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Tax facts and figures Canada 2013 Canadian individual and corporate tax changes, tax rates, tax deadlines and a wide range of other valuable tax information.
Key 2013 income tax rates – individuals and corporations
Applies to taxable income above $135,054 ($150,000 for Nova Scotia; $509,000 in Ontario).
For December 31 year end (12-month taxation year).
Individuals (page 4)
Corporations (page 17)
Top combined marginal rates
Combined rates
Canadian dividends
Ordinary income and interest
Capital gains
Federal Alberta British Columbia Manitoba New Brunswick Newfoundland and Labrador Northwest Territories Nova Scotia Nunavut
29.00% 39.00% 43.70% 46.40% 45.07%
Eligible
Non-eligible
14.50% 19.50% 21.85% 23.20% 22.54%
19.29% 19.29% 25.78% 32.26% 24.91%
19.58% 27.71% 33.71% 39.15% 33.05%
42.30%
21.15%
22.47%
29.96%
43.05% 50.00% 40.50%
21.53% 25.00% 20.25%
22.81% 36.06% 27.56%
29.65% 36.21% 28.96%
Ontario
49.53%
24.76%
33.85%
36.47%
Prince Edward Island Quebec
47.37% 49.97%
23.69% 24.98%
28.70% 35.22%
38.56% 38.54%
Saskatchewan
44.00%
22.00%
24.81%
33.33%
Yukon
42.40%
21.20%
15.93% to 19.29%
30.41%
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General and M&P
General M&P
General M&P
General M&P General M&P
15% 25% 25.75% 27% 26.01% 29% 20% 26.5% 31% 27% 26.5% 25% 31% 26.9% 27% 25% 30% 17.5%
Canadian-Controlled Private Corporations (CCPCs) Active business income to $400,000 $400,000 to $500,000 11% 14% 13.5% 11%
23% 15.5% 15% 15%
14.5%
27% 15% 15.5%
14.64% 19% 13% 15% 13.5%
Investment income 34.67% 44.67% 45.42% 46.67% 45.67% 48.67% n/a 46.17% 50.67% 46.67% 46.17% n/a 50.67% 46.57% 46.67% n/a 49.67% n/a
No part of this booklet may be produced without permission from PricewaterhouseCoopers LLP (PwC).
Tax facts and figures Canada 2013
A message from our tax leader
PwC tax contacts
On behalf of PwC, I am proud to present our 36th edition of Tax facts and figures. This indispensible reference tool can save you time and money by putting individual and corporate tax rates and deadlines at your fingertips. This past year has been marked by numerous tax changes. Many affect taxpayers engaged in international transactions; some continue to tighten perceived tax loopholes. Top personal income tax rates are increasing in 2013 in New Brunswick, Ontario and Quebec, and in 2014 in British Columbia and (again) New Brunswick. Further, in 2014, all personal rates on non-eligible dividends will be higher. Five provinces – British Columbia, Manitoba, Nova Scotia, Prince Edward Island and Quebec – are revising their sales tax rates or systems.
Alberta Calgary
Angelo Toselli
[email protected]
Edmonton
Kent Davison
[email protected]
Dean Landry
[email protected]
Atlantic Provinces Halifax/Saint John/St. John’s
British Columbia Vancouver
Bill Holms
[email protected]
Manitoba
To stay current, subscribe to our tax publications by visiting www.pwc.com/ca/stayintouch. You can also use PwC’s Tax rate app to get the latest corporate, personal and sales tax rates. Download it by scanning the code for your device.
Winnipeg
Danny Wright
Greater Toronto Area
Steve Dunk
For more help understanding how taxes and changes apply to you or your company, please contact your PwC tax advisor or any of the individuals listed on the right.
Ottawa
Pierre Lessard
Southwestern Ontario
Kevin Robertson
[email protected]
Ontario
[email protected] [email protected] [email protected]
Quebec Montreal/Quebec City
Pierre Lessard
[email protected]
Erick Preciado
[email protected]
Saskatchewan Saskatoon
Christopher Kong National Tax Leader PwC Canada
Office addresses and telephone numbers are available at: www.pwc.com/ca/offices. Tax News Network (TNN) provides subscribers with Canadian and international information, insight and analysis to support well-informed tax and business decisions. Try it today at www.ca.taxnews.com.
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Contents Click on a heading to go to that page Highlights for individuals and corporations: 2013 and beyond..................................................................2 Individuals.............................................................................4
Individual marginal rates ....................................................................4 How much tax? Individual tax table ....................................................5 Income tax filing and payment deadlines – individuals and trusts ........6 Probate fees (for estates over $50,000) ...............................................7 Key tax changes ..................................................................................8 Federal ............................................................................................8 Alberta, British Columbia .............................................................. 10 Manitoba, New Brunswick............................................................. 11 Newfoundland and Labrador, Northwest Territories ...................... 12 Nova Scotia, Nunavut .................................................................... 13 Ontario, Prince Edward Island....................................................... 14 Quebec .......................................................................................... 15 Saskatchewan, Yukon .................................................................... 16
Individuals and corporations ................................................31 CPP/QPP, EI and QPIP premiums........................................................31 Health care premiums and sales tax rates............................................32 Payroll tax rates .................................................................................33 Retirement savings and profit sharing plans .......................................34 R&D tax credits ..................................................................................35 Land transfer tax and registration fees ...............................................36 Filing deadlines ..................................................................................37 Prescribed interest rates – income, capital and payroll taxes ...............38
International........................................................................ 39
US top individual income tax rates – federal and state combined.........39 US estate, gift and generation-skipping transfer tax rates ...................40 US corporate income tax rates – federal and state ...............................41 Canada’s treaty withholding tax rates ................................................42
Corporations........................................................................ 17
Corporate income tax rates ............................................................... 17 Other federal tax rates and income tax deadlines .............................. 18 Provincial income tax holidays and M&P investment tax credits ........ 19 Financial institutions capital tax rates and deadlines .........................20 Key tax changes ................................................................................ 21 Federal .......................................................................................... 21 Alberta, British Columbia ..............................................................23 Manitoba .......................................................................................24 New Brunswick, Newfoundland and Labrador ...............................25 Northwest Territories, Nova Scotia ................................................26 Nunavut, Ontario .......................................................................... 27 Prince Edward Island ....................................................................28 Quebec ..........................................................................................29 Saskatchewan, Yukon ....................................................................30
This booklet is published with the understanding that PwC is not thereby engaged in rendering accounting, legal or other professional service or advice. The comments included in this booklet are not intended to constitute professional advice, nor should they be relied upon to replace professional advice. Rates and other information are current to May 31, 2013, but may change as a result of legislation or regulations issued after that date.
Highlights for individuals and corporations: 2013 and beyond
Federal
British Columbia
Personal income tax rates: increasing on non-eligible dividends in 2014 (p. 8)
Because of the May 14, 2013 election, it is uncertain whether British Columbia tax changes that have not been enacted into law will proceed. At the publication date, the 2013 British Columbia budget measures had not been enacted.
Corporate income tax rates: unchanged (p. 21) Lifetime capital gains exemption: increasing to $800,000 in 2014; indexed thereafter (p. 8)
Personal income tax rates: rate on taxable incomes over $150,000 increasing from 14.7% to 16.8% for 2014 and 20151 (p. 10)
Synthetic dispositions and character conversion transactions: curtailed, generally for agreements entered into after March 20, 2013 (p. 8) Corporate loss trading: anti-avoidance measure applies after certain share acquisition transactions, generally for shares acquired after March 20, 2013 (p. 21) Thin capitalization rules: will apply to Canadian-resident trusts and non-resident corporations and trusts that operate in Canada, for taxation years beginning after 2013 (p. 22) Shareholder loans: non-resident controlled Canadian corporations permitted to make certain loans to related foreign companies without incurring the deemed dividend withholding tax, generally for loans received or indebtedness incurred after March 28, 2012 (p. 22) Tax evasion and aggressive tax avoidance: Canada Revenue Agency will have more tools to combat (p. 22)
Alberta
Corporate income tax rates: general and M&P rate increased from 10% to 11% on April 1, 2013; CCPC rate unchanged (p. 23) Harmonized Sales Tax: replaced by Provincial Sales Tax and Goods and Services Tax on April 1, 2013 (pp. 10, 23)
Manitoba Personal and corporate income tax rates: unchanged1 (pp. 11, 24) CCPC threshold: increasing from $400,000 to $425,000 on January 1, 2014 (p. 24) Provincial Sales Tax: 7% rate increasing to 8% from July 1, 2013, to June 30, 2023 (pp. 11, 24)
New Brunswick Personal income tax rates: increasing in 2013 and 20141 (p. 11)
Personal and corporate income tax rates: unchanged (pp. 10, 23) 1
Corporate income tax rates: general and M&P rate increasing from 10% to 12% on July 1, 2013; CCPC rate unchanged (p. 25)
1. 2014 personal tax rates on non-eligible dividends in the province will increase due to federal changes.
2
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Highlights for individuals and corporations: 2013 and beyond
Newfoundland and Labrador
Prince Edward Island
Personal and corporate income tax rates: unchanged1 (pp. 12, 25)
Personal income tax rates: on non-eligible dividends – decreasing in 20131 (p. 14)
Northwest Territories
Corporate income tax rates: general and M&P rate unchanged; CCPC rate increased from 1% to 4.5% on April 1, 2013 (p. 28)
Personal and corporate income tax rates: unchanged1 (pp. 12, 26)
Harmonized Sales Tax (HST): 14% HST rate replaced combined 15.5% Provincial Sales Tax/Goods and Services Tax rate on April 1, 2013 (pp. 14, 28)
Nova Scotia
Quebec
Personal income tax rates: unchanged1 (p. 13) Corporate income tax rates: general and M&P rate unchanged; CCPC rate decreasing from 4% to 3.5% on January 1, 2013, and to 3% on January 1, 2014 (p. 26) CCPC threshold: decreasing from $400,000 to $350,000 on January 1, 2014 (p. 26)
Because the Quebec government is in a minority, it is uncertain whether Quebec tax changes that have not been enacted into law will proceed. At the publication date, the November 20, 2012 Quebec budget measures had not been enacted. Personal income tax rates: rate on taxable incomes over $100,000 increased from 24% to 25.75% in 20131 (p. 15)
Harmonized Sales Tax: decreasing from 15% to 14% by July 1, 2014, and to 13% by July 1, 2015 (pp. 13, 26)
Corporate income tax rates: unchanged (p. 29)
Nunavut Personal and corporate income tax rates: unchanged (pp. 13, 27)
Quebec Sales Tax (QST): further harmonized with the Goods and Services Tax (GST) on January 1, 2013; combined GST/QST rate remains 14.975% (pp. 15, 29)
Ontario
Saskatchewan
1
Personal and corporate income tax rates: unchanged1 (pp. 16, 30)
Because the Ontario government is in a minority, it is uncertain whether Ontario tax changes that have not been enacted into law will proceed. At the publication date, the 2013 Ontario budget measures had not been enacted.
Yukon
Personal income tax rates: top rate increased from 12.16% to 13.16% in 2013, plus surtaxes1 (p. 14)
Personal and corporate income tax rates: unchanged1 (pp. 16, 30)
Corporate income tax rates: unchanged (p. 27)
1. 2014 personal tax rates on non-eligible dividends in the province or territory will increase due to federal changes.
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3
Individuals Individual marginal rates
This table shows 2013 combined federal and provincial (or territorial) marginal tax rates – the percentage of tax paid on the last dollar of income, or on additional income. Taxable income $11,038 to $43,561 Taxable income $43,561 to $87,123 Taxable income $87,123 to $135,054 Taxable income > $135,054 Provincial Canadian dividends1 Brackets Ordinary Capital Canadian dividends1 Brackets Ordinary Capital Canadian dividends1 Brackets Ordinary Capital Canadian dividends1 brackets below Brackets Ordinary Capital $ income & gains $ income & gains income & gains income & gains $11,038 are $ $ Eligible Non-eligible Eligible Non-eligible Eligible Non-eligible Eligible Non-eligible not shown. interest % % interest % % interest % % interest % % % % % % % % % % Federal
11,038 17,593 11,038
15.00 25.00 15.00
7.50 12.50 7.50
(0.03) to 0 (0.03) to 0 (0.03) to 0
2.08 10.21 2.08
37,568 11,038
22.70 20.06
11.35 10.03
(3.20) to 0 (6.84) to 0
31,000 11,038 38,954 11,038 33,748 11,038 39,453 13,546 11,038
27.75 25.80 28.46 24.39 27.50 22.70
13.88 12.90 14.23 12.20 13.75 11.35
6.53 3.84 1.99 (3.63) 2.04 (4.58)
23.60 20.90 15.00
11.80 10.45 7.50
(4.03) to 0 (7.76) to 0 (0.03) to 0
29,590 11,038 41,535 12,455 11,038
29.95 23.79 22.00 19.00 15.00
14.98 11.90 11.00 9.50 7.50
8.39 (0.11) 2.03 (2.11) (0.03)
to 8.42 to 0 to 2.06 to 0 to 0
11.15 3.45 5.83 2.08 2.08
Ontario
39,723 11,038
24.15 20.05
12.08 10.03
3.77 to 3.80 (1.89) to 0
7.90 2.77
Prince Edward Island
31,984 11,038 41,095 13,994 11,038
28.80 24.80 32.53 28.53 12.53
14.40 12.40 16.26 14.26 6.26
4.53 (0.99) 11.16 5.64 (0.02)
Saskatchewan
42,906 15,241 11,038
28.00 26.00 15.00
14.00 13.00 7.50
2.73 to 2.76 (0.03) to 0 (0.03) to 0
Yukon
11,038
22.04
11.02
(11.12) to 0
5.25
11,038
22.20
11.10
(0.04) to 0
3.08
Alberta British Columbia Manitoba New Brunswick Newfoundland and Labrador Northwest Territories Nova Scotia Nunavut
Quebec
Non-resident
2
to 6.56 to 3.86 to 2.01 to 0 to 2.07 to 0
to 4.55 to 0 to 11.18 to 5.66 to 0
43,561
22.00
11.00
9.63
10.83
87,123
26.00
13.00
15.15
15.83
135,054
29.00
14.50
19.29
19.58
43,561
32.00
16.00
9.63
18.96
87,123
36.00
18.00
15.15
23.96
135,054
39.00
19.50
19.29
27.71
7.46 4.16
86,268 75,138 43,561
34.29 32.50 29.70
17.15 16.25 14.85
12.79 10.32 6.46 to 9.63
21.95 19.71 16.21
104,754 87,123
40.70 38.29
20.35 19.15
21.64 18.31
29.96 26.95
135,054
43.70
21.85
25.78
33.71
15.83 13.40 12.28 7.20 11.46 5.46
67,000 43,561 77,908 43,561 67,496 43,561
39.40 34.75 36.46 35.46 35.30 34.50
19.70 17.38 18.23 17.73 17.65 17.25
22.60 16.19 13.03 11.65 12.81 11.70
30.40 24.58 22.28 21.03 21.21 20.21
87,123
43.40
21.70
28.12
35.40
135,054
46.40
23.20
32.26
39.15
126,662 87,123
42.07 40.46
21.04 20.23
20.77 18.55
29.30 27.28
135,054
45.07
22.54
24.91
33.05
87,123
39.30
19.65
18.33
26.21
135,054
42.30
21.15
22.47
29.96
5.33 1.96 to 2.08 2.08
78,908 43,561
34.20 30.60
17.10 15.30
10.60 5.63 to 9.63
18.58 14.08
128,286 87,123
40.05 38.20
20.03 19.10
18.67 16.12
25.90 23.58
135,054
43.05
21.53
22.81
29.65
59,180 43,561
38.67 36.95
19.34 18.48
20.42 18.05
22.05 19.90
93,000 87,123
43.50 42.67
21.75 21.34
27.09 25.94
28.08 27.05
150,000 135,054
50.00 46.50
25.00 23.25
36.06 31.23
36.21 31.83
83,071 43,561
31.00 29.00
15.50 14.50
14.45 11.69
17.08 14.58
87,123
35.00
17.50
19.97
22.08
135,054
40.50
20.25
27.56
28.96
82,420 79,448 69,958 43,561 63,969 43,561
39.41 35.39 32.98 31.15 38.70 35.80
19.70 17.70 16.49 15.58 19.35 17.90
19.88 17.52 14.19 13.43 18.19 14.19
23.82 20.82 17.81 16.65 28.08 24.46
87,123
43.41
21.70
25.40
28.82
509,000 135,054
49.53 46.41
24.76 23.20
33.85 29.54
36.47 32.57
98,143 87,123
44.37 42.70
22.19 21.35
24.56 23.71
34.81 33.08
135,054
47.37
23.69
28.70
38.56
82,190 43,561
42.37 38.37
21.19 19.19
24.74 19.22
29.05 24.05
100,000 87,123
47.46 45.71
23.73 22.86
31.77 29.35
35.41 33.22
135,054
49.97
24.98
35.22
38.54
43,561
35.00
17.50
12.39
22.08
122,859 87,123
41.00 39.00
20.50 19.50
20.67 17.91
29.58 27.08
135,054
44.00
22.00
24.81
33.33
81,891 43,561 43,561
32.16 31.68 32.56
16.08 15.84 16.28
1.81 to 9.63 2.18 to 9.63 14.26
17.62 17.30 16.03
87,123
38.01
19.01
24.93
135,054
42.40
21.20
87,123
38.48
19.24
23.43
135,054
42.92
21.46
15.71 10.71 16.74 11.74 1.74 13.33 10.83 2.08
1. Eligible dividends are designated as such by the payor. Most dividends paid by public corporations will be eligible dividends. When two dividend rates are indicated, the rate that applies depends on the level of the taxpayer’s other income, with the higher rate applying if the taxpayer has no other income. 4
9.88 to 15.15 22.43
15.93 to 19.29 28.55
30.41 28.98
2. A non-resident will pay tax on taxable income below $11,038 if the non-resident does not qualify for the federal personal basic tax credit (see page 5). Non-resident rates for interest and dividends apply only in limited cases; generally, interest (other than most interest paid to arm’s-length nonresidents) and dividends are subject to Part XIII non-resident withholding tax.
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Individuals How much tax? Individual tax table
This table shows 2013 combined federal and provincial (or territorial) income taxes payable, assuming all income is interest or ordinary income (such as salary) and only the basic personal tax credit is claimed (except for non-residents). This table assumes the non-resident will not qualify for the basic personal tax credit. A non-resident can claim this credit only if all or substantially all (i.e. 90% or more) of his or her worldwide income is included in taxable income earned in Canada for the year. Instead of provincial or territorial tax, non-residents pay an additional 48% of basic federal tax on income taxable in Canada that is not earned in a province or territory. Non-residents are subject to provincial or territorial rates on employment income earned, and business income connected with a permanent establishment, in the respective province or territory. Different rates may apply to non-residents in other circumstances. For the taxation of interest and dividends paid to non-residents, see footnote 2 on page 4.
Certain types of income and deductions may trigger alternative minimum tax (AMT), affecting the results.
For Quebec, the federal income tax amounts shown should be reduced by the 16.5% “Quebec abatement.” See page 15.
Taxable income
$1,000,000 $277,758 500,000 132,758
Combined 2013 federal and provincial/territorial income tax Alberta
B.C.
Manitoba
N.B.
$375,999 180,999
$417,074 198,574
$447,079 215,079
$433,173 207,823
Nfld. & Lab. $407,948 196,448
N.W.T.
N.S.
Nunavut
Ontario
P.E.I.
Quebec
Sask.
