Newfoundland and Labrador capital tax on financial institutions

A provincial tax is levied on the taxable capital of a corporation that is a financial institution that has a permanent establishment in Newfoundland and Labrador. This tax applies to banks, as well as trust and loan corporations.

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.

A penalty applies to financial institutions that have to pay this tax and do not file the required return on time. For more details, see Large Corporations.

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.

Instalment payment requirements for this tax are the same as for Part I tax. For more details, see Paying Instalments.

Capital deduction

A capital deduction of $5 million is available to a corporation if the total amount of the capital of the corporation and any corporations in a related group, if any, is $10 million or less. If the corporation is a member of a related group that includes another financial institution, the corporation's entitlement to the $5 million capital deduction could be subject to allocation by the province unless the corporation files an agreement allocating the capital deduction among the corporations in the related group.

Allocating the deduction

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.

Reporting the tax

File a completed Schedule 305, Newfoundland and Labrador Capital Tax on Financial Institutions.

On line 518 of Schedule 5, Tax Calculation Supplementary – Corporations, enter the provincial tax on financial institutions payable.

Forms and publications

Government partners

Page details

Date modified: