Corporate Income Tax
Generally, corporations carrying on business through a permanent establishment in Ontario are subject to both federal and Ontario corporate income taxes. The tax rates apply to taxable income allocated to Ontario.
The Ontario General corporate income tax rate is currently 11.5%.
|July 1, 2011 onwards||11.5%|
|July 1, 2010 to June 30, 2011||12.0%|
|Prior to July 1, 2010||14.0%|
Small Business Deduction
The Ontario small business deduction (SBD) reduces the corporate income tax rate on the first $500,000 of active business income of Canadian‑controlled private corporations (CCPCs). Effective January 1, 2020, the lower rate of Ontario corporate income tax is reduced from 3.5 per cent to 3.2 per cent.
|Period||Lower rate of Ontario corporation income tax|
|January 1, 2020 onwards||3.2%|
|January 1, 2018 to December 31, 2019||3.5%|
|July 1, 2010 to December 31, 2017||4.5%|
|Prior to July 1, 2010||5.5%|
While the federal government announced in 2018 that it is phasing out the $500,000 small business limit for corporations that earn between $50,000 and $150,000 of passive investment income in a taxation year, Ontario is not paralleling this phase‑out.
Ontario does parallel the federal SBD phase‑out where a CCPC's (and associated groups of CCPCs) taxable capital is between $10 million and $15 million. CCPCs (and associated groups of CCPCs) with taxable capital of $15 million or more are no longer eligible for the lower rate of corporate income tax on the first $500,000 of active business income.
Where a corporation assigns any portion of its federal business limit to another corporation, the corporation's Ontario business limit is also reduced by the same amount by which the federal business limit is reduced.
Manufacturing and Processing Tax Credit
Corporations involved in manufacturing and processing, fishing, farming, mining and logging may qualify for a tax credit that reduces the corporate income tax rate to 10 per cent.
Contact the Canada Revenue Agency
The Canada Revenue Agency administers Ontario's corporate income tax, corporate minimum tax, and the special additional tax on life insurers. Contact the agency with your questions at 1‑800‑959‑5525 or 1‑800‑665‑0354 for teletypewriter (TTY).