Nova Scotia financial institutions capital tax

For tax years starting after October 31, 2021, a provincial tax is levied on the taxable capital of financial institutions that have a permanent establishment in Nova Scotia at any time in the tax year. This tax applies to banks (including authorized foreign banks) as well as trust and loan companies.

The tax is equal to 4% of the financial institution's taxable capital employed in the province for the year, including the offshore area.

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

Capital deduction

When calculating its taxable capital (before allocation to the province), a financial institution can deduct:

• a basic capital deduction

        plus

• the amount of its investment in related financial institutions for the tax year

For a tax year, a basic capital deduction of $5 million is available to a financial institution if the total amount of the capital of the financial institution and its related financial institutions, if any, is $10 million or less. If the financial institution is a member of a related group, the financial institution's entitlement to the $5 million capital deduction could be deemed to be nil unless it files an agreement allocating the basic capital deduction among the group.

The basic capital deduction is increased to $30 million if the financial institution is a trust company or a loan company with its registered office in Nova Scotia.

Allocating the basic capital deduction

Use Schedule 353, Nova Scotia Financial Institutions Capital Tax – Agreement Among Related Corporations, to allocate the basic capital deduction. File this agreement with your return.

Reporting the tax

File a completed Schedule 352, Nova Scotia Financial Institutions Capital Tax.

On line 222 of Schedule 5, Tax Calculation Supplementary – Corporations, enter the provincial tax on financial institutions payable.

Forms and publications

• Schedule 352, Nova Scotia Financial Institutions Capital Tax
• Schedule 353, Nova Scotia Financial Institutions Capital Tax – Agreement Among Related Corporations
• Schedule 5, Tax Calculation Supplementary – Corporations

Government partners

• Nova Scotia (provincial site)