax year.

Before claiming the credit, you must apply online to the Ontario Media Development Corporation (OMDC) for a certificate of eligibility. If the production is eligible, the OMDC will issue a certificate indicating the estimated amount of the tax credit.

To claim the credit, file the following with your return for the year for each eligible production:

If you file your return electronically, see information on T2 Attach-a-doc.

If you file a paper return, send the return and required attachments to your tax centre.

On line 460 of Schedule 5, enter the total amount of the credit you are claiming.

Reference
Section 92, Taxation Act, 2007 (Ontario)

Ontario interactive digital media tax credit

The Ontario interactive digital media tax credit is a refundable tax credit based on qualifying expenditures incurred for eligible products and eligible digital games by a qualifying corporation during a tax year.

This credit focuses on entertainment products and educational products for children under 12. Certain products, such as search engines, real estate databases, or news and public affairs products are excluded. These do not apply to large digital game corporations (qualifying digital game corporations and specialized digital game corporations).

The eligibility of the Ontario interactive digital media tax credit is extended to film and television websites that are purchased or licensed by a broadcaster and embedded in the broadcaster’s website. Previously, such websites were technically ineligible for the credit, even though they would have been eligible if operated independently.

This change applies to websites that host content related to film, television or Internet productions that, as of November 1, 2017, had not received a certificate of eligibility or a letter of ineligibility.

For products that are certified after April 23, 2015, the following conditions apply:

  • 80% of total labour costs for eligible products have to be attributable to qualifying wages and qualifying remuneration paid to individuals or to corporations that carry on a personal services business
  • 25% of total labour costs for eligible products have to be attributable to qualifying wages of employees of the qualifying corporation

These apply to products for which a determination of eligibility has not been made before April 24, 2015, including those waiting for certification on that date. However, only the 80% test applies to products for which certification was applied for before April 24, 2015.

The above-noted eligibility requirements do not apply to large digital game corporations.

The credit applies to the following situations:

  • all qualifying corporations that develop and market their own eligible products (non-specified products) are eligible to claim a credit equal to 40% of expenditures
  • qualifying corporations that develop eligible products under a fee-for-service arrangement (specified products) are eligible to claim a credit equal to 35% of expenditures
  • a 35% credit is available to both:
    • qualifying digital game corporations that incur a minimum of $1 million of eligible Ontario labour expenditures over a 36-month period for fee-for-service work done in Ontario for an eligible digital game
    • specialized digital game corporations that incur at least $1 million of Ontario labour expenses per year in developing eligible digital games. A specialized digital game corporation generally would have at least 80% of Ontario payroll or 90% of annual gross revenues directly attributable to developing digital games

For all eligible products, qualifying expenditures include Ontario salaries and wages incurred in a tax year that are directly attributable to the eligible product and paid within 60 days of the end of the tax year.

For eligible products that are not specified products, the qualifying expenditures also include marketing and distribution expenditures (maximum $100,000 per eligible product for all tax years) incurred in a tax year that are directly attributable to the product and paid to certain persons and entities within 60 days of the end of the tax year.

The amount of eligible remuneration expenditures that a corporation can claim is 100%. It includes amounts paid to other taxable Canadian corporations for services rendered by its employees. Corporations that develop specified products are also able to claim these expenditures.

Qualifying expenditures are reduced by any government assistance reasonably related to these expenditures (some exceptions apply—see Schedule 560).

You cannot claim the Ontario interactive digital media tax credit if you claim the Ontario computer animation and special effects tax credit, the Ontario film and television tax credit or the Ontario production services tax credit for the same expenditure for any tax year.

To be eligible for the credit, a corporation must meet certain criteria, including all of the following:

  • be a Canadian corporation
  • have completed development on or developed an eligible interactive digital media product at a permanent establishment in Ontario, as described in subsection 93(16) of the Taxation Act, 2007 (Ontario)
  • not be exempt from tax under Part III of the Taxation Act, 2007 (Ontario) for the tax year
  • not be controlled directly or indirectly, in any way, at any time in the tax year, by one or more corporations, all or part of whose taxable income was exempt from tax under section 57 of the Corporations Tax Act (Ontario) or Part III of the Taxation Act, 2007 (Ontario)
  • not be a prescribed labour-sponsored venture capital corporation at any time in the tax year

In addition, a qualifying digital game corporation or a specialized digital game corporation must also meet the following criteria:

  • be a corporation that carries on through a permanent establishment in Ontario a business that includes developing digital games
  • not be a corporation the primary activity of which is to provide the services of a single individual and all the issued and outstanding shares of the capital stock of which are owned by that individual

For more information see Schedule 560, Ontario Interactive Digital Media Tax Credit.

Before claiming the credit, you must apply online to the Ontario Media Development Corporation (OMDC) for a certificate of eligibility. If the product or digital game is eligible, the OMDC will issue a certificate indicating the estimated amount of the tax credit. Only one certificate of eligibility is issued for all of the eligible products or digital games for the tax year.

Note

You have to apply for this certificate within 18 months of the end of the tax year in which development of the eligible product was completed.

To claim the credit, file the following with your return for the year:

  • a certificate of eligibility (or copy) issued by the OMDC
  • a completed Schedule 560, Ontario Interactive Digital Media Tax Credit, for each eligible product or eligible digital game

If you file your return electronically, see information on T2 Attach-a-doc.

If you file a paper return, send the return and required attachments to your tax centre.

On line 462 of Schedule 5, enter the total amount of the credit you are claiming.

Reference
Section 93, Taxation Act, 2007 (Ontario)

Ontario book publishing tax credit

The Ontario book publishing tax credit is a refundable tax credit of 30% on the qualifying expenditures incurred during a tax year for an eligible literary work, by an Ontario book publishing company, up to a maximum credit of $30,000 per work.

Qualifying expenditures include the following expenditures the corporation incurred in publishing an eligible literary work:

  • pre-production costs
  • marketing expenditures incurred 12 months before to 12 months after the date the literary work is published
  • 50% of the production costs
  • 100% of expenditures incurred that reasonably relate to preparing a literary work for publishing in one or more digital or electronic formats
  • 50% of expenditures incurred that reasonably relate to transferring a prepared digital or electronic version of the literary work into or onto a form suitable for distribution

The credit is available for any number of literary works by a Canadian author in an eligible category.

Qualifying expenditures are reduced by any assistance reasonably related to these expenditures.

To be eligible for the credit, a corporation must meet certain criteria, including all of the following:

  • be a Canadian-controlled corporation throughout the tax year, as determined under sections 26 to 28 of the Investment Canada Act
  • carry on a book publishing business primarily through a permanent establishment in Ontario for the tax year
  • not be exempt from tax under Part III of the Taxation Act, 2007 (Ontario) for the tax year
  • not be controlled by the author of the literary work, or by a person not dealing at arm's length with the author

Before claiming the credit, you must apply online to the Ontario Media Development Corporation (OMDC) for a certificate of eligibility. If the literary work is eligible, the OMDC will issue the certificate.

To claim the credit, file the following with your return for the year for each literary work:

If you file your return electronically, see information on T2 Attach-a-doc.

If you file a paper return, send the return and required attachments to your tax centre.

On line 466 of Schedule 5, enter the total amount of the credit you are claiming.

Reference
Section 95, Taxation Act, 2007 (Ontario)

Ontario innovation tax credit

You are eligible to claim an Ontario innovation tax credit if you meet all of the following conditions:

The credit is an 8% refundable tax credit based on the sum of the corporation's qualified expenditures incurred in Ontario and any eligible repayments. Qualified expenditures include 100% of current expenditures.

The credit is available to a maximum annual expenditure limit of $3 million. Associated corporations must share in the $3 million expenditure limit.

The expenditure limit of $3 million begins to reduce when the federal taxable income of the corporation and its associated corporations for the previous tax year exceeds $500,000 and becomes nil at $800,000. The $3 million expenditure limit also begins to reduce when the specified capital amount of the corporation and its associated corporations for the previous tax year reaches $25 million and becomes nil at $50 million.

Expenditure limit, qualified expenditure, and eligible repayments are defined in subsections 96(3.1), 96(8), and 96(12) of the Taxation Act, 2007 (Ontario).

File a completed Schedule 566, Ontario Innovation Tax Credit, with your return. See the schedule for more details.

On line 468 of Schedule 5, enter the amount of the credit you are claiming.

Reference
Section 96, Taxation Act, 2007 (Ontario)

Ontario business-research institute tax credit

You are eligible to claim an Ontario business-research institute tax credit if you meet all of the following conditions:

  • you carried on business in the tax year through a permanent establishment in Ontario
  • you incurred qualified expenditures under an eligible contract with an eligible research institute and
  • you were not exempt from tax under Part III of the Taxation Act, 2007 (Ontario)

This credit is a 20% refundable tax credit based on qualified expenditures for the tax year incurred in Ontario under an eligible contract with an eligible research institute.

The annual qualified expenditure limit is $20 million. If a corporation is associated with other corporations at any time in a calendar year, the $20 million limit must be allocated among the associated corporations. The maximum tax credit that a qualifying corporation or an associated group of corporations can claim in a tax year is $4 million (20% of $20 million).

Complete Schedule 568, Ontario Business-Research Institute Tax Credit, to claim the credit and complete a Schedule 569, Ontario Business-Research Institute Tax Credit Contract Information, for each eligible contract.

Note

When completing Schedule 569, to find the applicable eligible research institute code, go to Eligible Research Institutes.

Keep a copy of each eligible contract to support your claim.

On line 470 of Schedule 5, enter the amount of the credit you are claiming.

Reference
Section 97, Taxation Act, 2007 (Ontario)

Ontario Ministry of Government and Consumer Services annual return

Ontario corporations and foreign business corporations licensed to carry on business in Ontario must file an Ontario Corporations Information Act Annual Return with the CRA within six months of the end of the tax year as follows:

Note

The original amalgamating corporations that have since amalgamated and continued as one amalgamated corporation are NOT required to file a Corporations Information Act Annual Return. The Ministry of Government and Consumer Services (MGCS) cannot accept requests to update the corporate record for these corporations. The corporation resulting from the amalgamation has to file a Corporations Information Act Annual Return at the appropriate time.

File the completed Schedule 546 or 548 with the T2 return. If you have to file more than one tax return in a calendar year, file the annual return only with the first tax return.

The CRA will transmit the information on Schedules 546 and 548 to the MGCS. The MGCS is responsible for maintaining a public database of corporate information. It is the corporation's responsibility to ensure that the information on the public record is accurate and up to date.

To report changes to the name of a director/officer, or changes to both the address and date elected/appointed of a director/officer, complete two copies of Part 7 of Schedule 546 as follows:

  • enter the director/officer information exactly as shown (incorrectly) on the public record, with a cease date
  • photocopy and complete only Part 7 of Schedule 546 with the correct director/officer information

Corporations that have to file Schedule 546 have the option of filing electronically with one of the service providers under contract with the Ontario Ministry of Government and Consumer Services, instead of filing it together with the T2 return.

Ontario specialty types

Any corporation carrying on business in Ontario through a permanent establishment must file Schedule 524, Ontario Specialty Types, to identify its specialty type in one of the following situations:

  • the tax year is the first year after incorporation or an amalgamation
  • there is a change to the specialty type

Manitoba

The higher rate of Manitoba income tax is 12%.

Corporations may be eligible for a small business deduction to reduce all or part of the tax otherwise payable.

The lower rate of Manitoba income tax for small business is 0%.

The income eligible for the small business deduction rate is determined using the Manitoba business limit of $450,000.

Effective January 1, 2019, the Manitoba business limit increases from $450,000 to $500,000.

When the business limit changes during the tax year, you have to base your calculation on the number of days in the year that each limit is in effect.

You can use Schedule 383, Manitoba Corporation Tax Calculation, to help you calculate your Manitoba tax before the application of credits. You do not have to file it with your return. See the schedule for more details.

On line 230 of Schedule 5, enter the amount of tax calculated.

Manitoba additional deduction for credit unions

The Manitoba additional deduction for credit unions will be phased out over five years, starting in January 1, 2019, as follows: 80% for 2019, 60% for 2020, 40% for 2021, 20% for 2022, and 0% after 2022. The amount will be prorated for all tax years during the phase-out period that do not coincide with the calendar year.

The Manitoba additional deduction for credit unions allows credit unions an additional reduction from income tax otherwise payable. It is designed to reduce their overall income tax rate to the same net rate paid by small business corporations that claim the Manitoba small business deduction.

To be eligible to claim the additional deduction, the credit union must meet all of the following conditions:

  • have been a credit union throughout the tax year
  • have had a permanent establishment in Manitoba at any time in the tax year
  • have Manitoba taxable income in the year

You can use Part 1 of Schedule 383, Manitoba Corporation Tax Calculation, to calculate the Manitoba additional deduction for credit unions. Schedule 383 is a worksheet and you do not have to file it with your return.

Manitoba manufacturing investment tax credit

You can earn this credit on the cost of qualified property. The credit will first be applied to reduce the Manitoba corporation income tax payable. Then you can claim a part of the credit you are entitled to claim in a tax year as a refundable credit.

The credit is equal to 9% of the cost of qualified property acquired before January 1, 2021. For qualified property acquired before April 12, 2017, the rate is 10%.

The non refundable credit is 1% of the cost of qualified property. For property acquired before April 12, 2017, the rate is 2%.

The refundable credit rate remains unchanged at 8%.

Under subsection 7.2(7) of the Manitoba Income Tax Act, you can renounce, in whole or in part, the manufacturing investment tax credit earned in the current tax year.

You have to use the qualified property in Manitoba mainly for manufacturing or processing goods for sale or lease.

Qualified property includes new and used buildings, machinery, and equipment made available for use in manufacturing or processing goods for sale or lease.

Note

The acquired date for purposes of this credit is the date that the property became available for use.

Starting in 2015, certain green energy equipment is eligible for both the manufacturing investment tax credit and the green energy equipment tax credit.

You can carry back an unused non-refundable credit to the three previous tax years from the tax year in which you acquired the property. You can also carry it forward to the 10 tax years that follow the tax year in which you acquired the property.

To claim the credit, file a completed Schedule 381, Manitoba Manufacturing Investment Tax Credit no later than 12 months after your income tax return is due for the tax year in which the expenditures were incurred. For more details, see the schedule.

On line 605 of Schedule 5, enter the amount of the non-refundable credit you are claiming. On line 621, enter the amount of the refundable credit you are claiming.

Manitoba research and development tax credit

You can claim this credit if you have a permanent establishment in Manitoba and you made eligible expenditures for research and development carried out in Manitoba.

The amount of the credit is equal to 15% of eligible expenditures incurred after April 11, 2017. The rate was previously 20%. In addition to the corporation's eligible expenditures, a corporation may claim any repayments of government assistance that are related to eligible expenditures.

The tax credit for research and development carried on in Manitoba under an eligible contract with a qualifying research institute is fully refundable. When eligible research and development is not undertaken under an eligible contract with an institute, 50% of the tax credit amount is refundable, the rest is non-refundable.

You can carry back an unused non-refundable credit to the 3 previous tax years from the tax year that you made the expenditure in. You can also carry it forward to the 20 tax years that follow the tax year in which you made the expenditure.

You can renounce the research and development tax credit for an eligible expenditure incurred during the year, in whole or in part, under subsection 7.3(7) of the Income Tax Act (Manitoba).

To claim the credit, file a completed Schedule 380, Manitoba Research and Development Tax Credit, with your return. You must identify the eligible expenditures no later than 12 months after your income tax return is due for the tax year in which the expenditures were incurred. For more details, see the schedule.

On line 606 of Schedule 5, enter the amount of the non-refundable credit you are claiming. On line 613 of Schedule 5, enter the amount of the refundable credit.

Manitoba paid work experience tax credit

The Manitoba paid work experience tax credit includes the following:

  • youth work experience hiring incentive (25%, maximum $5,000)
  • co-op student hiring incentive (15%, lifetime maximum $5,000)
  • co-op graduate hiring incentive (15%, maximum $2,500)
  • apprentice hiring incentive (15%, 20% for rural or northern early level, 25% for high school, maximum $5,000)
  • journeyperson hiring incentive (15%, maximum $5,000)

Employers self-assess salary and wages for qualifying employees based on the fiscal year, as long as the employee is progressing through their co-op or apprenticeship program.

The credit is fully refundable, but it must first be applied against total taxes payable.

To claim the credit, file a completed Schedule 384, Manitoba Paid Work Experience Tax Credit, with your return. For more details, see the schedule.

On line 622 of Schedule 5 enter the amount of the refundable credit you are claiming.

A corporation that is exempt under section 149 of the federal Income Tax Act is also eligible to claim this credit, except Crown corporations and other provincial government entities for tax years ending after 2016. Along with Schedule 384, the exempt corporation will also have to complete Schedule 5 and file a T2 return.

Youth work experience hiring incentive

You can claim this credit if you have been approved by the Province to provide paid work experience to an individual who has completed an approved high school course or training program.

The credit is equal to 25% of the eligible salary and wages paid to a qualifying youth, less government assistance, up to a lifetime maximum of $5,000 per youth.

The eligible employment period of the youth must be completed by the end of the calendar year following the academic year that the youth completed the approved course.

Co-op student hiring incentive

You can claim this credit if you are an employer who provides a work placement for a student enrolled in a qualifying post-secondary co-operative education program.

The credit for each qualifying work placement is 15% of the salary and wages paid to the employee for work performed mainly in Manitoba, to a lifetime maximum of $5,000 per student, less government assistance.

For tax years ending before 2016, the credit for each qualifying work placement is the lesser of:

  • $1,000
  • 10% of the salary and wages paid to the employee for work performed mainly in Manitoba, less government assistance

The credit will be nil if the student under the work placement has had five previous qualifying work placements.

The credit is fully refundable, but it must first be applied against total taxes payable.

Co-op graduate hiring incentive

You can claim this credit if you are an employer that has hired co-op graduates in full-time employment in Manitoba. The students must have graduated, from a recognized post-secondary co-operative education program in a field related to the employment.

The credit is equal to 15% of the net salary and wages paid to the graduate, less government assistance, in each of the first two full years of employment, to a maximum of $2,500 for each year, where the employment starts within 18 months of graduation.

Apprentice hiring incentive

You can claim this credit if you are an employer who hires high-school and post-secondary apprentices in Manitoba.

The maximum amount of the credit is $5,000 per apprentice per year. The rate of salary and wages is:

  • 15%
  • 20% for employers of apprentices who normally reside outside of Winnipeg and who normally report to an employer’s office in rural and northern Manitoba
  • 25% for employers of high school apprentices for tax years ending after 2015

This component of the credit also covers employers eligible for the federal apprenticeship job creation tax credit, who will receive a top-up that is equal to the difference between this provincial credit and the federal credit.

Journeyperson hiring incentive

You can claim this credit if you are an employer that has hired recent graduates of apprenticeship programs in full-time employment in Manitoba. The journeyperson must have received their certificate of qualification in Canada in a field related to the employment.

The credit is equal to 15% of salary and wages paid to the journeyperson, less government assistance, in each of the first two full years of employment, up to a maximum of $5,000 for each year, where the employment starts within 18 months of certification.

Employment periods must be continuous and consecutive, but an employment period may be interrupted by a seasonal layoff of not more than three months.

Manitoba odour-control tax credit

Note

The Manitoba odour‑control tax credit is eliminated for expenditures made after April 11, 2017.

You can earn this credit on eligible expenditures made before April 12, 2017, to reduce Manitoba income tax payable.

Eligible expenditures consist of the capital costs of depreciable capital properties that become available for use in the year and were acquired for preventing, reducing, or eliminating nuisance odours that arise or may arise from the use or production of organic waste.

You can earn this credit if odour control is a significant, but not necessarily your primary, purpose for acquiring the eligible capital property. The properties must be unused and must not have been acquired for any use by anyone before. Eligible expenditures are either prescribed by regulation or approved by the minister.

The credit is equal to 10% of the eligible expenditures.

For non-agricultural corporations, it is non-refundable. You can carry back an unused credit to the 3 tax years before the tax year in which you earned the credit. You can also carry forward the unclaimed credit to the 10 tax years that follow the tax year in which you earned the credit. Unused credits may be carried forward on amalgamation or wind-up.

The corporation may be the beneficiary of a trust or a member of a partnership at the end of the trust's or partnership's tax year. If so, it may include its proportionate allocation or share of the trust/partnership's eligible expenditures in computing its odour-control tax credit.

You cannot claim this credit on eligible expenditures used in calculating any other credit.

You can renounce the odour-control tax credit in whole or in part.

Agricultural corporations are eligible for a refundable odour-control tax credit, in whole or in part. The credit is fully refundable to agricultural corporations effective June 16, 2011. For the 2013 tax year, this includes any amounts not previously claimed or renounced from the previous 10 years.

To claim the credit, file a completed Schedule 385, Manitoba Odour – Control Tax Credit, with your return. You can claim this credit no later than 12 months after your income tax return is due for the tax year in which the expenditures were incurred. For more details, see the schedule.

On line 607 of Schedule 5, enter the non-refundable amount of the credit you are claiming.

If you are an agricultural corporation, enter the refundable credit you are claiming on line 623 of Schedule 5.

Manitoba small business venture capital tax credit

You can claim this non-refundable tax credit if you meet both of the following conditions:

  • you are a corporation that is not a prescribed venture capital corporation or labour-sponsored venture capital corporation under Part LXVII of the federal regulations
  • you directly invested a minimum of $20,000 before January 1, 2020, in a qualifying community enterprise, as defined in the regulations

Effective March 12, 2018, the minimum investment to be eligible for the credit is lowered from $20,000 to $10,000

An eligible business corporation can have a maximum of 100 full-time equivalent employees.

Eligible businesses includes ventures of commercial crop production in a climate-controlled environment and brew pubs.

Manitoba small business venture capital tax credit
Credit rate Annual and lifetime investment limit Yearly maximum earned Yearly maximum applicable
Shares issued after June 11, 2014 45% $450,000 $202,500 $67,500
Shares issued before June 12, 2014 30% $450,000 $135,000 $45,000

The credit is equal to 45% of the amount invested to a lifetime maximum investment of $450,000. For eligible shares issued before June 12, 2014, the rate was 30%.

The annual investment limit is also $450,000 and the maximum amount of the tax credit that you can earn in a given year is $202,500. However, the maximum amount of the tax credit that you can apply against provincial tax in the year is $67,500, including any amounts carried back or carried forward. For eligible shares issued before June 12, 2014, these last two amounts were respectively $135,000 and $45,000.

This credit must be claimed against Manitoba tax otherwise payable. You can carry forward unused credits to the 10 following tax years or back to the 3 previous tax years.

The Province of Manitoba will issue a tax credit receipt for qualifying investments. If you file your T2 return electronically, keep your receipt in case we ask for it later. Otherwise, file it with your paper T2 return.

To claim the credit, file a completed Schedule 387, Manitoba Small Business Venture Capital Tax Credit. See the schedule for more details.

On line 608 of Schedule 5, enter the amount of the credit you are claiming.

Manitoba cooperative development tax credit

Note

The Manitoba cooperative development tax credit is eliminated for contributions made after April 11, 2017.

Manitoba cooperatives and credit unions with a permanent establishment in Manitoba that make financial contributions to a cooperative development fund are eligible for a tax credit.

The credit is equal to:

Calculation for the Manitoba cooperative development tax credit
Contribution Tax credit
$10,000 or less 3/4 of the contribution
$10,001 to $30,000 1/2 of the contribution plus $2,500
$30,001 to $50,000 1/3 of the contribution plus $7,500
$50,001 or more $24,167

The maximum amount of the refundable credit is $750. The maximum amount of the non-refundable credit is $23,417, for a total credit amount of $24,167.

You can carry back an unused credit to the 3 previous tax years. You can also carry forward the unused credit to the 10 following tax years.

If you file electronically, keep your receipt in case we ask for it later. Otherwise, file your receipt with your paper return.

To claim the credit, file a completed Schedule 390, Manitoba Cooperative Development Tax Credit, with your return.

On line 609 of Schedule 5, enter the amount of the non-refundable credit you are claiming. The amount cannot be more than the non-refundable amount on the T2CDTC(MB) slip and the Manitoba tax payable before claiming this credit and the refundable credits.

On line 612 of Schedule 5, enter the amount of the refundable credit you are claiming.

Manitoba Neighbourhoods Alive! tax credit

Note

The Manitoba Neighbourhoods Alive! tax credit is eliminated for contributions made after April 11, 2017.

Corporations that make financial donations and provide an eligible service contribution to support charitable organizations in establishing and operating eligible social enterprises in Manitoba can claim a 30% non-refundable tax credit of up to $15,000 a year, in addition to their charitable donation deduction.

The donations made in the immediately preceding four tax years, after April 12, 2011, and before April 12, 2017,  are eligible for the tax credit. The social enterprise must be newly created after April 12, 2011, and eligible service contributions must be made in its first five years.

You can take up to four years to achieve the minimum $50,000 donation threshold. You can also make an up-front donation of up to $200,000 in the first year, and provide eligible service contributions to earn the maximum credit in each of the subsequent four tax years.

Any unused tax credits can be carried back for up to 3 tax years. They can also be carried forward up to 10 years.

To claim the credit, file a completed Schedule 391, Manitoba Neighbourhoods Alive! tax credit, with your return.

On line 610 of Schedule 5, enter the amount of the credit you are claiming.

Manitoba cultural industries printing tax credit

The Manitoba cultural industries printing tax credit, which was scheduled to end on December 31, 2018, is extended to December 31, 2019.

This refundable tax credit for Manitoba printers is based on the eligible printing costs incurred and paid before 2020 in producing eligible books.

The credit is calculated as

tax credit = 35% x L x (R1/R2)

where:

L is the total of the amounts paid by the printer in the tax year, and before 2020, as salary or wages to its employees who were resident in Manitoba on December 31 of that tax year for their employment in the printer’s book printing division

R1 is the printer’s eligible printing revenue for the tax year

R2 is the total book printing revenue, other than revenue from the printing of yearbooks, earned by the printer in the tax year and before 2020

Before 2015, the credit was equal to 15% of eligible printing costs.

You can claim this credit if you are engaged in the business of printing books in Manitoba and have a permanent establishment in Manitoba.

All of the following conditions apply:

  • the maximum revenue is capped at $200,000 per book title
  • at least 90% of the book must be new material that has not already been published
  • if the book contains pictures and is not a children’s book, at least 65% must be text
  • the printer must demonstrate that the book is for sale through an established distributor

An eligible book is a non-periodical Canadian-authored publication. It is classified as fiction, non-fiction, poetry, drama, biography or children's. An eligible book must be printed before 2020.

On line 611 of Schedule 5, enter the amount of the credit you are claiming.

Manitoba interactive digital media tax credit

Manitoba Growth, Enterprise and Trade will issue a tax credit certificate to a corporation that develops and produces an eligible interactive digital media project in Manitoba. The certificate can be issued upon completion of the project or, if the purchaser is not the government or a public body, on a yearly basis. However, the corporation must first receive a certificate of eligibility before the start of the project.

The following conditions apply:

  • repaid or repayable government assistance does not reduce eligible labour costs
  • where a government or public authority is the purchaser of an interactive digital media product, the amount paid by the purchaser and the amount of the interactive digital media tax credit cannot exceed 100% of the project's costs

To claim the credit, a qualifying corporation must be a taxable Canadian corporation with a permanent establishment in Manitoba.

The credit is equal to: 

  • 40% of eligible project costs paid in the tax year to residents of the province when a corporation pays at least 25% of the salary and wages to employees who are Manitoba residents for the project period
  • as of June 30, 2016, 35% of eligible labour costs for the year, when a corporation that pays less than 25% of its wages to Manitoba employees, still incurs labour expenses of at least $1 million more than government assistance related to those expenses

Before June 30, 2016, limits of 24 months and $500,000 labour expense per project were applicable.

Projects that begin prototyping and product development before 2023 qualify for the credit.

For projects that have been issued an eligibility certificate after 2011 and that start production after 2012:

  • companies may claim up to $100,000 in eligible marketing and distribution expenses that are directly attributable to an eligible production entitled to claim marketing and distribution expense
  • financial support from the Canada Media Fund that is recoupable or repayable is not treated as government assistance
  • an eligible product that is developed under contract for an arm's-length purchaser does not need to demonstrate the product will be resold or licensed by that arm's-length purchaser
  • a broader interpretation of the sale requirement will be used by the province in determining which types of commercialization projects will be eligible

This credit is fully refundable.

To claim the credit, file the certificate with your return no later than the filing due date of the tax year following the tax year in which the project was completed.

On line 614 of Schedule 5, enter the amount of the credit you are claiming.

Manitoba book publishing tax credit

You can claim this credit if you meet all of the following conditions:

  • are engaged mainly in the business of publishing books or you operate a book publishing business as a university press
  • have a permanent establishment in Manitoba
  • pay at least 25% of the wages and salaries to employees who are Manitoba residents
  • have published at least two eligible books within the two-year period ending at the end of the tax year

An eligible book is a first edition, non-periodical Canadian-authored publication. It is classified as fiction, non-fiction, poetry, drama, biography or children's. An eligible book must be published before 2019.

The Manitoba book publishing tax credit, which was scheduled to end on December 31, 2018, is extended to December 31, 2019.

The credit is equal to 40% of eligible Manitoba labour costs, including non-refundable monetary advances made in the tax year to authors of eligible books, to a maximum of $100,000 per year. Eligible labour costs must be incurred and paid in Manitoba by the publisher before 2020.

The credit also includes non-refundable monetary advances and labour costs related to publishing an electronic version of an eligible literary work.

An additional bonus of 15% on Manitoba printing costs can be claimed if the book is printed on paper with a minimum of 30% recycled content. For this bonus, eligible printing costs must be incurred and paid within one year of publication of the eligible book.

The credit is fully refundable.

To claim the credit, file a completed Schedule 389, Manitoba Book Publishing Tax Credit, no later than 18 months after the end of the tax year for which you are claiming the credit.

On line 615 of Schedule 5, enter the amount of the credit you are claiming.

Manitoba green energy equipment tax credit

Manufacturer's tax credit

You can claim this credit if you manufacture and sell geothermal heat pumps for use in Manitoba before July 1, 2023.

Manufacturers can claim a 7.5% tax credit on the adjusted cost of geothermal heat pump systems that meet the standards set by the Canadian Standards Association.

Adjusted cost means an amount equal to 125% of the manufacturer’s cost of manufacturing the heat pump.

For tax years beginning before July 1, 2023, manufacturers can also claim an 8% tax credit on the adjusted cost of green energy transmission equipment sold before July 1, 2023.

The Manitoba manufacturing investment tax credit includes a credit for green energy transmission equipment.

This credit is refundable, but must first be applied against total taxes payable.

On line 619 of Schedule 5, enter the amount of the credit earned in the year.

Purchaser's tax credit

You can also claim this credit if you buy qualifying property that is used to produce energy in Manitoba from a renewable resource before July 1, 2023. The rate varies with different classes of property and is prescribed by legislation.

Purchasers can claim a credit on geothermal heat pump systems that meet the standards set by the Canadian Standards Association. The tax credit equals the total of:

  • 15% of the capital cost of geothermal energy equipment, excluding the cost of the heat pump
  • 7.5% of the purchase price of a heat pump that qualifies for the manufacturer's geothermal energy equipment tax credit

Purchasers who install new specified solar heating equipment in Manitoba qualify for a refundable 10% credit on the eligible capital costs (including taxes and costs related to acquiring and making the system operational). The equipment does not include equipment used to heat water for use in a swimming pool or equipment that distributes heated air or water in a building.

The purchaser's credit also includes gasification equipment and biomass fuel energy equipment that is installed in Manitoba and used in a business. The tax credit rate is 15%.

This credit is refundable, but must first be applied against total taxes payable.

On line 619 of Schedule 5, enter the amount of the credit earned in the year.

Manitoba film and video production tax credit

Manitoba Film and Music reviews all tax credit applications and will issue a tax credit certificate to a corporation that produces an eligible film in the province.

The credit is based on labour costs or production costs.

The credit is equal to 45% (65% with bonuses) of eligible salaries paid before January 1, 2020, for work performed on an eligible film.

The percentage of eligible salaries paid to non-residents for work performed in Manitoba is 30% of eligible salaries paid to Manitobans when there are two Manitoba trainees for each eligible non-resident in the film production technical crew. However, it is 10% of eligible salaries paid to Manitobans when there is only one Manitoba trainee for each eligible non-resident.

The following bonuses are available:

  • a 10% frequent filming bonus on the third eligible film, for corporations that produce three eligible films in two years. This also applies to serial productions
  • a 5% rural filming bonus on eligible salaries paid for work performed in Manitoba on productions where at least 50% of filming days take place at least 35 kilometres outside of Winnipeg
  • a 5% Manitoba producer bonus on eligible salaries where a Manitoba resident receives credit as a producer on an eligible film

Instead of claiming the credit based on labour costs only, corporations may elect to claim a 30% tax credit based on production costs incurred for labour, goods, and services provided in Manitoba that are directly attributable to the production of an eligible film.

For productions that start principal photography after April 17, 2012, the cost of production credit also includes eligible accommodation expenditures incurred and paid up to $300 (including tax) per night for a residence or a hotel room in Manitoba.

This credit is fully refundable, but must first be applied against total taxes payable.

To claim the credit, for each eligible film, file the following with your return for the tax year:

  • a Certificate of Completion (if the production was completed in the tax year), or an Advance Certificate of Eligibility (if the production was not completed in the tax year), issued by Manitoba Film and Music
  • a completed copy of Schedule 388, Manitoba Film and Video Production Tax Credit
  • all the additional documents listed on the last page of Schedule 388

If you file your return electronically, see information on T2 Attach-a-doc.

If you file a paper return, send the return and required attachments to your tax centre.

Corporations may file Form T2029, Waiver in Respect of the Normal Reassessment Period or Extended Reassessment Period, to extend the application for a Certificate of Completion with the Manitoba certifying authority by 18 months.

On line 620 of Schedule 5, enter the amount of the credit earned in the current year.

Manitoba data processing investment tax credits

Note

The Manitoba data processing investment tax credits are eliminated for property purchased or leased after April 11, 2017.

The Manitoba data processing investment tax credits include the following three credits:

  • the data processing centre investment tax credit for operator
  • the data processing centre investment tax credit for building lessor
  • the data processing property investment tax credit
Data processing centre (operator)

The Manitoba data processing centre investment tax credit for operator is a refundable credit available to corporations with a permanent establishment in Manitoba whose primary business activity, including the activities of their affiliates, is data processing.

The tax credit is equal to 4.5% of the capital cost of a new data processing building and 8% of the capital cost of new or refurbished data processing centre property. Such property must be acquired by the company for use in its data processing centre in Manitoba and be available for use.

Data processing centre (building lessor)

The credit also applies to new data processing centres built or acquired in Manitoba, and leased to an eligible corporation that is dealing at arm’s length with the lessor. This part of the credit is the Manitoba data processing centre investment tax credit for building lessor.

Data processing property

The Manitoba data processing property investment tax credit is a refundable credit for eligible corporations equal to 8% of the cost of data processing property purchased or leased in the current tax year. To be eligible for this credit, the total cost of data processing property purchased or leased in the year has to be at least $10 million.

Property must be purchased or leased by the company for use in its data processing centre in Manitoba and be available for use. The corporation does not have to be primarily engaged in data processing in Manitoba, as long as it has a permanent establishment in Manitoba.

These credits also apply to data processing centres built by partnerships. The corporation can claim its proportionate share of the credit that would be earned by the partnership, if the partnership were a taxable Canadian corporation. To claim the entire amount of the credit, the corporation has to file an election, along with a written consent of the partnership, with its return.

To claim the credits, file a completed Schedule 392, Manitoba Data Processing Investment Tax Credits, with your return.

On line 324 of Schedule 5, enter the total amount of the credit you are claiming.

Manitoba nutrient management tax credit

Note

The Manitoba nutrient management tax credit is eliminated for expenditures made after April 11, 2017

Agribusiness corporations with a permanent establishment in Manitoba are eligible for this refundable tax credit.

The credit is equal to 10% of the capital costs related to acquiring and installing environmentally sound systems for use in Manitoba that reduce the risk of nutrient transport to water and help improve water quality.

Eligible equipment includes: solid-liquid separation systems, anaerobic digesters, gravity settling tanks, manure treatment systems, and manure composting facilities; also included are storage tanks suitable for winter manure storage by operators with fewer than 300 animal units.

The assets must be acquired and available for use before April 12, 2017.

Borrowing costs are not eligible, and tax creditable capital costs will be net of any government assistance received or receivable on the eligible investment.

To claim the credit, file a completed Schedule 393, Manitoba Nutrient Management Tax Credit, with your return.

On line 325 of Schedule 5, enter the amount of the credit you are claiming.

Manitoba rental housing construction tax credit

This  tax credit is equal to 8% of the capital cost of an eligible rental housing project that becomes available for use before 2020.

The Manitoba rental housing construction tax credit projects must be made available for use before 2020 for projects in which the application is submitted before March 13, 2018. For applications submitted after March 12, 2018, and before 2019, the project must be available for use before 2021.

Eligible projects means the construction or conversion from a non residential use, of a building, group of buildings, or portion of a building, with at least five or more new residential rental units, and with at least 10% of the units qualifying as affordable rental housing units. The maximum credit is set at $12,000 per eligible rental unit.

Manitoba Housing and Community Development reviews all tax credit applications and will issue a tax credit certificate to a corporation that builds an eligible rental housing project.

Eligible landlords can operate as a for-profit or not-for-profit corporation, but must be residents of Manitoba or have a permanent establishment in Manitoba. Eligible not-for-profit projects will receive a fully refundable tax credit in the year in which the tax credit is earned, as the project becomes available for use. The tax credit on for-profit projects will be claimable over a maximum of five years, and is non-refundable.

To claim the credit, file a completed Schedule 394, Manitoba Rental Housing Construction Tax Credit, with your return. You do not have to file the certificate with your return. However, keep it in case we ask for it later. Tax‑exempt corporations also have to file a return in order to claim this credit.

On line 602 of Schedule 5, enter the amount of the non-refundable credit you are claiming. On line 326 of Schedule 5, enter the amount of the refundable credit.

Manitoba community enterprise development tax credit

Corporations with a permanent establishment in Manitoba that pay at least 25% of their payroll to Manitoba residents are eligible to acquire tax-creditable shares when they invest in specific community enterprises or in community development investment pools in their communities. The Manitoba government will issue a receipt called slip T2CEDTC (MAN.). The shares must be issued after June 11, 2014 and before 2021.

This refundable credit is equal to 45% of a maximum annual investment of $60,000.

If you file electronically, keep your receipt in case we ask for it later. Otherwise, file your receipt with your paper return.

On line 327 of Schedule 5, enter the total amount of the credit you are claiming.

Manitoba child care centre development tax credit

A new refundable income tax credit is introduced for the creation of licensed child care centres.

Manitoba will issue a tax credit certificate to taxable private corporations that create, after March 12, 2018, and before 2021, new child care centres. The credit can reach $10,000 over five years per infant or preschool space created. The corporation must not be primarily engaged in child care services.

On line 889 of Schedule 5, enter the certificate number and on line 328, the amount of the credit you are claiming.

Saskatchewan

The lower rate of Saskatchewan income tax is 2%.

Income eligible for this lower rate is determined using the Saskatchewan business limit of $600,000. Before January 1, 2018, this business limit was $500,000.

The higher rate of income tax is:

  • 12% effective January 1, 2018
  • 11.5% effective July 1, 2017
  • 12% before July 1, 2017

This higher rate applies to all income not eligible for the lower rate.

If the business limit or the rate changes during the tax year, you have to base your calculation on the number of days in the year that each business limit or rate is in effect.

You can use Schedule 411, Saskatchewan Corporation Tax Calculation, to help you calculate your Saskatchewan tax before the application of credits. You do not have to file it with your return. See the schedule for more details.

On line 235 of Schedule 5, enter the amount of tax calculated.

Saskatchewan credit union tax reduction

Note

The Saskatchewan credit union tax reduction is being phased out over four year as follows: 75% for 2017, 50% for 2018, 25% for 2019, and 0% after 2019. The amount is prorated for all tax years during the phase-out period that do not coincide with the calendar year.

The Saskatchewan credit union tax reduction allows credit unions a special reduction from income tax otherwise payable. It is designed to reduce their overall income tax rate to the same net rate paid by small business corporations that claim the Saskatchewan small business deduction.

To be eligible to claim the tax reduction, the credit union must meet all of the following conditions:

  • have been a credit union throughout the tax year
  • have had a permanent establishment in Saskatchewan at any time in the tax year
  • have Saskatchewan taxable income in the year

You can use Part 1 of Schedule 411, Saskatchewan Corporation Tax Calculation, to calculate the Saskatchewan credit union tax reduction. Schedule 411 is a worksheet and you do not have to file it with your return.

Saskatchewan political contribution tax credit

You can claim a tax credit on contributions made to qualifying political parties or election candidates.

The annual maximum credit is $650 and is calculated as follows:

  • 75% of the first $400 contributed

plus

  • 50% of the next $350 contributed

plus

  • 33 1/3% of the next $525 contributed

You do not have to file official receipts with your return. However, keep them in case we ask for them later. We can only accept photocopies if the issuer certifies them as true copies.

On line 890 of Schedule 5, enter the total amount of qualifying contributions, and on line 624, enter the amount of the credit you are claiming.

Saskatchewan manufacturing and processing profits tax reduction

You can claim this reduction if at any time in the tax year you had a permanent establishment in Saskatchewan, earned taxable income and had Canadian manufacturing and processing profits, in Saskatchewan.

The profits from producing or processing electrical energy or steam for sale can be included with Canadian manufacturing and processing profits for this tax reduction.

You must claim this reduction within three years of the filing due date of the return for the applicable tax year.

You can reduce the Saskatchewan income tax rate on Canadian manufacturing and processing profits by 2%.

You can calculate the reduction on Schedule 404, Saskatchewan Manufacturing and Processing Profits Tax Reduction. Schedule 404 is a worksheet to calculate the reduction. You do not have to file it with your return. For more details, see the schedule.

On line 626 of Schedule 5, enter the amount of reduction you are claiming.

Saskatchewan manufacturing and processing investment tax credit

You can earn this credit on qualified property that is used in Saskatchewan mainly for manufacturing or processing goods for lease or sale.

The credit is fully refundable and is equal to 6% of the capital cost of a qualified property acquired after March 22, 2017. The rate was previously 5%.

If the rate changes during the tax year, you have to base your calculation on the number of days in the year that each rate is in effect.

Corporations that are exempt under section 149 of the federal Income Tax Act are not eligible for the refundable credit.

To claim the credit, file a completed Schedule 402, Saskatchewan Manufacturing and Processing Investment Tax Credit, with your return. For more details, see the schedule.

On line 644 of Schedule 5, enter the amount of the credit you are claiming.

Saskatchewan research and development tax credit

You can claim this credit if you have a permanent establishment in Saskatchewan, and you made eligible expenditures for scientific research and experimental development carried out in Saskatchewan.

The credit is equal to 10% of eligible expenditures incurred after March 31, 2015. This rate was previously 15%.

The credit is based on the sum of the corporation’s eligible expenditures and on any repayments of government assistance that are related to eligible expenditures.

Refundability varies with the period the expenditure is incurred. Any unused non‑refundable credit can be carried back 3 tax years and carried forward 10 tax years from the tax year in which you earned the credit.

You can renounce the non‑refundable research and development tax credit for an eligible expenditure incurred during the year, in whole or in part.

Effective April 1, 2017, Canadian-controlled private corporations (CCPCs) are eligible for a refundable tax credit on the first $1 million of qualifying expenditures. Qualifying expenditures that are more than the annual limit, and those incurred by non‑CCPCs, remain eligible for a non-refundable credit. A yearly maximum of $10 million for total qualifying expenditures is set for refundable and non‑refundable tax credits. The following table summarizes the eligibility criteria for refund:

 

Refundability conditions for the Saskatchewan R&D tax credit
Expenditures incurred Annual expenditures Non-CCPCs CCPCs
After March 31, 2017  $1 million or less  non-refundable  refundable 
After March 31, 2017  more than $1 million, up to $10 million  non-refundable  non-refundable 
After March 31, 2015 and before April 1, 2017 no limit non-refundable non-refundable
After March 31, 2012, and before April 1, 2015 $3 million or less non-refundable refundable
After March 31, 2012, and before April 1, 2015 more than $3 million non-refundable non-refundable
After March 18, 2009, and before April 1, 2012 no limit refundable refundable
Before March 19, 2009 no limit non-refundable non-refundable

For eligible expenditures incurred after March 31, 2015, and before April 1, 2017, the whole credit is non-refundable.

For eligible expenditures incurred before April 1, 2015, the credit is equal to 15% and is refundable only in some situations. 

Effective for qualifying expenditures incurred after March 31, 2012, and before April 1, 2015:

  • the tax credit is refundable only for CCPCs, up to a maximum annual limit of $3 million in qualifying expenditures
  • qualifying expenditures that are more than the annual limit, and all qualifying expenditures incurred by non-CCPCs, are eligible for a non-refundable tax credit

For eligible expenditures made after March 18, 2009, and before April 1, 2012, the credit is fully refundable for all corporations.