Yukon
$411,180 195,930
$478,150 228,150
$385,976 183,476
$458,554 211,187
$455,930 219,080
$480,508 230,683
$422,772 202,772
$405,933 193,943
Nonresident $413,533 $1,000,000 198,933 500,000
400,000
103,758
141,999
154,874
168,679
162,753
154,148
152,880
178,150
142,976
164,777
171,710
180,718
158,772
151,545
156,013
400,000
300,000
74,758
102,999
111,174
122,279
117,683
111,848
109,830
128,150
102,476
118,367
124,340
130,753
114,772
109,147
113,093
300,000
250,000
60,258
83,499
89,324
99,079
95,148
90,698
88,305
103,150
82,226
95,163
100,655
105,770
92,772
87,948
91,633
250,000
200,000
45,758
63,999
67,474
75,879
72,613
69,548
66,780
78,150
61,976
71,958
76,970
80,788
70,772
66,749
70,173
200,000
150,000
31,258
44,499
45,624
52,679
50,078
48,398
45,255
53,150
41,726
48,753
53,285
55,805
48,772
45,550
48,713
150,000
100,000
17,810
26,051
24,940
30,531
29,024
28,300
25,305
30,952
23,404
26,600
30,651
31,701
28,275
25,889
28,809
100,000
90,000
15,210
22,451
21,111
26,191
24,978
24,370
21,485
26,627
19,904
22,259
26,350
27,130
24,375
22,087
24,961
90,000
80,000
12,895
19,136
17,679
22,136
21,217
20,724
17,950
22,645
16,751
18,300
22,365
22,885
20,760
18,712
21,535
80,000
70,000
10,695
15,936
14,573
18,196
17,650
17,194
14,851
18,778
13,851
14,989
18,495
19,048
17,260
15,544
18,279
70,000
60,000
8,495
12,736
11,603
14,581
14,104
13,724
11,791
14,911
10,951
11,873
14,740
15,211
13,760
12,376
15,023
60,000
50,000
6,295
9,536
8,633
11,106
10,558
10,274
8,731
11,202
8,051
8,758
11,160
11,374
10,260
9,208
11,767
50,000
40,000
4,344
6,585
5,913
7,880
7,261
7,074
5,920
7,756
5,446
5,892
7,830
7,788
7,068
6,383
8,880
40,000
30,000
2,844
4,085
3,842
5,125
4,780
4,504
3,815
4,761
3,546
3,876
5,029
4,936
4,468
4,179
6,660
30,000
20,000
1,344
1,585
1,836
2,545
2,341
2,234
1,725
2,357
1,646
1,871
2,549
2,083
1,868
1,975
4,440
20,000
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Taxable income
Federal income tax
5
Individuals Income tax filing and payment deadlines – individuals and trusts
Deadlines falling on holidays or weekends may be extended to the next business day. See page 37 for other filing deadlines. Instalments for 2013 Required Individuals
Trusts
Inter vivos
Deadline
If tax payable in 2013 and either 2012 or 2011 exceeds tax withheld by more than $3,000 ($1,800 for Quebec residents)
Testamentary
April 30 15th of March, (extensions may be June, September, available) December 90 days after trust year end
None
However, the Canada Revenue Agency’s policy is to not charge instalment interest to an inter vivos trust.
Applies to unit trusts, including mutual fund trusts. Inter vivos Trusts Testamentary
Special cases
Tax forms Filing T1 (and TP-1-V for Quebec filers) T3 (and TP-646-V for Quebec filers)
For the 2013 taxation year of an inter vivos trust, the filing deadline is March 31, 2014.
Mutual fund trusts can elect to have a taxation See page 4. year that ends on December 15. Trust created
Year end
Tax rate
During lifetime
December 31
Top personal tax rate
On death
Any (year must be < 12 months)
Personal marginal tax rates
Year end may be changed with the Minister’s approval.
6
Filing deadline and balance due
Exceptions apply, for example, in Ontario, Prince Edward Island and Yukon, which impose surtaxes.
This trust must maintain its status as a testamentary trust for tax purposes.
Non-residents are not subject to instalment or filing requirements on these (and certain other) receipts. Instead, 25% Part XIII withholding tax applies (may be reduced by treaty).
If a taxpayer (or his/ her spouse) carried on a business and died: • January 1 to December 15, filing deadline1 is June 15 of the following year • December 16 to December 31, filing deadline1 is 6 months after date of death
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Taxpayer (or spouse) carried on a business
Non-resident
Taxpayer died
Balance due
June 151 If a non-resident receives: • rental income on Canadian real property and elects to file under section 216, filing deadline is two years after end of year the income was paid or credited (June 30 if NR6 was filed) • certain Canadian pension, retirement and social assistance benefits and elects to file under section 217, filing deadline is June 30
April 30 (no extension)
Return for year of death—If a taxpayer died: • January to October, filing deadline1 is April 30 • November to December, filing deadline1 is 6 months after date of death
For deceased, if died: • January to October, April 30 • November to December, 6 months after date of death For spouse, April 30.
Return for year before death—If a taxpayer died: • after year-end, but • before filing deadline for previous year’s return, filing deadline1 is 6 months after date of death.
For deceased, 6 months after date of death. For spouse, April 30.
1. Applies to taxpayer and his or her spouse.
Individuals Probate fees (for estates over $50,000)
Probate is an administrative procedure under which a court validates a deceased’s will and confirms the appointment of the executor. This table shows probate fees or administrative charges for probating a will. Other fees may also apply. For some provinces and territories, different rates may apply to smaller estates (less than $50,000).
Example fees
Fee schedule (value over $50,000)
$2,000,000 value $400
$5,000,000 value
Alberta
$200 to $400
British Columbia
$350 + 1.4% of portion > $50,000
$6,650
$27,650
$69,650
$70 + 0.7% of portion > $10,000
$3,500
$14,000
$35,000
$2,500
$10,000
$25,000
$2,585
$10,085
$25,085
$7,553
$32,228
Manitoba New Brunswick Newfoundland and Labrador Before April 1, 2013, Nova Scotia’s fee was $920 + 1.553% of portion > $100,000.
$500,000 value
0.5% of estate $90 + 0.5% of portion > $1,000
Northwest Territories
$200 to $400
Nova Scotia
$973 + 1.645% of portion > $100,000
Nunavut
$200 to $400
$400 $81,578
$400
Ontario
$250 + 1.5% of portion > $50,000
$7,000
$29,500
$74,500
Prince Edward Island
$400 + 0.4% of portion > $100,000
$2,000
$8,000
$20,000
$14,000
$35,000
Quebec
Nominal fee
Saskatchewan Yukon
0.7% of estate
$3,500
$140
Although Quebec does not levy probate fees, wills (other than notarial wills) must be authenticated by the Superior Court of Quebec. A nominal fee applies.
$140
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7
Individuals Key tax changes
Federal
2012 2013
Top federal rates Dividends Eligible Non-eligible
Ordinary income
Capital gains
29%
14.50%
Dividends:
19.29%
19.58%
2013 Federal Basic personal amount $11,038 Indexing factor 2.0% Bracket $0 $43,561 $87,123 $135,054 Rate 15% 22% 26% 29%
Adoption expense tax credit: The adoption period in which adoption expenses may be claimed for this credit is expanded, for adoptions finalized after 2012. Non-eligible dividends 2013 2014 25% 18%
First-time donor’s super credit: This additional 25% credit on up to $1,000 of donations made after March 20, 2013, can be claimed by first-time donors only once, after 2012 and before 2018.
Dividend gross-up Dividend tax credit (on 13.3333% 11.0169% grossed-up dividend) Top federal rate 19.58% 21.22%
Safety deposit boxes: The cost of renting safety deposit boxes is no longer deductible, for taxation years beginning after March 20, 2013.
Tax-free savings account (TFSA): In 2013, the annual TFSA contribution limit increased from $5,000 to $5,500. See our Tax memo ‘Tax-free savings accounts (TFSAs): Making the most of them’ at www.pwc.com/ca/taxmemo. Lifetime capital gains exemption: Effective 2014, the maximum exemption will increase from $750,000 to $800,000 (indexed after 2014) of capital gains realized on the disposition of qualified property. Automobile deductions and benefits: The 2013 prescribed rates will: • remain at their 2012 levels for purposes of determining capital cost allowance, interest and leasing deductions • be 1¢ per kilometre higher than for 2012 for purposes of determining automobile allowance deductions, tax-exempt allowances and taxable benefits
Retirement savings plans and deferred profit sharing plans: Contribution limits will increase. See page 34. Defined benefit registered pension plans: The maximum pension benefit that can be paid from these plans is increasing as shown:
2012 2013 2014
Pension benefit (per year of service) $2,647 $2,697 Indexed
Mineral exploration tax credit for flow-through shares: This credit is extended by one year to flow-through share agreements entered into before April 1, 2014. Labour-sponsored venture capital corporations (LSVCCs) tax credit: The 15% federal credit will decrease to 10% in 2015, 5% in 2016 and nil after 2016. In addition, new federal registrations of LSVCCs will cease, and provincially registered LSVCCs will no longer be prescribed for the federal LSVCC if applications are submitted after March 20, 2013. Synthetic dispositions: New rules curtail ‘synthetic dispositions,’ which are certain arrangements that allow a taxpayer to avoid capital gains tax or obtain other tax benefits by economically disposing of a property while retaining ownership of it for tax purposes. The rules generally apply to agreements and arrangements entered into after March 20, 2013.
Also, see Car expenses and benefits – A tax guide at www.pwc.com/ca/carexpenses.
8
Registered pension plans (RPPs): For RPP contributions made on or after the later of January 1, 2014, and royal assent of the enacting legislation, RPP administrators will be able to refund contributions to correct reasonable errors without first obtaining the Canada Revenue Agency’s approval, if the refund is made by December 31 of the year following the year in which the inadvertent contribution was made.
Character conversion transactions: New rules curtail ‘character conversion transactions,’ which are certain arrangements that seek to convert ordinary income into capital gains through the use of derivative contracts. The rules apply to defined ‘derivative forward agreements’ with a duration exceeding 180 days that are generally entered into after March 20, 2013. Tax shelters and reportable transactions: For taxation years ending after March 20, 2013, the normal reassessment period for participants in a tax shelter or reportable transaction for which an information return is not filed on time, is extended to three years after the date the relevant information return is filed.
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Individuals
Charitable donation tax shelters: For tax deductions or credits arising from charitable donation tax shelters that are in dispute and for which the taxpayer has objected to an assessment of tax, interest or penalties, the Canada Revenue Agency will be permitted to collect 50% of the assessed amounts, starting the 2013 taxation year. Trusts: • The rules that constrain arm’s length ‘loss trading’ are extended to trusts in certain situations, generally for transactions occurring after March 20, 2013. • The government will explore eliminating the tax benefits that arise from the graduated tax rates used by certain grandfathered inter vivos trusts, testamentary trusts and estates. • Draft legislative proposals that apply after July 24, 2012, counter the Tax Court of Canada decision in Richard Lewin Re: The J.J. Herbert Family Trust #1 v. the Queen, which had addressed situations in which a Canadian resident trust makes an amount payable to a non-resident beneficiary, but pays or credits the amount after the trust ceases to be resident in Canada.
Caseload management: To improve the caseload management of the Tax Court of Canada (TCC), draft legislative proposals: • update the monetary limits for access to the informal appeal procedure • remove the requirement for the TCC to deal with all issues raised in an appeal of an assessment together, enabling some issues to be disposed of independently • permit the TCC to hear a question affecting a group of taxpayers that arises out of substantially similar transactions, and provide that the resulting judicial determination is binding on each taxpayer in the group Tax treaties: Recent developments are shown below. See page 42.
Ratified and entered into force
Signed but awaiting ratification
Under negotiation (or concluded but not signed)
Tax treaties
Colombia Singapore
Hong Kong
None
Non-resident trusts (NRTs): • Draft legislation that was re-released on October 24, 2012, refines the NRT rules that generally apply to taxation years ending after 2006 (earlier if elected). Trusts subject to these rules will be deemed resident for Canadian income tax purposes. See our Tax memo ‘October 24, 2012 Notice of Ways and Means Motion: “Final” version of non-resident trust rules’ at www.pwc.com/ca/taxmemo. • For taxation years ending after March 20, 2013, a NRT other than an ‘immigration trust’ will be deemed to be resident in Canada if a Canadian-resident taxpayer transfers or lends property to the trust (regardless of the consideration received) and the property held by the trust may revert to the taxpayer, pass to persons to be determined by the taxpayer, or be disposed of only with the taxpayer’s consent. Offshore investment funds: Draft legislation that was re-released on October 24, 2012, maintains the enacted provision for investments in offshore investment funds, but increases the prescribed income percentage by 2%, and extends the statute-barred period for taxpayers that have invested in these funds by three years, for taxation years ending after March 4, 2010. See our Tax memo ‘October 24, 2012 Notice of Ways and Means Motion: Offshore investment fund rules revised’ at www.pwc.com/ca/taxmemo.
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9
Individuals
Alberta
2012 2013
British Columbia Top combined rates Dividends Eligible Non-eligible
Ordinary income
Capital gains
39.00%
19.50%
19.29%
27.71%
Highlights of changes Dividends: Dividend gross-up Dividend tax credit (on grossed-up dividend) Top combined rate
Non-eligible dividends 2013 2014 25% 18% 3.5%
2.67%
27.71%
29.87%
2013 Alberta Basic personal amount $17,593 Indexing factor Bracket $0 Rate 10%
1.8%
Alberta is the only province or territory with a single rate.
2012 2013
Top combined rates Dividends Eligible Non-eligible
Ordinary income
Capital gains
43.70%
21.85%
25.78%
33.71%
2013 British Columbia Basic personal amount $10,276 Indexing factor 1.5% Bracket $0 $37,568 $75,138 $86,268 $104,754 Rate 5.06% 7.70% 10.5% 12.29% 14.7%
Can be reduced for low incomes.
Because of the May 14, 2013 election, it is uncertain whether British Columbia tax changes that have not been enacted into law will proceed. At the publication date, the 2013 British Columbia budget measures had not been enacted. Highlights of changes Personal tax system: • For 2014 and 2015, the tax rate on taxable incomes over $150,000 will be 16.8%, increasing the top combined rate on ordinary income from 43.70% to 45.80%. • Starting April 1, 2013, the basic personal and spouse/equivalent to spouse amounts are based on the 2009 amounts, adjusted for inflation. Dividends: Dividend gross-up Dividend tax credit (on grossed-up dividend) Top combined rate
Eligible dividends 2013 2014 38% 10% 25.78%
28.68%
Non-eligible dividends 2013 2014 25% 18% 3.4%
2.59%
33.71%
37.99%
B.C. Training and Education Savings Grant: A one-time $1,200 grant will be paid to a registered education savings plan (RESP) for a beneficiary born after 2006. Medical Services Plan: Monthly premiums are increasing as follows:
10
Single Effective date
Before January 1, 2013 January 1, 2013 January 1, 2014
$64 $66.50 $69.25
Family (2 persons) (> 2 persons) $116 $128 $120.50 $133 $125.50 $138.50
Harmonized Sales Tax (HST): On April 1, 2013, the 12% HST was cancelled and replaced with a 7% Provincial Sales Tax (PST) and the 5% federal Goods and Services Tax (GST). Transitional rules apply. See our Tax memos at www.pwc.com/ca/taxmemo: • ‘British Columbia PST regulations released’ • ‘Re-implementation of British Columbia Provincial Sales Tax: Transitional rules’ • ‘Returning to B.C.’s Provincial Sales Tax: Transitional rules for new housing (Updated November 29, 2012)’ • ‘Eliminating the HST in British Columbia: Canada’s Department of Finance proposes transitional rules’
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Individuals
Manitoba
2012 2013
New Brunswick Top combined rates Dividends Eligible Non-eligible
Ordinary income
Capital gains
46.40%
23.20%
32.26%
2013 Manitoba Basic personal amount $8,884 Indexing factor Bracket $0 $31,000 $67,000 Rate 10.8% 12.75% 17.4%
39.15%
Can be reduced for low incomes.
Highlights of changes Personal tax system: Changes to Manitoba’s personal amounts follow: 2012 Basic Personal amounts Spouse/equivalent to spouse
Dividends: Dividend gross-up Dividend tax credit (on grossed-up dividend) Top combined rate
$8,634
2013 $8,884
n/a 2012 2013
Ordinary income 43.30% 45.07%
Top combined rates Dividends Eligible Non-eligible 22.47% 30.83% 24.91% 33.05%
Capital gains 21.65% 22.54%
Highest Income tax rates Lowest
Non-eligible dividends 2013 2014 25% 18% 1.75%
0.83%
39.15%
40.77%
Provincial Sales Tax (PST): Manitoba will increase its 7% PST rate to 8% from July 1, 2013, to June 30, 2023.
Can be reduced for low incomes.
Highlights of changes Personal tax system:
2014 $9,134
2013 New Brunswick Basic personal amount $9,388 Indexing factor 2.0% Bracket $0 $38,954 $77,908 $126,662 Rate 9.39% 13.46% 14.46% 16.07%
2012 14.3% 12.4% 12.1% 9.1%
Dividends: 2012 Dividend gross-up Dividend tax credit (on grossed-up dividend) Top combined rate
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2013 16.07% 14.46% 13.46% 9.39%
2014 17.84% 16.52% 14.82% 9.68%
Eligible dividends 2013 2014 38% 12%
22.47%
24.91%
The top combined rate on ordinary income will increase from 45.07% to 46.84% for 2014.
Non-eligible dividends 2012 2013 2014 25% 18% 5.3%
27.35%
30.83%
33.05%
4.04% 37.50%
11
Individuals
Newfoundland and Labrador
2012 2013
Top combined rates Dividends Eligible Non-eligible
Ordinary income
Capital gains
42.30%
21.15%
22.47%
29.96%
Highlights of changes Dividends: Dividend gross-up Dividend tax credit (on grossed-up dividend) Top combined rate
12
2013 Newfoundland and Labrador Basic personal amount $8,451 Indexing factor Bracket $0 $33,748 $67,496 Rate 7.7% 12.5% 13.3%
Can be reduced for low incomes.
2.6% 2012 2013
Top combined rates Dividends Eligible Non-eligible
Ordinary income
Capital gains
43.05%
21.53%
22.81%
29.65%
Highlights of changes Dividends:
Non-eligible dividends 2013 2014 25% 18% 5% 29.96%
Northwest Territories
31.01%
Dividend gross-up Dividend tax credit (on grossed-up dividend) Top combined rate
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Non-eligible dividends 2013 2014 25% 18% 6% 29.65%
30.72%
2013 Northwest Territories Basic personal amount $13,546 Indexing factor 2.0% Bracket $0 $39,453 $78,908 $128,286 Rate 5.9% 8.6% 12.2% 14.05%
Individuals
Nova Scotia
2012 2013
Nunavut Top combined rates Dividends Eligible Non-eligible
Ordinary income
Capital gains
50.00%
25.00%
36.06%
36.21%
2013 Nova Scotia Basic personal amount $8,481 Indexing factor n/a Bracket $0 $29,590 $59,180 $93,000 $150,000 Rate 8.79% 14.95% 16.67% 17.5% 21%
Can be reduced for low incomes.