For eligible expenditures made before March 19, 2009, the whole credit was non-refundable.

To claim the credit, file a completed Schedule 403, Saskatchewan Research and Development Tax Credit. See the schedule for more details.

On line 631 of Schedule 5, enter the amount of the non-refundable credit you are claiming. On line 645 of Schedule 5, enter the amount of the refundable credit.

Saskatchewan qualifying environmental trust tax credit

A corporation that is a beneficiary of a qualifying environmental trust located in Saskatchewan can claim a 12% tax credit on income that is subject to tax under Part XII.4 of the federal Income Tax Act.

The qualifying environmental trust will issue a letter to the corporation that is a beneficiary.

This credit is fully refundable, but must first be applied against taxes payable.

You do not have to file the letter with your return. However, keep it in case we ask for it later.

On line 641 of Schedule 5, enter the amount of the credit earned.

British Columbia

The lower rate of British Columbia income tax is 2%, effective April 1, 2017. It was previously 2.5%.

Income eligible for the lower rate is determined using the British Columbia business limit of $500,000.

The higher rate of British Columbia income tax is 12%, effective January 1, 2018. It was previously 11%.

This rate applies to all income not eligible for the lower rate.

If the rate changes during the tax year, you have to base your calculation on the number of days in the year that each rate is in effect.

You can use Schedule 427, British Columbia Corporation Tax Calculation, to help you calculate your British Columbia tax before the application of credits. You do not have to file it with your return. See the schedule for more details.

On line 240 of Schedule 5, enter the amount of tax calculated.

References
Sections 14, 14.1, and 16, British Columbia Income Tax Act

British Columbia credit union tax reduction

The British Columbia credit union tax reduction allows credit unions a special reduction from income tax otherwise payable. It is designed to reduce their overall income tax rate to the same net rate paid by small business corporations that claim the British Columbia small business deduction.

To be eligible to claim the tax reduction, the credit union must meet all of the following conditions:

  • have been a credit union throughout the tax year
  • have had a permanent establishment in British Columbia at any time in the tax year
  • have British Columbia taxable income in the year

Note

Exceptionally, in 2016, only 80% of the additional deduction was available.

To claim the British Columbia credit union tax reduction, file Schedule 17, Credit Union Deductions, with your return.

British Columbia logging tax credit

Corporations that have paid logging tax to British Columbia on income they earned from logging operations for the year can claim a British Columbia logging tax credit. This non-refundable credit is equal to one-third of the logging tax payable and paid as indicated on provincial forms FIN 542S, Logging Tax Return of Income, or FIN 542P, Logging Tax Return of Income for Processors.

On line 651 of Schedule 5, enter the amount of the credit you are claiming.

Reference
Section 19.1, British Columbia Income Tax Act

British Columbia political contribution tax credit

You can claim a tax credit on contributions made to registered British Columbia political parties, registered British Columbia constituency associations, or to candidates for an election to the Legislative Assembly of British Columbia.

The annual maximum credit is $500 and is calculated as follows:

  • 75% of the first $100 contributed

plus

  • 50% of the next $450 contributed

plus

  • 33 1/3% of the next $600 contributed

You do not have to file official receipts with your return. However, keep them in case we ask for them later. We can accept photocopies only if the issuer certifies them as true copies.

On line 896 of Schedule 5, enter the total amount of qualifying contributions, and on line 653, enter the amount of the credit you are claiming.

Reference
Section 20, British Columbia Income Tax Act

British Columbia farmers’ food donation tax credit

Corporations in the business of farming can claim this credit if they donate qualifying agricultural products they produce in British Columbia to a registered charity that provides food to those in need or helps to operate a school meal program.

The non‑refundable tax credit is equal to 25% of the eligible amount of the qualifying agricultural product for gifts made on or after February 17, 2016.

The British Columbia farmers’ food donation tax credit, which was scheduled to end December 31, 2018, is extended to December 31, 2019.

You must claim the credit in the same year that you claim the deduction for charitable gifts under section 110.1 of the federal Income Tax Act for the donation. The carry-forward period is five years.

To claim the credit, file a completed Schedule 2, Charitable Donations and Gifts, with your return. For more details, see the schedule.

On line 683 of Schedule 5, enter the amount of the credit you are claiming.

British Columbia small business venture capital tax credit

Corporations investing in shares of a registered venture capital corporation or eligible business corporation can claim a British Columbia venture capital tax credit. The British Columbia government issues a certificate called Form SBVC 10 to these corporations.

For tax years that end after February 21, 2017, eligible business corporations participating in the small business venture capital program are allowed to claim the British Columbia interactive digital media tax credit.

Apply the venture capital tax credit first to reduce the British Columbia provincial tax payable for the year to zero. If unclaimed credits remain, you can carry them forward for four tax years to reduce the British Columbia tax payable.

You do not have to file the certificate with your return. However, keep it in case we ask for it later.

On Schedule 5, line 880, enter the unclaimed tax credit, if any, at the end of the previous tax year. On line 881, enter the tax credit amount available in the current year as reported on Form SBVC 10. On line 882, enter the nine-digit certificate number from Form SBVC 10. On line 656, enter the tax credit amount you are claiming.

Reference
Section 21, British Columbia Income Tax Act

British Columbia scientific research and experimental development tax credit

A qualifying corporation with a permanent establishment in British Columbia can claim this credit on expenditures incurred in the tax year before September 1, 2022, for scientific research and experimental development (SR&ED) carried on in British Columbia.

An active member of a partnership can also claim its share of the partnership's non-refundable tax credit for SR&ED carried on in British Columbia. Only partners that are qualifying corporations can claim the credit.

To claim the credit, file a completed Form T666, British Columbia (BC) Scientific Research and Experimental Development Tax Credit, with your return. You must file this form no later than 18 months after the end of the tax year in which the qualified expenditures are incurred (even if you do not claim the credit for that year). For more details, see Form T666.

References
Part 6, British Columbia Income Tax Act

British Columbia SR&ED refundable tax credit

A qualifying corporation that is a CCPC may claim the refundable tax credit.

The amount of the credit is equal to 10% of whichever of the following amounts is less:

  • the SR&ED qualified BC expenditure for the tax year
  • the expenditure limit for the tax year

On line 674 of Schedule 5, enter the amount of the refundable credit you are claiming.

Reference
Section 98, British Columbia Income Tax Act

British Columbia SR&ED non-refundable tax credit

Qualifying CCPCs with SR&ED qualified expenditures that are more than their expenditure limit, and qualifying corporations that are not CCPCs may claim a non-refundable tax credit.

The annual non-refundable tax credit is 10% of the SR&ED qualified BC expenditure for that year less the total of:

  • the amount of refundable credit for that year
  • any amount renounced for that year

The credit may be deducted against the income tax payable for that year. You must claim the maximum tax credit available in the year it is earned. You can carry back an unused credit to the three previous tax years from the year the expenditures were incurred. You can also carry forward the unclaimed credit to the ten tax years that follow the tax year in which the expenditures were incurred.

On line 659 of Schedule 5, enter the amount of the non-refundable credit you are claiming.

Reference
Section 99, British Columbia Income Tax Act

Recapture of British Columbia SR&ED tax credit

A corporation that disposed of a property used in SR&ED, or converted it to commercial use within 10 years of acquiring the property, may be required to report a recapture of any British Columbia SR&ED tax credit previously calculated on that property. Any recapture will create or increase British Columbia tax otherwise payable.

To calculate the recapture, complete Form T666 and attach it to your return. For more details, see Form T666.

On line 241 of Schedule 5, enter the amount of recapture calculated.

Reference
Sections 102.1 to 102.6, British Columbia Income Tax Act

British Columbia qualifying environmental trust tax credit

A corporation that is a beneficiary of a qualifying environmental trust located in British Columbia can claim a tax credit on income that is subject to tax under Part XII.4 of the federal Income Tax Act.

The credit will reduce the provincial tax otherwise payable for the tax year that includes the trust's tax year.

This credit is fully refundable, but must first be applied against total taxes payable.

On line 670 of Schedule 5, enter the amount of the credit earned.

Reference
Section 25, British Columbia Income Tax Act

British Columbia film and television tax credit

The film and television tax credits are for domestic productions with qualifying levels of Canadian content. To claim these credits, an eligible production corporation must be a Canadian-controlled taxable corporation that has a permanent establishment in British Columbia and its activities must primarily be carrying on a film or video production business through a permanent establishment in Canada.

The film and television tax credit cannot be claimed if the production services tax credit is claimed for that production.

These credits are fully refundable but must first be applied against total taxes payable.

These credits apply to BC labour expenditures. For determining BC labour expenditures, a BC-based individual is a person who is resident in the province on December 31 of the year preceding the end of the tax year for which the tax credit is claimed.

An eligible production corporation can claim these different credits:

  • the basic tax credit (35%)
  • the regional tax credit (12.5%)
  • the distant location regional tax credit (6%)
  • the film training tax credit (3%—see other option below)
  • the digital animation, visual effects and post-production (DAVE) tax credit (16%—17.5% before October 1, 2016)
Note

If you are not eligible for, and do not claim the basic tax credit, you cannot claim the regional, distant location, film training, or the DAVE tax credits.

The British Columbia film and television tax credit is expanded to include a new scriptwriting tax credit.

This new refundable credit is equal to 35% of eligible scriptwriting expenditures directly attributable to developing script material for a production. This includes salary, wages, and other remuneration and reimbursements paid to scriptwriters who are BC-based individuals. The cost of purchasing a published or finished literary work, screenplay, script or script material is not eligible.

The expenses have to be incurred after February 20, 2018, maximum two years before the date principal photography begins, and before the end of the final script stage. The amounts have to be paid no later than 60 days after the end of the tax year in which principal photography began.

The scriptwriting tax credit can be claimed only if the corporation is eligible for, and claiming the basic tax credit.

 To claim these credits, file the following with your return for the year:

  • the eligibility certificate (or a copy) requested from Creative BC
  • if it applies, the completion certificate (or a copy) and a copy of the audited statement of production costs and notes provided to Creative BC
  • a completed copy of Form T1196, British Columbia Film and Television Tax Credit, for each eligible production

If you file your return electronically, see information on T2 Attach-a-doc.

If you file a paper return, send the return and required attachments to your tax centre.

You must claim these credits no later than 36 months after the end of the tax year.

On line 671 of Schedule 5, enter the amount you are claiming.

Basic tax credit

The basic tax credit is equal to 35% of the qualified BC labour expenditure for the tax year for the production.

 Regional tax credit

The regional tax credit is equal to one of the following amounts:

  • 12.5% of the qualified BC labour expenditure for the production for the tax year, where a minimum of five days and more than 50% of the total principal photography days in British Columbia are outside of the designated Vancouver area
  • for a production that is intended for television broadcast as a series and that comprises a cycle of at least three episodes, where principal photography of at least three episodes is done in British Columbia outside of the designated Vancouver area, the credit is 12.5% of the qualified BC labour expenditure for the tax year for the qualified episodes done in British Columbia, where a minimum of five days and more than 50% of the total principal photography days in British Columbia are outside of the designated Vancouver area

The credit is prorated for the number of days of principal photography done in British Columbia outside the designated Vancouver area over the total number of days of principal photography done in British Columbia.

For animated productions that start key animation after June 26, 2015, the regional tax credit is 12.5% of the qualified BC labour expenditure prorated by the BC labour expenditure incurred in BC outside of the designated Vancouver area over the total BC labour expenditure for the animated production incurred in the tax year. There is no minimum number or percentage of principal photography days required, and there is no proration based on principal photography days.

Distant location regional tax credit

The distant location regional tax credit is available when principal photography is done in British Columbia in a distant location. The distant location is that part of British Columbia that is not included within the area that extends from the designated Vancouver area north, up to and including Whistler, and east to include Hope.

For a production with principal photography done in the Capital Regional District, the distant location regional tax credit is only available if principal photography started after February 18, 2014.

The distant location regional tax credit is equal to one of the following amounts:

  • 6% of the qualified BC labour expenditure for the production for the tax year, where a minimum of one day of principal photography is in a distant location
  • for a production that is intended for television broadcast as a series and that comprises a cycle of at least three episodes, where principal photography of at least three episodes is done in a distant location, the credit is 6% of the qualified BC labour expenditure for the tax year for the qualified episodes determined for the regional tax credit, where a minimum of one day of principal photography is in a distant location

The credit is prorated for the number of days of principal photography done in a distant location, over the total number of days of principal photography done in British Columbia.

For animated productions that start key animation after June 26, 2015, the distant location regional tax credit is 6% of the qualified BC labour expenditure prorated by the BC labour expenditure incurred in a distant location over the total BC labour expenditure for the animated production incurred in the tax year. There is no minimum number or percentage of principal photography days required, and there is no proration based on principal photography days.

The distant location regional tax credit can only be claimed if the corporation is eligible for, and claiming the regional tax credit.

Film training tax credit

The film training tax credit is equal to whichever is less:

  • 3% of the qualified BC labour expenditure for the production for the tax year
  • 30% of the payments (net of assistance) made to the trainees in the tax year while they are participating in the approved training program on the production
Digital animation, visual effects and post-production (DAVE) tax credit

The digital animation, visual effects and post-production tax credit is equal to 16% of BC labour expenditure directly attributable to prescribed digital animation or visual effects activities, including prescribed digital post-production activities for productions that start principal photography after February 28, 2015. For productions that started principal photography before October 1, 2016, the rate is 17.5%.

References
Part 5, British Columbia Income Tax Act
CIT 009, British Columbia Film and Television Tax Credit
CIT 011, British Columbia Digital Animation or Visual Effects Tax Credit

British Columbia production services tax credit

The production services tax credits are available to both domestic and foreign producers and there is no Canadian content requirement. To claim these credits, the corporation must have a permanent establishment in British Columbia during the tax year, and throughout the tax year, must have primarily carried on a film or video production business or a film or video production services business.

The production services tax credit cannot be claimed if the film and television tax credit is claimed for that production.

These credits are fully refundable, but must first be applied against total taxes payable.

These credits apply to BC labour expenditures. A BC-based individual is a person who is resident in the province on December 31 of the year preceding the end of the tax year for which the tax credit is claimed.

An accredited production corporation can claim these different credits:

  • the basic production services tax credit (28%—33% before October 1, 2016)
  • the regional production services tax credit (6%)
  • the distant location production services tax credit (6%)
  • the digital animation, visual effects and post-production (DAVE) services tax credit (16%—17.5% before October 1, 2016)
Note

If you are not eligible for, and do not claim the basic production services tax credit, you cannot claim the regional, distant location, or DAVE production services tax credits.

To claim these credits, file the following with your return for the year:

If you file your return electronically, see information on T2 Attach-a-doc.

If you file a paper return, send the return and required attachments to your tax centre.

You must claim these credits no later than 36 months after the end of the tax year.

On line 672 of Schedule 5, enter the amount of credit you are claiming.

Basic production services tax credit

The basic production services tax credit is equal to 28% of the corporation’s accredited qualified BC labour expenditure for the tax year.

For productions that started principal photography before October 1, 2016, the rate is 33%. If the first episode in a cycle of a television series started principal photography before October 1, 2016, the 33% rate applies to all episodes in that cycle.

Regional production services tax credit

The regional production services tax credit is equal to 6% of the accredited qualified BC labour expenditure for the production for the tax year, where a minimum of five days and more than 50% of the total principal photography days in British Columbia are done outside of the designated Vancouver area.

The credit is prorated for the number of days of principal photography done in British Columbia outside the designated Vancouver area over the total number of days of principal photography done in British Columbia.

For animated productions that start key animation after June 26, 2015, the regional production services tax credit is 6% of the accredited qualified BC labour expenditure, prorated by the accredited BC labour expenditure incurred in BC outside the designated Vancouver area over the total accredited BC labour expenditure for the animated production incurred in the tax year. There is no minimum number or percentage of principal photography days required, and there is no proration based on principal photography days.

Distant location production services tax credit

The distant location production services tax credit is available when principal photography is done in British Columbia in a distant location. The distant location is that part of British Columbia that is not included within the area that extends from the designated Vancouver area north, up to and including Whistler and east to include Hope.

For a production with principal photography done in the Capital Regional District, the distant location production services tax credit is only available if principal photography started after February 18, 2014.

The distant location production services tax credit is equal to 6% of the accredited qualified BC labour expenditure for the production for the tax year, where a minimum of one day of principal photography is done in a distant location.

The credit is prorated for the number of days of principal photography done in a distant location, over the total number of days of principal photography done in British Columbia.

For animated productions that start key animation after June 26, 2015, the distant location production services tax credit is 6% of the accredited qualified BC labour expenditure prorated by the accredited BC labour expenditure incurred in a distant location over the total accredited BC labour expenditure incurred for the animated production in the tax year. There is no minimum number or percentage of principal photography days required, and there is no proration based on principal photography days.

The distant location production services tax credit can only be claimed if the corporation is eligible for, and is claiming the regional production services tax credit.

Digital animation, visual effects and post-production (DAVE) services tax credit

The digital animation, visual effects and post-production (DAVE) services tax credit is equal to 16% of accredited qualified BC labour expenditure that is directly attributable to prescribed digital animation or visual effects activities, including prescribed digital post-production activities for productions that start principal photography after February 28, 2015.

For productions that started principal photography before October 1, 2016, the rate is 17.5%. If the first episode in a cycle of a television series started principal photography before October 1, 2016, the 17.5% rate applies to all episodes in that cycle.

References
Part 5, British Columbia Income Tax Act
CIT 010, British Columbia Production Services Tax Credit
CIT 011, British Columbia Digital Animation or Visual Effects Tax Credit

British Columbia mining exploration tax credit

A corporation that has incurred qualified mining exploration expenses in British Columbia may qualify for the British Columbia mining exploration tax credit. The corporation must have maintained a permanent establishment in the province at any time in the tax year.

The expenditures have to be incurred before January 1, 2020, for determining the existence, location, extent, or quality of a mineral resource in British Columbia.

Qualified mining exploration expenses may include expenses incurred in the course of prospecting, carrying out geological surveys, drilling, trenching, digging test pits, and preliminary sampling. Exploration expenses include expenses incurred after February 28, 2015, for environmental studies and community consultation to get a right, licence or privilege for determining the existence, location, extent or quality of a mineral resource in BC.

Any flow-through mining expenditure renounced under subsection 66(12.6) of the federal Income Tax Act does not qualify for the credit.

This credit also applies to partnerships. Taxpayers who are active members of a partnership, other than specified members (such as limited partners), can each claim their proportionate share of the partnership's tax credit. To claim your proportionate share of the partnership's tax credit, file a completed Schedule T1249, British Columbia Mining Exploration Tax Credit Partnership Schedule, with your return. For more details, see the schedule.

The credit is equal to 20% of the amount by which:

  • the total qualified mining exploration expenses incurred in the tax year

is more than

  • the total assistance for amounts included in the total qualified mining exploration expenses for the tax year

Prospecting, drilling, trenching, digging test pits and preliminary sampling expenses incurred after May 17, 2018, are qualified mining exploration expenses only to the extent the expenses exceed any revenues resulting from those expenses before the mine comes into production in reasonable commercial quantities.

A corporation can claim an additional 10% of the total qualified mining exploration expenses incurred in prescribed mountain pine beetle affected areas. These expenses must be reduced by the total assistance attributable to them.

The credit is fully refundable, but must first be applied against total taxes payable.

To claim the credit, file a completed Schedule 421, British Columbia Mining Exploration Tax Credit, with your return. You must claim this credit no later than 18 months after the end of the tax year, for a tax year that ends on or after January 1, 2017. It was previously 36 months.

For more details, see the schedule. Members of a partnership must also file a completed Schedule T1249.

On line 673 of Schedule 5, enter the amount of credit you are claiming.

References
Section 25.1, British Columbia Income Tax Act

British Columbia book publishing tax credit

You can claim this credit if you receive a base amount of Publishing Support contributions under the federal Canada Book Fund (CBF) before April 1, 2018.

This credit, which was scheduled to end March 31, 2018, is extended three years to March 31, 2021.

The recipient must be a Canadian-controlled corporation carrying on business mainly through a permanent establishment in British Columbia with book publishing as its principal business.

You are eligible for a credit of 90% of the base amount of Publishing Support contributions received in the tax year. The credit is fully refundable, but must first be applied against total taxes payable.

On line 886 of Schedule 5, enter the base amount of Publishing Support contributions received in the tax year and on line 665, enter the amount of the credit you are claiming. You must claim this credit no later than 18 months after the end of the tax year.

References
Part 8, British Columbia Income Tax Act

British Columbia training tax credit

You can claim a refundable tax credit if you are a taxable corporation with a permanent establishment in the province and you paid salary or wages before January 1, 2019, to an employee who was registered in a prescribed program administered through the BC Industry Training Authority.

The province offers a credit to employers based on the wages paid to an apprentice:

  • the basic tax credit for apprentices in the first 24 months of a non-Red Seal program (20%, maximum $4,000)
  • the completion tax credit when an apprentice completes level three or four of either a Red Seal program or a non-Red Seal program (15%, maximum $2,500 / $3,000)
  • the enhanced tax credit for apprentices who are registered as Indians under the Indian Act or who qualify for the disability amount on their income tax and benefit return (all levels of both Red Seal and non-Red Seal programs) (5.5% maximum $1,000, 30% maximum $6,000, or 22.5% maximum $3,750 / $4,500)
Note

For level three or four of a Red Seal or non-Red Seal program, level has the same meaning as tax credit level. To complete a tax credit level, see the requirements in the table issued by the Province, Training Tax Credits: Table of Eligible Programs and Completion Requirements for Employers.

You cannot claim the British Columbia training tax credit if you claim the British Columbia shipbuilding and ship repair industry tax credit in the tax year.