Highlights of changes
Personal tax system: If Nova Scotia tables a budget surplus in its 2014-2015 fiscal year, for 2014 the $150,000 bracket and 21% rate will be eliminated, but a 10% surtax on provincial income tax exceeding $10,000 will be reinstated. These changes would decrease the combined rate on ordinary income from 50% to 48.25%. Dividends: Dividend gross-up Dividend tax credit (on grossed-up dividend) Top combined rate
Non-eligible dividends 2013 2014 25% 18%
7.7%
5.87%
36.21%
39.07%
2012 2013
Top combined rates Dividends Eligible Non-eligible
Ordinary income
Capital gains
40.50%
20.25%
27.56%
28.96%
2013 Nunavut Basic personal amount $12,455 Indexing factor 2.0% Bracket $0 $41,535 $83,071 $135,054 Rate 4% 7% 9% 11.5%
Highlights of changes Dividends: Dividend gross-up Dividend tax credit (on grossed-up dividend) Top combined rate
Non-eligible dividends 2013 2014 25% 18% 4%
3.05%
28.96%
31.19%
If Nova Scotia tables a budget surplus in its 2014-2015 fiscal year, the top 2014 combined rate will be 32.42% on eligible dividends and 36.32% on non-eligible dividends.
Age Amount Tax Credit: Starting January 1, 2014, a $1,000 non-refundable tax credit is available for seniors with taxable incomes under $24,000. Probate fees: Nova Scotia’s probate fees increased effective April 1, 2013. See page 7. Harmonized Sales Tax (HST): Nova Scotia will reduce its HST rate from 15% to 14% by July 1, 2014, and to 13% by July 1, 2015 (i.e. the provincial portion of the HST will decrease from 10% to 9% and to 8%, respectively).
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13
Individuals
Ontario
2012 2013
Ordinary income 47.97% 49.53%
Prince Edward Island Top combined rates 2013 Ontario Basic personal amount $9,574 Indexing factor 1.8% Dividends Eligible Non-eligible Bracket $0 $39,723 $79,448 $509,000 31.69% 34.52% Rate 5.05% 9.15% 11.16% 13.16% 33.85% 36.47% Can be reduced Surtax: 20% of basic provincial tax in excess of $4,289
Capital gains 23.98% 24.76%
Ordinary income 2012 2013
47.37%
Top combined rates Dividends Eligible Non-eligible 41.17% 23.69% 28.70% 38.56%
for low incomes. + 36% of basic provincial tax in excess of $5,489.
Dividend gross-up Dividend tax credit (on grossed-up dividend) Top combined rate
Highlights of changes Personal tax system: Ontario’s top personal tax rate increased from 12.16% to 13.16% for 2013. The 13.16% rate and bracket will be eliminated when Ontario’s budget is balanced (scheduled for 2017-2018). Non-eligible dividends 2013 2014 25% 18%
4.5%
3.72% 38.60%
Pooled registered pension plans (PRPPs): Ontario will introduce legislation to implement PRPPs after consulting with interested parties. Ontario Trillium Benefit: Commencing 2014, recipients of this benefit can choose to receive the benefit monthly or as a single payment at the end of the benefit year. Tax avoidance: • Disclosure rules – Ontario will implement disclosure rules for aggressive tax avoidance transactions, similar to proposed federal rules • Enhancing audit – Ontario will expand the use of its automated risk assessment system to identify tax accounts that pose the highest risk of tax loss
14
Can be reduced Surtax: 10% of basic provincial for low incomes. tax in excess of $12,500.
Non-eligible dividends 2012 2013 2014 25% 18% 1%
2.9%
2.21%
41.17%
38.56%
40.03%
Harmonized Sales Tax (HST): On April 1, 2013, a 14% HST (i.e. 9% provincial component plus the 5% federal Goods and Services Tax (GST)) replaced the combined Provincial Sales Tax (PST)/GST rate of 15.5% (i.e. 10% PST, which applied on the 5% GST). Transitional rules apply. An enhanced refundable tax credit will minimize the impact of the new tax on low- and modest-income individuals.
Dividends:
36.47%
n/a
Highlights of changes Dividends:
Because the Ontario government is in a minority, it is uncertain whether Ontario tax changes that have not been enacted into law will proceed. At the publication date, the 2013 Ontario budget measures had not been enacted.
Dividend gross-up Dividend tax credit (on grossed-up dividend) Top combined rate
2013 Prince Edward Island Basic personal amount $7,708 Indexing factor Bracket $0 $31,984 $63,969 Rate 9.8% 13.8% 16.7%
Capital gains
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Individuals
Quebec
2012 2013
Ordinary income 48.22% 49.97%
Top combined rates Dividends Eligible Non-eligible 32.81% 36.35% 35.22% 38.54%
Capital gains 24.11% 24.98%
2013 Quebec Basic personal amount $11,195 Indexing factor 2.48% Bracket $0 $41,095 $82,190 $100,000 Rate 16% 20% 24% 25.75%
Federal rates that apply are reduced by the 16.5% ‘Quebec abatement.’
Quebec is the only jurisdiction that does not use the federal definition of taxable income.
Bracket Rate
$0 12.53%
Youth Activities Tax Credit: Commencing 2013, families with incomes of $130,000 or less (indexed after 2013) can claim this refundable tax credit of up to $20, for each child aged five to under 17, who is enrolled in a physical activity or other qualifying program. The maximum credit is $40 for a child aged five to under 19 who qualifies for the disability tax credit. The maximum credit increases in stages, from 2014 to 2017, to $100 per child ($200 per child with a disability).
$43,561 $87,123 $135,054 18.37% 21.71% 24.22%
Because the Quebec government is in a minority, it is uncertain whether Quebec tax changes that have not been enacted into law will proceed. At the publication date, the November 20, 2012 Quebec budget measures had not been enacted. Highlights of changes Personal tax system: Starting 2013, Quebec will apply a tax rate of 25.75% on taxable incomes over $100,000. As a result, effective 2013: • the tax rate will increase from 24% to 25.75% on: – children’s split income – excess profit sharing plan amounts • 80% (up from 75%) of capital gains will be included in adjusted taxable income for alternative minimum tax purposes However, the maximum charitable donations tax credit rate will remain 24%. Dividends: Dividend gross-up Dividend tax credit (on grossed-up dividend) Top combined rate
Non-eligible dividends 2012 2013 2014 25% 8% 36.35%
38.54%
Health contribution premiums: Starting 2013, annual health contribution premiums will: • be based on an individual’s income • increase from $200 to a maximum of $1,000, which will be paid by individuals with incomes of $150,000 or more (indexed after 2013)
At the publication date, Quebec has not announced whether it will harmonize with the federal changes to non-eligible dividends (see page 8). If it does, Quebec’s 2014 rates will differ from those shown.
39.91%
Tuition and examination fees tax credit: The credit rate will decrease from 20% to 8%, for fees paid for taxation years after 2012. Exceptions apply.
Tax credit for experienced workers: The amount of eligible work income over $5,000 that can be exempt from tax for individuals 65 or over will remain $3,000. The amount was to have risen gradually from 2013 to 2016. Pension income splitting: Quebec will harmonize with federal measures relating to retirement compensation arrangements for pension income splitting between spouses, commencing 2013. Trusts: • Tax rate – increases from 24% to 25.75% for inter vivos trusts (including mutual fund and specified investment flow-through trusts), commencing 2013 taxation years • Returns – for taxation years starting after November 20, 2012, changes: – add three situations in which certain trusts liable for Quebec tax must file tax returns – require trusts that reside in Canada outside Quebec and that own rental immovable property in Quebec to file information returns Quebec Sales Tax (QST): On January 1, 2013, the QST was further harmonized with the GST, and the QST rate increased from 9.5% to 9.975%. In addition, starting January 1, 2013, the QST is calculated exclusive of GST (not on the GST included amount). The effective combined GST and QST rate remains 14.975%. See our Tax memos ‘QST to be harmonized with GST by 2013’ and ‘QST harmonization: Draft legislation has important implications for financial services and others’ at www.pwc.com/ca/taxmemo.
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15
Individuals
Yukon
Saskatchewan
2012 2013
Top combined rates Dividends Eligible Non-eligible
Ordinary income
Capital gains
44%
22%
24.81%
33.33%
2013 Saskatchewan Basic personal amount $15,241 Indexing factor Bracket $0 $42,906 $122,589 Rate 11% 13% 15%
2.0% 2012 2013
Highlights of changes Dividends: Dividend gross-up Dividend tax credit (on grossed-up dividend) Top combined rate
42.40%
Top combined rates Dividends Eligible Non-eligible 15.93% to 21.20% 30.41% 19.29% Capital gains
2013 Yukon Basic personal amount $11,038 Indexing factor 2.0% Bracket $0 $43,561 $87,123 $135,054 Rate 7.04% 9.68% 11.44% 12.76%
Can be reduced Surtax: 5% of basic provincial for low incomes. tax in excess of $6,000.
Highlights of changes Dividends:
Non-eligible dividends 2013 2014 25% 18% 4%
3.05%
33.33%
35.32%
Dividend gross-up Dividend tax credit (on grossed-up dividend) Top combined rate
Pooled registered pension plans (PRPPs): Saskatchewan will make PRPPs available to employees and the self-employed, and will allow the Saskatchewan Pension Plan to become a PRPP provider.
16
Ordinary income
Non-eligible dividends 2013 2014 25% 18% 4.51%
4.03%
30.41%
32.04%
Children’s Arts Tax Credit: Commencing 2012, parents can claim a non-refundable tax credit on up to $500 of fees paid for enrolling each child under 17 in an eligible program of artistic, cultural, recreational or developmental activities. An additional $500 is available for children under 19 who qualify for the disability tax credit.
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Corporations Corporate income tax rates
To compute rates for off-calendar year ends, refer to pages 23 to 30. For income not earned in a province or territory, see page 18. For non-resident corporations, the general and M&P rates in the table apply to business income attributable to a permanent establishment in Canada. Different rates may apply to non-residents in other circumstances. Non-resident corporations may also be subject to branch tax (see page 18).
Twelve-month taxation year ended December 31, 2013 General and Manufacturing and Processing (M&P) (%)
Canadian-Controlled Private Corporations (CCPCs) (%) Active business income earned in Canada to $500,000
Basic federal rate Less: Plus: Federal rate
The general and M&P rate does not apply to certain types of income. See page 21.
Provincial abatement General rate reduction or M&P deduction Small business deduction Refundable investment tax
Newfoundland and Labrador
General M&P
Northwest Territories Nova Scotia Nunavut
Corporations subject to Ontario income tax may also be liable for Ontario corporate minimum tax. See page 27.
Ontario
General M&P
Prince Edward Island Quebec Saskatchewan Yukon
General M&P General M&P
Income above $500,000 ($400,000 in Manitoba and Nova Scotia): A CCPC’s active business income above this threshold is subject to the general and M&P rate.
38 -10 -13
n/a
Provincial/ Territorial 10 10.75 12 11.01 14 H 5H 11.5 16 12 11.5 H 10 H 16 H 11.9 H 12 10 15 2.5
Investment income: See Refundable Investment Tax on page 18 for more details.
n/a -17 n/a 11
15
Alberta British Columbia Manitoba New Brunswick
Investment income
Combined 25 25.75 27 26.01 29 20 26.5 31 27 26.5 25 31 26.9 27 25 30 17.5
$500,000 threshold ($400,000 in Manitoba and Nova Scotia): This threshold is shared by associated CCPCs. It is reduced on a straight-line basis for CCPCs that, in the preceding year, had taxable capital employed in Canada (on an associated basis) between $10 million and $15 million. This clawback also applies to all provincial and territorial small business deductions except Ontario’s.
6.67 34.67
Provincial/ Territorial 3 2.5 01 or 121 4.5
Combined
4H
15
4 3.51 H or 161 4
15 14.51 or 271 15
4.5 H
15.5
3.64 H 8H
14.64 19
2
13
4 2.5
15 13.5
14 13.5 111 or 231 15.5
Provincial/ Territorial 10 10.75 12 11.01 14 H
Combined 44.67 45.42 46.67 45.67 48.67 n/a 46.17 50.67 46.67 46.17
11.5 16 12 11.5 H n/a
50.67 46.57 46.67
16 H 11.9 H 12 n/a
49.67
15 n/a
Special rules apply to M&P income in Ontario (see page 27) and Saskatchewan (see page 30).
H Tax holidays are available to certain corporations. See the table on page 19. 1. In Manitoba and Nova Scotia, the lower rate applies to active business income up to $400,000 and the higher rate to active business income from $400,000 to $500,000.
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17
Corporations Other federal tax rates and income tax deadlines Other federal rates
Therefore, the federal rate is 25%, instead of 15% (see page 17).
Rate
Corporations affected
Description
Special rules
Income not earned in a province or territory
25%
All corporations
Income tax is calculated as follows: Basic federal rate 38% Less: General rate reduction - 13% Federal rate 25%
Branch Tax
25%
Non-resident corporations, except: • transportation, communications and iron-ore mining companies • insurers (other than in special circumstances)
Applies to after-tax profits that are not invested in qualifying property in Canada.
The 25% rate may be reduced by the relevant tax treaty (generally to the withholding tax rate on dividends, which is usually 5%, 10% or 15%). Some treaties prohibit the imposition of branch tax or provide that the tax is payable only on earnings exceeding a threshold. A corporation subject to Part III.1 tax at the 20% rate (i.e. the excess designation was inadvertent) can elect, with shareholder concurrence, to treat all or part of the excess designation as a separate non-eligible dividend, in which case Part III.1 tax will not apply to the amount that is the subject of the election.
Part III.1 Tax on Excess Eligible Dividend Designations
20% or 30%
Canadian-resident corporations
Applies if: • a CCPC has designated as eligible dividends during the year an amount that exceeds the corporation’s general rate income pool (GRIP) at the end of the year • a non-CCPC pays an eligible dividend when it has a positive balance in its low rate income pool (LRIP)
Refundable Part IV Tax
33-1/3%
Private corporations Certain public corporations
Payable on taxable dividends received from certain taxable Canadian corporations.
Refundable Investment Tax
6-2/3%
Increases the total federal rate that applies to investment income Canadian-controlled private corporations (CCPCs) of a CCPC to 34.67% (see page 17). Generally, 26-2/3% of a CCPC’s aggregate investment income is added to its RDTOH.
Part VI Financial Institutions Capital Tax
1.25%
Banks Trust and loan corporations Life insurance companies
Income tax deadlines
CCPCs can pay federal and Quebec instalments on the last day of months 3, 6, 9 and 12 of the taxation year, if certain conditions are met.
General rule Federal income tax payments include payments for: • Financial Institutions Capital Tax (see above) • Tax on Corporations Paying Dividends on Taxable Preferred Shares • Additional Tax on Authorized Foreign Banks
Exceptions
Applies if capital employed in Canada is over $1 billion. The threshold is shared by related corporations.
Federal All jurisdictions except Alberta and Quebec
Refundable to the corporation through the refundable dividend tax on hand (RDTOH) mechanism at a rate of $1 for every $3 of taxable dividends paid.
Reduced by the corporation’s federal income tax liability. Any unused federal income tax liability can be applied to reduce Financial Institutions Capital Tax for the previous three years and the next seven.
Two $3,000 thresholds apply; one for federal purposes and the other for all provinces and territories combined, except Alberta and Quebec.
Federal balance due deadlines also apply to Part IV tax (see above). However, no Part IV tax instalments are required.
Instalment deadline Last day of each month
Balance due deadline 2 months after year end
Filing deadline 6 months after year end
Waived if total tax1 is < $3,000
3 months after the year end, if the corporation: • was a CCPC throughout the current year, • claimed the small business deduction,1 and • had taxable income, on an associated basis, in taxation years ending in the previous calendar year < the total business limit for those taxation years
No exceptions
Alberta
Waived if Alberta income tax ≤ $2,000 or CCPC qualifies for extended balance due deadline
Quebec
Waived if Quebec income tax1 < $3,000
1
1
3 months for CCPCs that: • claimed Alberta’s small business deduction, and • had taxable income < $500,000
1. In current or previous year. 18
Corporate income that is not earned in a province or territory is neither: • eligible for the provincial abatement, nor • subject to provincial or territorial tax (exceptions apply)
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Corporations Provincial income tax holidays and M&P investment tax credits
Income tax holidays
Other restrictions may apply.
Eligible corporations Newfoundland Companies meeting job and Labrador creation and other conditions
Holiday Outside Northeast Avalon region
Designated after December 31, 2001
In Northeast Avalon region
Designated before January 1, 2002 CCPCs incorporated after April 24, 1992 Companies incorporated in Canada after March 24, 2008, and before March 25, 2012, that Ontario commercialize intellectual property developed by Canadian universities, colleges or research institutions Minimum employee and payroll Prince Edward Aviation- and aerospace-related firms in Slemon Park requirements must be met. Island Bioscience companies Businesses that carry out a large investment project of at least $300 million in Quebec Businesses that undertake major investment projects Quebec Companies incorporated in Canada after March 19, 2009, and before April 1, 2014, that commercialize intellectual property developed by Quebec universities or public research centres
Full holiday for 15 years, phased out over next 5 years: Full holiday for 10 years, phased out over next 5 years
Nova Scotia
Program eliminated on November 20, 2012. However, no new applications have been accepted since June 12, 2003. See page 29.
Income not taxed each year Additional 50% federal tax rebate
Income attributable to new or expanded business
For 3 years
$500,000 of active business income
For 10 years
No limit
To December 31, 2022
This threshold is equal to the federal small business limit (see page 17).
Income attributable to PEI operations 15% of eligible investment expenditures
For 10 years No limit
The initial application must be submitted after November 20, 2012, and before November 21, 2015. See page 29.
M&P investment tax credits For federal tax purposes, M&P investment tax credits are considered government assistance and reduce the capital cost of the M&P asset.
An additional 25% credit may be claimed in PEI by exportfocused corporations.
Nova Scotia’s 20% credit can be claimed by certain industries for the cost (up to $1 million annually) of technologically-advanced machinery, clean technology, equipment, software and hardware. The property cost must exceed $25,000.
Manitoba’s refundable portion of the credit increased from 70% to 80% for qualified property acquired after June 30, 2013.
Rate
Manitoba 10% Nova Scotia 20% Prince Edward Island 10% Quebec 5% to 40% 6% Saskatchewan 7% 5%
For M&P property acquired After Before March 11, 1992 December 19, 2010 December 31, 1992 March 13, 2008 March 26, 1999 March 31, 2004 October 27, 2006
January 1, 2015 No cut-off January 1, 2018 April 1, 2004 October 28, 2006 No cut-off
In Quebec, a cumulative limit of $75 million of eligible investments qualifies for this credit at rates above 5% and/or refundability.
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Carryback
CarryRefundable forward
3 years
10 years n/a 7 years 3 years 20 years 10 years n/a
80% 100% No Sometimes No
Depends on level of consolidated paid-up capital.
100%
Saskatchewan’s credit is refundable for purchases after April 6, 2006.
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Corporations Financial institutions capital tax rates and deadlines
See Insurance industry: Key tax rates and updates at www.pwc.com/ca/insurancekeytaxrates for rates that apply to insurance companies.
To compute rates for off calendar year ends, refer to pages 21 to 30.
Associated or related corporations may be required to share the exemption.
Twelve-month taxation year ended December 31, 2013 Rate Exemption Federal (Part VI Financial Institutions Capital Tax) Manitoba’s rate increased from 4% to 5% for fiscal years ending after April 16, 2013.
Manitoba
1.25%
$1 billion
If taxable paid-up capital < $4 billion
Nil
n/a
If taxable paid-up capital > $4 billion
5%
New Brunswick
Quebec’s compensation tax on paid-up capital was eliminated on January 1, 2013 (see page 29).