You can claim one or more of the following three credits in the year for each qualified employee:

  • The basic tax credit is 20% of the salary and wages (net of designated assistance) that were paid to an employee who was in the first 24 months of a non-Red Seal apprenticeship program in the tax year. The maximum basic tax credit you can claim is $4,000, per employee, per year. This credit is not available to Red Seal programs and cannot be claimed if you are claiming the federal apprenticeship job creation tax credit for the same employee (see Apprenticeship job creation tax credit)
  • The completion tax credit is 15% of the salary and wages (net of designated assistance) that were paid to an employee within the 12 month period ending on any day in the month that the employee completed level three or four. The maximum completion tax credit you can claim is $2,500 per employee who has completed level three, and $3,000 per employee who has completed level four. This credit applies to both Red Seal and non-Red Seal programs
  • The enhanced tax credit applies to employees who are registered as Indians under the Indian Act or qualify for the disability amount on their income tax return. Do not claim the basic tax credit or the completion tax credit if you are claiming the enhanced tax credit as these credits are included in the calculation of the enhanced tax credits. An employer claiming the enhanced tax credit for a qualifying employee should only complete Part 3 when filing Schedule 428, British Columbia Training Tax Credit. The enhanced tax credits are as follows:
    • for the first 24 months of a Red Seal program, 5.5% of the salary and wages (net of designated assistance) that were paid to an employee who was in the first 24 months of a Red Seal apprenticeship program in the tax year. The maximum tax credit you can claim is $1,000 per employee. You can claim this credit in addition to the federal apprenticeship job creation tax credit for the same employee
    • for the first 24 months of a non-Red Seal program, 30% of the salary and wages (net of designated assistance) that were paid to an employee who was in the first 24 months of a non-Red Seal apprenticeship program in the tax year. The maximum tax credit you can claim is $6,000 per employee. This credit is not available to Red Seal programs and cannot be claimed if you are claiming the federal apprenticeship job creation tax credit for the same employee
    • for level three or four of a Red Seal or non-Red Seal program, 22.5% of the salary and wages (net of designated assistance) that were paid to an employee within the 12-month period ending on any day in the month that the employee completed level three or four. The maximum tax credit you can claim is $3,750, per employee who has completed level three and $4,500, per employee who has completed level four. This part of the credit is also called the enhanced completion tax credit

For the completion and enhanced tax credits, the salary and wages can be dually applied to overlapping periods when more than one level is completed during the tax year.

Example

The employer's tax year runs from January 1 to December 31, 2018.

An employee completes level three on January 31, 2018, and level four on June 30, 2018.

In the tax year, the employer can claim the wages paid from February 1, 2017, to January 31, 2018, for the level three tax credit. In the same tax year, the employer can also claim the wages paid from July 1, 2017, to June 30, 2018, for the level four tax credit. The wages paid from July 1, 2017, to January 31, 2018, are used for both credits.

You can also claim these credits for former qualified employees for the time they were employed by you during an eligible period, even though they were no longer working for you when they completed a specific level of the apprenticeship program.

These credits extend to partnerships. Corporations who are members of a partnership, other than specified members (such as limited partners), can each claim their share of the partnership's tax credit.

Special rules apply for employers not dealing at arm's length who want to claim the training tax credit for the same employee. For more details, see section 125 of the British Columbia Income Tax Act.

To claim these credits, file a completed Schedule 428, British Columbia Training Tax Credit, with your return. You must claim the basic tax credit and the enhanced basic tax credit no later than 36 months after the end of the tax year in which the eligible salaries and wages are paid. You must claim the completion tax credit and the enhanced completion tax credit no later than 36 months after the end of the tax year in which the employee completed the requirements for a tax credit level.

On line 679 of Schedule 5, enter the total amount of the credits you are claiming.

References
Part 9, British Columbia Income Tax Act
Training Tax Credits: Table of Eligible Programs and Completion Requirements  for Employers

British Columbia interactive digital media tax credit

The interactive digital media tax credit is a refundable credit equal to 17.5% of BC eligible salary and wages (net of designated assistance) incurred before September 1, 2018.

The British Columbia interactive digital media tax credit, which was scheduled to end August 31, 2018, is extended five years to August 31, 2023.

You cannot claim this credit if you claim the BC SR&ED tax credit for the year. Also, the corporation must:

  • be registered with the BC Ministry of Finance for each tax year for which the tax credit is claimed
  • have a permanent establishment in British Columbia at any time during the tax year
  • be a taxable Canadian corporation throughout the tax year
  • have an amount of eligible salary and wages for the tax year greater than $100,000. This amount is prorated for short tax years, and
  • be a corporation whose
    • principal business in the tax year is developing interactive digital media products
    • all or substantially all of the business in the tax year consists of one or both of the following:
      • developing interactive digital media products
      • providing eligible activities to a corporation who has a permanent establishment in British Columbia and whose principal business is the development of interactive digital media products, or
    • principal business in the tax year is not developing interactive digital media products, but eligible salary and wages are equal to or greater than $2 million for tax years that end after February 21, 2017

Note

For tax years that end after February 21, 2017, interactive digital media corporations registered as eligible business corporations in the small business venture capital program are eligible to claim the credit.

To claim the credit, file a completed Schedule 429, British Columbia Interactive Digital Media Tax Credit, with your return.

You must claim this credit no later than 18 months after the end of the tax year.

On line 680 of Schedule 5, enter the amount of the credit you are claiming.

Reference
Part 10, British Columbia Income Tax Act

British Columbia shipbuilding and ship repair industry tax credit

You can claim a refundable tax credit if you are an eligible employer in the British Columbia shipbuilding and ship repair industry and you paid salary or wages to an employee who was registered in a prescribed program administered through the BC Industry Training Authority.

The British Columbia shipbuilding and ship repair industry tax credit is available for salary and wages paid after September 30, 2012. It applies to Red Seal and non-Red Seal programs.

You can claim one or more of the following three credits in the year for each qualified employee:

  • the basic tax credit for employees within 24 months after the employee entered into an industry training agreement (20%, maximum $5,250)
  • the completion tax credit when an employee completes level three or four of an eligible program (20%, maximum $5,250)
  • the enhanced tax credit for employees who are registered as Indians under the Indian Act or who qualify for the disability amount on their income tax return (all levels of an eligible program) (30%, maximum $7,875)

For each of the basic and completion tax credits, the credit is equal to 20% of the salary and wages (net of designated assistance) that were paid to an employee, up to a maximum of $5,250 per employee per tax year.

These numbers are increased by half when they apply to the enhanced tax credit. This credit is equal to 30% of the salary and wages (net of designated assistance) that were paid to an employee, up to a maximum of $7,875 per employee per tax year.

For the completion and enhanced tax credits, the salary and wages can be dually applied to overlapping periods when more than one level is completed during the tax year.

You cannot claim the British Columbia training tax credit if you claim the British Columbia shipbuilding and ship repair industry tax credit in the tax year.

These credits extend to partnerships. Corporations that are members of a partnership, other than specified members (such as limited partners), can each claim their share of the partnership's tax credit.

Special rules apply for employers not dealing at arm's length who wish to claim the tax credit for the same employee. For more details, see section 126.5 of the British Columbia Income Tax Act.

To claim these credits, file a completed Schedule 430, British Columbia Shipbuilding and Ship Repair Industry Tax Credit, with your return. You must claim these credits no later than 36 months after the end of the tax year in which you paid the eligible salaries and wages.

On line 681 of Schedule 5, enter the total amount of the credits you are claiming.

References
Part 9, British Columbia Income Tax Act

Yukon

The lower rate of Yukon income tax is 2%, effective July 1, 2017. It was previously 3%.

Income eligible for the lower rate is determined using the Yukon business limit of $500,000.

The higher rate of tax is 12%, effective July 1, 2017. It was previously 15%. The higher rate applies to taxable income earned in the Yukon that does not qualify for the small business deduction.

If the rate changes during the tax year, you have to base your calculation on the number of days in the year that each rate is in effect.

You can use Schedule 443, Yukon Corporation Tax Calculation, to help you calculate the Yukon tax before the application of credits. You do not have to file it with your return. See the schedule for more details.

On line 245 of Schedule 5, enter the amount of tax calculated.

Yukon political contribution tax credit

You can claim a tax credit on contributions made to a registered political party or to a candidate for an election to the Yukon Legislative Assembly.

The Yukon political contribution tax credit for corporations matches the federal political contribution tax credit for individuals on an ongoing basis.

Currently, the annual maximum credit is $650 and is calculated as follows:

  • 75% of the first $400 contributed

plus

  • 50% of the next $350 contributed

plus

  • 33 1/3% of the next $525 contributed

You do not have to file official receipts with your return. However, keep them in case we ask for them later. We can only accept photocopies if the issuer certifies them as true copies.

On line 897 of Schedule 5, enter the total amount of qualifying contributions. On line 675, enter the amount of the credit you are claiming.

Yukon manufacturing and processing profits tax credit

Corporations that have earned taxable income and manufacturing and processing profits in the Yukon are eligible for this credit.

As of July 1, 2017, the Yukon manufacturing and processing profits tax credit rate decreased from 12.5% to 9.5%. The small business increment decreased from 1.5% to 0.5%.

If the rate changes during the tax year, you have to base your calculation on the number of days in the year that each rate is in effect.

Schedule 440, Yukon Manufacturing and Processing Profits Tax Credit, is a worksheet to calculate the credit. You do not have to file it with your return. For more details, see the schedule.

On line 677 of Schedule 5, enter the amount of the credit you are claiming.

Yukon research and development tax credit

You can claim this credit if you have a permanent establishment in the Yukon at any time in the year and you incurred qualified expenditures in the year for scientific research and experimental development carried on in the Yukon.

The credit is equal to the total of the following amounts:

  • 15% of eligible expenditures incurred in the year
  • 5% of eligible expenditures included above paid or payable to the Yukon College

The credit is based on the sum of the corporation's qualified expenditures and any eligible repayments.

The credit is fully refundable, but must first be applied against total taxes payable.

To claim the credit, file Schedule 442, Yukon Research and Development Tax Credit, with your return no later than 18 months after the end of the tax year for which you are claiming the credit. For more details, see the schedule.

On line 698 of Schedule 5, enter the amount of the credit earned.

Northwest Territories

The lower rate of Northwest Territories income tax is 4%. This lower rate applies to taxable income earned in the Northwest Territories that qualifies for the federal small business deduction.

The higher rate of the Northwest Territories income tax is 11.5%. This rate applies to taxable income earned in the Northwest Territories that does not qualify for the federal small business deduction.

You can use Schedule 461, Northwest Territories Corporation Tax Calculation, to help you calculate the Northwest Territories tax before the credits are applied. You do not have to file it with your return. See the schedule for more details.

On line 250 of Schedule 5, enter the amount of tax calculated.

Northwest Territories political contribution tax credit

You can claim a tax credit on contributions made to a candidate for an election to the Northwest Territories Legislative Assembly.

The annual maximum credit is $500 and is calculated as follows:

  • 100% of the first $100 contributed

plus

  • 50% of the next $800 contributed

You do not have to file official receipts with your return. However, keep them in case we ask for them later. We can only accept photocopies if the issuer certifies them as true copies.

Note

Contributions to a political party do not qualify for this credit.

On line 898 of Schedule 5, enter the total amount of qualifying contributions, and on line 700, enter the amount of the credit you are claiming.

Nunavut

The lower rate of Nunavut income tax is 4%. This lower rate applies to taxable income earned in Nunavut that qualifies for the federal small business deduction.

The higher rate of Nunavut income tax is 12%. This rate applies to taxable income earned in Nunavut that does not qualify for the small business deduction.

You can use Schedule 481, Nunavut Corporation Tax Calculation, to help you calculate the Nunavut tax before the credits are applied. You do not have to file it with your return. See the schedule for more details.

On line 260 of Schedule 5, enter the amount of tax calculated.

Nunavut political contribution tax credit

You can claim a tax credit on contributions made to a candidate for an election to the Nunavut Legislative Assembly.

The annual maximum credit is $500 and is calculated as follows:

  • 100% of the first $100 contributed

plus

  • 50% of the next $800 contributed

You do not have to file official receipts with your return. However, keep them in case we ask for them later. We can only accept photocopies if the issuer certifies them as true copies.

Note

Contributions to a political party do not qualify for this credit.

On line 899 of Schedule 5, enter the total amount of qualifying contributions. On line 725, enter the amount of the credit you are claiming.

Other credits

Line 780 – Investment tax credit refund

On line 780, enter the amount of the investment tax credit refund. See Investment tax credit for details.