Newfoundland If paid-up capital < $10 million and Labrador If paid-up capital > $10 million Head office in N.S. Trust and loan corporations Nova Scotia Other Banks Prince Edward Island If paid-up capital < $1.5 billion Saskatchewan If paid-up capital > $1.5 billion
4%
$10 million
Same as federal income tax (page 18) 15th day of months 3, 6, 9 and 12 of the year (If capital tax1 ≤ $5,000, one instalment three 6 months after months after year end) year end 20th day of each month
$5 million Nil $30 million
Same as federal income tax (page 18)
20th day of each month
6 months after year end
Last day of each month (Waiver if capital tax for current year < $4,800)
Last day of 6th month after year end
$500,000 5% 0.7% 3.25%
$2 million Up to $20 million
If, in the taxation year ending after October 31, 2008, and before November 1, 2009, taxable paid-up capital < $1.5 billion, 0.7% applies to first $1.5 billion of taxable paid-up capital.
For example, in Saskatchewan the balance payable would be June 30 for a December 15 year end.
1. In current or previous year. 20
Balance due and filing deadlines
Instalment deadlines
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Corporations Key tax changes
Federal
Taxation of corporate groups: The government has determined that moving to a formal system of corporate group taxation is not a priority. It will continue to work with the provinces and territories to address their concerns on loss utilization.
Corporate income tax rates (for December 31, 2013 year ends) The general and M&P rate does not apply to certain corporations (e.g. mutual fund corporations, mortgage investment corporations and investment corporations).
Mining expenses: Changes: • treat pre-production mine development expenses as Canadian development expense, instead of as Canadian exploration expense, generally for expenses incurred after March 20, 2013, subject to a phase-in over three calendar years, from 2015 to 2017 • phase out, over the 2017 to 2020 calendar years, the additional allowance that allows a taxpayer to claim up to 100% of certain eligible mining assets, generally for expenses incurred after March 20, 2013
CCPC
General and M&P
Active business income to $500,000
15
11
Investment income 34.67
The federal government’s goal is to achieve combined 25% federal/provincial and federal/territorial rates.
See our Tax memo ‘2013 Federal budget: Alert for mining companies’ at www.pwc.com/ca/taxmemo.
Other 2013 rates Capital tax Financial institutions: 1.25% (see page 20) Payroll tax None Sales tax 5% GST (see page 32)
For Canada Pension Plan and Employment Insurance premiums, see page 31.
Reserve for future services: Generally, this reserve is no longer available for amounts received after March 20, 2013, to fund future reclamation obligations.
Most of the key tax changes related to individuals also affect corporations. See pages 8 and 9.
Scientific research and experimental development (SR&ED): SR&ED program claims filed on or after the later of January 1, 2014, and royal assent of the enacting legislation, will require more detailed information about the SR&ED program tax preparers and billing arrangements. A $1,000 penalty per claim will apply for missing, incomplete or inaccurate information. Capital cost allowance (CCA): Enhancements extend: • the 50% straight-line accelerated CCA rate, for two years, to M&P machinery and equipment acquired before 2016 • for property acquired generally after March 20, 2013, the Class 43.2, 50% declining balance CCA rate, to biogas production equipment that uses more types of organic waste and to all cleaning and upgrading equipment used to treat eligible gases from waste Corporate loss trading: An anti-avoidance measure to support the restrictions on the deductibility of losses, and the use of certain other tax benefits, after certain share acquisition transactions, will generally apply for shares acquired after March 20, 2013.
Tax avoidance: Draft legislation that was re-released on October 24, 2012, makes an ‘avoidance transaction’ meeting certain conditions a ‘reportable transaction’ that must be reported to the Canada Revenue Agency, generally for transactions entered into after 2010, and for those that are part of a series of transactions that commenced before 2011 and that are completed after 2010. Tax compliance reporting: The government wants to implement common-sense solutions to barriers identified by Canadian businesses, such as Canadian tax compliance reporting. See our Tax memo ‘Red Tape Reduction Action Plan – What it means for tax compliance’ at www.pwc.com/ca/taxmemo. Hiring credit for small business: The credit is extended one year for employers that paid employment insurance (EI) premiums in 2012 of $15,000 (up from $10,000 in 2011) or less, if their 2013 EI premiums exceed those paid in 2012. Leveraged life insurance arrangements: Certain tax benefits are eliminated for: • ‘leveraged insured annuities’ – generally for taxation years ending after March 20, 2013, annual accrual-based taxation applies, premiums are not deductible and death benefits no longer increase a private corporation’s capital dividend account (CDA) • 10-8 arrangements – no deductions are allowed for interest on related borrowings and insurance premiums that relate to a period after 2013, and the CDA is not increased for death benefits that become payable after 2013 and are associated with the borrowing
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Corporations
Credit unions: The additional deduction from tax that effectively provides credit unions access to the CCPC small business income tax rate for certain income that would not otherwise be eligible will be phased out by 2017, beginning March 21, 2013. Restricted farm losses: For taxation years ending after March 20, 2013, changes: • ensure that farming losses of a taxpayer are subject to the ‘restricted farm loss’ rules if the taxpayer’s chief source of income is neither farming nor a combination of farming and some other source of income that is a subordinate source of income • increase the restricted farm loss limit to $17,500 of deductible farm losses annually Thin capitalization rules: For taxation years beginning after 2013, the thin capitalization rules will apply to Canadian-resident trusts and to non-resident corporations and trusts that operate in Canada. Foreign affiliates: Draft legislation released on October 24, 2012, includes proposals relating to the taxation of Canadian corporations with foreign affiliates and is the culmination of legislative developments that started a decade ago. See our Tax memos at www.pwc.com/ca/taxmemo: • ‘Comprehensive income tax package released: Long-awaited foreign affiliate amendments included’ • ‘October 24, 2012 Notice of Ways and Means Motion: Changes to upstream loan and foreign tax credit generator rules’ Shareholder loans: Non-resident controlled Canadian corporations are permitted to make certain loans to foreign parent companies or related non-resident companies without incurring the deemed dividend withholding tax, generally for loans received or indebtedness incurred after March 28, 2012. This change also applies to loans made by, or to, certain partnerships. See our Tax memo ‘Legislation tabled October 15, 2012: Foreign affiliate dumping and shareholder loan rules’ at www.pwc.com/ca/taxmemo.
Tax evasion and aggressive tax avoidance: To help the Canada Revenue Agency (CRA) combat international tax evasion and aggressive tax avoidance: • starting in 2015, certain financial intermediaries will be required to report international electronic funds transfers of $10,000 or more • upon royal assent to the enacting legislation, the court order process for obtaining information or documents from a third party will be streamlined • the ‘Stop International Tax Evasion Program’ will be launched, under which the CRA will compensate certain persons who provide information that leads to the assessment or reassessment of over $100,000 in federal tax Foreign Income Verification Statement (Form T1135): Changes: • extend the normal assessment period for this form by three years if the taxpayer fails to report income from a specified foreign property and a Form T1135 for the year was not filed on time or a specified foreign property was not, or not properly, identified on the form • require more detailed information to be reported on the form International Banking Centres (IBCs): The IBC rules, which exempt prescribed financial institutions from tax on certain income earned through a branch or office in the metropolitan areas of Montreal and Vancouver, will be repealed for taxation years starting after March 20, 2013. Treaty shopping: The federal government will explore methods to protect the integrity of Canada’s tax treaties while preserving a business tax environment that is conducive to foreign investment. Tax Information Exchange Agreements (TIEAs): Canada is negotiating nine TIEAs and has signed five. Sixteen have entered into force (one on behalf of five jurisdictions).
‘Foreign affiliate dumping’ rules: A variety of transactions described as ‘foreign affiliate dumping’ transactions, which involve an investment in a foreign affiliate by a corporation that is both resident in Canada and controlled by a non-resident of Canada, have been curtailed, generally for transactions occurring after March 28, 2012. See our Tax memo ‘Legislation tabled October 15, 2012: Foreign affiliate dumping and shareholder loan rules’ at www.pwc.com/ca/taxmemo.
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Corporations
Alberta
British Columbia
Corporate income tax rates (for December 31, 2013 year ends)
Corporate income tax rates (for December 31, 2013 year ends)
CCPC
General and M&P
Active business income to $500,000
10 25
3 14
Investment income 10 44.67
Figures in bold are combined federal/provincial rates.
10.75 25.75
2.5 13.5
Capital tax None Payroll tax Sales tax 7% PST (see page 32)
Capital tax Payroll tax None Sales tax
Additional highlights Scientific research and experimental development (SR&ED): Retroactive to January 1, 2009, changes: • recalculate the SR&ED “grind” (i.e. the deduction of the federal SR&ED tax credit when calculating Alberta’s SR&ED tax credit) to address a technical deficiency that, in some cases, caused an incorrect calculation of the grind, for taxation years ending before April 1, 2012 • introduce two anti-avoidance rules that apply if the timing of the federal SR&ED grind elimination, creates an opportunity to avoid the application of the grind • parallel Alberta’s proxy amount to the federal proxy amount, which declines from 65% to 60% for 2013 and to 55% after 2013 • allow Alberta eligible expenditures to include amounts transferred to the claimant under an agreement filed for federal income tax purposes • extend the deadline for filing prescribed SR&ED forms to 15 months (from 12 months) after the due date for a corporation’s income tax return
Insurance: Changes that affect insurance companies: • require the same policy reserves to be claimed for Alberta and federal tax purposes, effective taxation years ending after December 10, 2012 • provide technical amendments to the rules for calculating the insurance premiums tax
Active business income to $500,000
Investment income 10.75 45.42
Figures in bold are combined federal/provincial rates.
Other 2013 rates
Other 2013 rates
See our Developments ‘Alberta’s SR&ED changes clarified’ at www.pwc.com/ca/sred/developments.
CCPC
General and M&P
12% HST before April 1, 2013.