Line 784 – Dividend refund

On line 784, enter the amount of the dividend refund, which you calculated in the "Dividend refund" area on page 6 of your return. See Dividend refund for details.

Line 788 – Federal capital gains refund

Investment corporations and mutual fund corporations have to file Schedule 18, Federal and Provincial or Territorial Capital Gains Refund, with their returns. Schedule 18 has to contain the following information:

  • details about the refundable capital gains tax on hand
  • details of the capital gains redemption for the year
  • a calculation of the federal capital gains refund for the year

Use 28% as the percentage to determine the refundable capital gains tax on hand.

The federal capital gains refund for the year is whichever is less:

  • 14% of the total of:
    • the capital gains dividends paid in the period starting 60 days after the beginning of the year and ending 60 days after the end of the year, and
    • the capital gains redemption for the year or
  • the refundable capital gains tax on hand at the end of the year

Complete the appropriate lines on Schedule 18, and enter on line 788 of the return the federal capital gains refund. See the details on the provincial or territorial capital gains refund.

Note

If a corporation is established and maintained mainly to benefit non-residents, it does not qualify as a mutual fund corporation, and it cannot claim the capital gains refund.

References
Sections 130 and 131

Line 792 – Federal qualifying environmental trust tax credit refund

On line 792, enter the amount of federal qualifying environmental trust tax credit refund that was not used in the Part I tax calculation. See line 648 for more information.

Line 796 – Canadian film or video production tax credit refund

A fully refundable tax credit is available to qualified corporations that produce an eligible production certified by the minister of Canadian Heritage to be a Canadian film or video production.

The credit is equal to 25% of qualified labour expenditures for the year for the production. The qualified labour expenditure cannot be more than 60% of the total cost of a production. The tax credit is therefore limited to 15% of the total cost of a production, less any assistance. Labour expenditures in respect of non-residents of Canada (other than Canadian citizens) will not be eligible for the credit.

For more information, see Guide RC4164, Canadian Film or Video Production Tax Credit, or go to Film and Media Tax Credits.

To claim the credit, file the following items with your return for the year:

  • the Canadian Film or Video Production Certificate (Part A) issued by the Canadian Audio-Visual Certification Office (CAVCO), or a copy
  • if it applies, a Certificate of Completion (Part B) issued by CAVCO, or a copy, and a copy of the audited statement of production costs and notes provided to CAVCO
  • a completed Form T1131, Canadian Film or Video Production Tax Credit, for each Canadian film or video production

If you file your return electronically, see information on T2 Attach-a-doc.

If you file a paper return, send the return and required attachments to your tax centre.

On line 796, enter the amount of the credit from Form T1131. If you are filing more than one of these forms, enter the cumulative total.

You cannot claim the Canadian film or video production tax credit if you claim the film or video production services tax credit for that same production for any tax year.

References
Section 125.4
Regulation 1106
RC4164, Canadian Film or Video Production Tax Credit

Line 797 – Film or video production services tax credit refund

A fully refundable tax credit is available to eligible production corporations for a film or video production certified by the minister of Canadian Heritage to be an accredited production.

Eligible production corporations do not include those that, at any time in the year, are tax-exempt, are controlled by one or more tax-exempt entities, or are prescribed labour-sponsored venture capital corporations.

The credit is equal to 16% of qualified Canadian labour expenditures for the year.

Note

Qualified Canadian labour expenditure is net of any assistance.

For more information, see Guide RC4385, Film or Video Production Services Tax Credit, or go to Film and Media Tax Credits.

To claim the credit, file the following items with your return for the year:

If you file your return electronically, see information on T2 Attach-a-doc.

If you file a paper return, send the return and required attachments to your tax centre.

On line 797, enter the amount of the credit from Form T1177. If you are filing more than one of these forms, enter the cumulative total.

You cannot claim the film or video production services tax credit if you claim the Canadian film or video production tax credit for that same production for any tax year.

References
Section 125.5
Regulation 9300
RC4385, Film or Video Production Services Tax Credit

Lines 800 and 801 – Tax withheld at source

This is the amount shown as "income tax deducted" on any information slips, such as NR4, T4A, or T4A-NR, you may have received. You do not have to file these information slips with your return, unless you are a non-resident corporation. However, keep them in case we ask for them later.

On line 800, enter the total amount of income tax deducted from all your information slips. On line 801, enter the total payments on which tax has been withheld.

References
IC77-16, Non-Resident Income Tax
IC75-6, Required Withholding From Amounts Paid to Non-Residents Providing Services in Canada

Line 808 – Provincial and territorial capital gains refund

Investment public corporations and mutual fund corporations have to file Schedule 18, Federal and Provincial or Territorial Capital Gains Refund, with their return, complete with information mentioned in Line 788 – Federal capital gains refund.

These corporations have to calculate the provincial and territorial capital gains refund according to provincial and territorial income tax acts.

Complete the appropriate lines of Schedule 18, and enter the provincial and territorial capital gains refund on line 808.

References
Sections 130 and 131

Line 812 – Provincial and territorial refundable tax credits

On line 812, enter the amount of provincial and territorial refundable tax credits calculated on line 255 of Schedule 5 (negative amount).

Line 840 – Tax instalments paid

On line 840, report all instalment payments you made for the tax year.

You can view your interim balance; and if needed, you can transfer payments within a program account and between program accounts of the same nine-digit business number and immediately view updated balances, by using the "Account balance and activities" service through:

If there is a discrepancy between the amount you report on the return and the interim balance in your business account, we will use the amount in your business account for the tax year being assessed when we process the return.

For information on how to make payments, go to Making payments for businesses or see Guide T7B-Corp, Corporation Instalment Guide. For more information on calculating instalments, go to My Business Account and use the "Calculate instalment payments" or see Guide T7B-Corp, Corporation Instalment Guide.

Note

Even if you elected to report in a functional currency, you still have to complete line 840 in Canadian currency.

Refund or payment

Your overpayment or balance unpaid is the difference you get after subtracting all the credits on lines 780 to 840 from the total tax payable on line 770.

If your total tax payable (line 770) is less than your total credits (line 890), enter the difference on the overpayment line.

If your total payable (line 770) is more than your total credits (line 890), enter the difference on the balance unpaid line.

Note

After we process your return and apply any interest and/or penalty charges, if the total amount owing at that time is $2 or less, you will not have to pay that amount. If an amount of $2 or less is owed to you, the amount will not be refunded; however, we will apply it to any existing liability you may have.

Line 894 – Refund code

If entitled to a refund, enter one of the following codes on line 894:

  • enter "1" or leave this line blank if you want us to refund the overpayment
  • enter "2" if you want us to transfer the overpayment to next year's instalment account
  • enter "3" if you want us to apply the overpayment to another liability (such as an expected debit from a reassessment) or to a different account. Attach a letter to your return giving instructions and we will review your request

Whichever option you choose, we will apply the overpayment to any outstanding liabilities the corporation owes on the same or related business number account. Then, we will refund or transfer the excess overpayment according to the code you enter. We will do this only if all the required returns have been filed on the account and all related accounts.

Note

Under subsection 220(6) of the Income Tax Act a corporation may assign any amount payable under this Act. However, according to subsection 220(7) the minister of National Revenue "is not required to pay to the assignee, the assigned amount". As an alternative, we will review a request to send the refund to a "care of" address. However, a refund issued in this manner will still be issued in the name of the corporation (see the third bullet).

The payment of refunds and rebates will be withheld until all required returns, of which the minister of National Revenue has knowledge, have been filed.

Reference
Subsection 164(2.01)

Line 896 – If the corporation is a Canadian-controlled private corporation throughout the tax year, does it qualify for the one-month extension of the date the balance of tax is due?

Tick the appropriate box. See Balance-due day.

Payment of balance owing

You can pay your corporation's balance owing electronically by using your financial institution's Internet or telephone banking services, or through a third-party service provider. Most financial institutions allow a corporation to schedule a future-dated payment. If you don’t have a bank account at a financial institution in Canada, you can pay by wire transfer.or at a Canada Post retail outlet using a remittance voucher containing a Quick Response (QR) code.

For more information aboutpayments, go to Payments to the Canada Revenue Agency or contact your financial institution.

Make your payment online using the Canada Revenue Agency's My Payment option, where you will also find more information.

Pre-authorized debit (PAD) is an online, self-service option. Businesses can authorize the CRA to withdraw a payment or payments to be made from a Canadian bank account to the CRA on a pre‑set date to pay an amount owing or make instalment payments. By setting up a PAD through the CRA’s My Business Account, businesses can reduce the risk of misallocated payments and avoid missing deadlines and the resulting penalties and interest charges.

If you have an amount owing, you can view a revised balance that includes interest calculated to a date you select by using the "Account balance and activities" service and selecting the "Calculate future balance" option through:

You can ask that we stop issuing remittance vouchers and the envelope that we send with notices and statements by using the "Enquiries service" and selecting the "Change mailing instructions" option through My Business Account or through Represent a Client.

Direct deposit request

Lines 910 to 918

You can start, update, or stop direct deposit online, and also view direct deposit transactions through:

Representatives authorized at level 1 or 2 with online access can see direct deposit banking information and transactions at Represent a Client.

Another way to start direct deposit for your corporation’s account, or to change banking information you already gave us, is to complete the “Direct deposit request” at the bottom of page 8 of the return. You do not have to complete this area if you have already signed up for direct deposit and the information you gave before has not changed.

You can also use Form RC366, Direct Deposit Request for Businesses.

You cannot use the Corporation Internet Filing service to start direct deposit or to change your direct deposit information.

For more information, go to Direct deposit.

Your direct deposit request will stay in effect until you change the information or cancel the service. However, if your financial institution advises us that you have a new account, we may deposit your payments into the new account. If, for any reason, we cannot deposit a payment into a designated account, we will mail a cheque to you at the address we have on file at the time of the original payment.

Note

The CRA must generate all large-value refunds ($25 million or more) through the Large Value Transfer System (LVTS). To avoid potential delays, you have to be registered for direct deposit and be registered on the LVTS. If you are expecting a large-value refund, arrange for direct deposit and contact your tax centre to make the necessary arrangements.

Mandatory electronic filing for tax preparers

Line 920

Enter the tax preparer’s EFILE number if applicable.

Tax preparers have to file electronically all income tax returns they prepare for a fee, with 2 exceptions: they can file 10 corporation returns and 10 individual returns by means other than electronically. We may charge a penalty to tax preparers who fail to do so.

For more information, go to Mandatory electronic filing for tax preparers.

Reference
Section 150.1

Certification

Lines 950 to 959

Lines 950 to 956 – Complete these lines with the required information. Be sure that the person who signs and dates the return is an authorized officer of the corporation.

Line 957 – Tick the appropriate box.

Lines 958 and 959 – If you answer no to line 957, provide the first and last names and telephone number of a contact person. This contact person is responsible for all matters related to the processing of this year's return and must be an authorized representative.

Note

If you wish to authorize representatives (including employees) to discuss your corporation income tax return for any year with the CRA, use My Business Account or complete Form RC59, Business Consent for Offline Access. Please verify if your list of authorized representatives is up-to-date and, if applicable, modify or cancel authorized representatives. My Business Account allows you to authorize new representatives, and to view, update, and cancel authorizations of existing representatives. For more information, go to My Business Account.

For information on how to authorize a representative for a non-resident account, go to Representatives for non-resident accounts.

Language of correspondence

Line 990

Indicate in which official language you would like to receive your correspondence by entering the appropriate code:

  • 1 for English
  • 2 for French
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