Because of the May 14, 2013 election, it is uncertain whether British Columbia tax changes that have not been enacted into law will proceed. At the publication date, the 2013 British Columbia budget measures had not been enacted. Corporate income tax rate changes
Effective date
General and M&P rates Before April 1, 2013 10% April 1, 2013 11%
Additional highlights Harmonized Sales Tax (HST): On April 1, 2013, the 12% HST was cancelled and replaced with a 7% Provincial Sales Tax (PST) and the 5% federal Goods and Services Tax (GST)). Transitional rules apply. See our Tax memos at www.pwc.com/ca/taxmemo: • ‘British Columbia PST regulations released’ • ‘Re-implementation of British Columbia Provincial Sales Tax: Transitional rules’ • ‘Returning to B.C.’s Provincial Sales Tax: Transitional rules for new housing (Updated November 29, 2012)’ • ‘Eliminating the HST in British Columbia: Canada’s Department of Finance proposes transitional rules’
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Corporations
Manitoba
Data Processing Investment Tax Credit: Enhancements: • extend the credit to companies not engaged primarily in data processing in Manitoba but that acquire at least $10 million of incremental eligible data processing equipment in a taxation year in Manitoba (applies to property purchased or leased and made available for use in Manitoba after April 16, 2013, and before 2016) • increase the credit rate from 7% to 8% for ‘data processing centre equipment’ and from 4% to 4.5% for ‘data processing buildings,’ starting July 1, 2013
Corporate income tax rates (for December 31, 2013 year ends) General and M&P 12 27
CCPC Active business income to $400,000 $400,000 to $500,000 Nil 12 11 23
Investment income 12 46.67
Figures in bold are combined federal/provincial rates.
Other 2013 rates
Rental Housing Construction Tax Credit: Eligible landlords can claim a new 8% tax credit on the capital cost of new rental housing construction projects of five or more residential rental units. At least 10% of the units must qualify as affordable rental housing units. The maximum credit is $12,000 per eligible rental unit and is: • refundable for not-for-profit entities • non-refundable (claimable over a minimum of five years) for for-profit entities.
Capital tax Financial institutions: Nil or 4% or 5% (see page 20 and below) Payroll tax Nil to 4.3% (see page 33) 8% PST after June 30, 2013; Sales tax 7% before July 1, 2013. (see page 32)
Corporate income tax rate changes
Effective date
Before January 1, 2014 January 1, 2014
Film and Video Production Tax Credit: The credit will expire on December 31, 2016, instead of on March 1, 2014.
Threshold up to which CCPC rate applies $400,000 $425,000
Additional highlights Financial institutions capital tax: The financial institutions capital tax rate increased from 4% to 5%, for fiscal years ending after April 16, 2013. Research and Development Tax Credit: • Manitoba’s credit will parallel the changes to the federal Scientific Research and Experimental Development Tax Credit that reduce: − the prescribed proxy amount from 65% to 60% in 2013 and to 55% in 2014 − the amount of contract payments incurred after 2012 that are claimable (other than payments to eligible Manitoba institutes) from 100% to 80% • Manitoba will not adopt federal changes that remove capital expenditures from the investment tax credit base. • Technical amendments will ensure Manitoba’s credit operates as intended. Manufacturing Investment Tax Credit: • The refundable portion of this 10% credit will increase from 70% to 80% for qualified property acquired after June 30, 2013. • Technical amendments will ensure this credit operates as intended.
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Interactive Digital Media Tax Credit: • The credit is extended three years to December 31, 2016. • For projects that have been issued an eligibility certificate after 2011, and that commence production after 2012: − up to $100,000 in eligible marketing and distribution expenses that are directly attributable to the project can be claimed − financial support from the Canada Media Fund that is recoupable or repayable will not be treated as ‘government assistance’ − a contractor that develops an eligible product for an arm’s-length purchaser no longer has to demonstrate that the product will be resold or licensed by that purchaser − a broader interpretation of the sale requirement will give Manitoba added flexibility to determine which types of commercialization projects are eligible Small Business Venture Capital Tax Credit: The credit is extended three years to December 31, 2016. Odour Control Tax Credit: This credit will be fully refundable to agricultural producers on qualifying property acquired after 2012. Provincial Sales Tax (PST): Manitoba will increase its 7% PST rate to 8% from July 1, 2013, to June 30, 2023.
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Corporations
New Brunswick
Corporate income tax rates (for December 31, 2013 year ends) General and M&P
CCPC
4.5 15.5
11.01 45.67
Figures in bold are combined federal/provincial rates.
14 H 29
CCPC Active business income to $500,000
5H 20
4H 15
Investment income 14 H 48.67
Figures in bold are combined federal/provincial rates. H = Tax holiday (see page 19)
The M&P credit can be claimed only by companies that manufacture or process at a permanent establishment in the province.
Other 2013 rates Capital tax Financial institutions: 4% (see page 20 and below) Payroll tax None Sales tax 13% HST (see page 32)
Corporate income tax rate changes Effective date
General M&P (non M&P)
Investment Active business income to $500,000 income
11.01 26.01
Newfoundland and Labrador
Corporate income tax rates (for December 31, 2013 year ends)
General and M&P rates Before July 1, 2013 10% July 1, 2013 12%
Other 2013 rates Capital tax Financial institutions: 4% (see page 20) Payroll tax Nil or 2% (see page 33) Sales tax 13% HST (see page 32)
Additional highlights No significant corporate tax changes were announced.
Additional highlights Financial Corporation Capital Tax: Effective date
Before April 1, 2012 April 1, 2012
Rate 3% 4%
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Corporations
Northwest Territories
Corporate income tax rates (for December 31, 2013 year ends) General and M&P 11.5 26.5
CCPC Investment Active business income to $500,000 income 4 11.5 15 46.17
General and M&P 16 31
Figures in bold are combined federal/territorial rates.
CCPC Active business income to $400,000 3.5 H 14.5
$400,000 to $500,000 16 27
Investment income 16 50.67
Figures in bold are combined federal/provincial rates. H = Tax holiday (see page 19)
Other 2013 rates
Other 2013 rates Capital tax None Payroll tax 2% (see page 33) Sales tax None
Nova Scotia
Corporate income tax rates (for December 31, 2013 year ends)
Payroll tax is paid by employees.
Additional highlights No significant corporate tax changes were announced.
Capital tax Financial institutions: 4% (see page 20) Payroll tax None Sales tax 15% HST (see page 32)
Corporate income tax rate changes CCPC rate Effective date
Before January 1, 2013 January 1, 2013 January 1, 2014
4% 3.5% 3%
Threshold up to which CCPC rate applies $400,000 $350,000
Additional highlights General capital tax: Effective date
Taxable capital Taxable capital < $10 million > $10 million Before July 1, 2012 0.1% 0.05% July 1, 2012 Nil
Digital Media Tax Credit: The credit is extended one year to expenditures incurred before January 1, 2014. Financial institutions capital tax: Nova Scotia will not pay interest on overpayments of this tax. Harmonized Sales Tax (HST): Nova Scotia will reduce its HST rate from 15% to 14% by July 1, 2014, and to 13% by July 1, 2015 (i.e. the provincial portion of the HST will decrease from 10% to 9% and to 8%, respectively).
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Corporations
Nunavut
Corporate income tax rates (for December 31, 2013 year ends) General and M&P 12 27
Ontario Corporate income tax rates (for December 31, 2013 year ends)
CCPC Investment Active business income to $500,000 income 4 12 15 46.67
CCPC General M&P (non M&P) Figures in bold are combined federal/territorial rates.
Other 2013 rates Capital tax None Payroll tax 2% (see page 33) Sales tax None
Payroll tax is paid by employees.
Additional highlights No significant corporate tax changes were announced.
11.5 H 26.5
Active business income to $500,000
Investment income
4.5 H 15.5
11.5 H 46.17
10 H 25
Ontario corporations that, on an associated basis, have annual gross revenues of $100 million or more and total assets of $50 million or more may have a corporate minimum tax (CMT) liability based on adjusted book income. CMT is payable only to the extent that it exceeds the regular Ontario income tax liability. Figures in bold are combined federal/provincial rates. H = Tax holiday (see page 19)
In Ontario, the M&P rate applies to profits from M&P, as well as from processing, farming, mining, logging and fishing operations carried on in Canada and allocated to Ontario.
Other 2013 rates Capital tax None Payroll tax Nil or 1.95% (see page 33 and below) Sales tax 13% HST (see page 32)
Because the Ontario government is in a minority, it is uncertain whether Ontario tax changes that have not been enacted into law will proceed. At the publication date, the 2013 Ontario budget measures had not been enacted. General corporate rate: This rate is frozen at 11.5% until the province returns to a balanced budget (scheduled for 2017-2018). The rate was to drop to 11% on July 1, 2012, and to 10% on July 1, 2013. Additional highlights Employer Health Tax (EHT): Associated employers must aggregate their payroll costs to apply the thresholds. Rate
Before January 1, 2014 Total payroll Payroll tax
1.95%
Over $400,000
(Payroll - $400,000) x 1.95%
0%
$0 to $400,000
$0
After December 31, 2013 Total payroll Payroll tax Over $5,000,000 Payroll x 1.95% $450,000 to $5,000,000 (Payroll - $450,000) x 1.95% $0 to $450,000 $0
The $450,000 exemption will be indexed every five years (expected to be $500,000 in 2019). It will not be available to private-sector employers with annual Ontario payrolls over $5 million.
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Corporations
Apprenticeship Training Tax Credit: For expenditures incurred after March 31, 2014, three apprenticeship trades in Information Technology – Contract Centre (technical support agent, insides sales agent and customer care agent) will no longer be eligible for the credit.
Prince Edward Island
Corporate income tax rates (for December 31, 2013 year ends)
Mining tax system: Ontario will conduct a review to determine whether the province is compensated fairly for its non-renewable resources. Tax avoidance: • Closing loopholes: − Ontario and the federal government have negotiated an agreement for enhanced compliance activities focused on aggressive international tax planning − Ontario will implement disclosure rules for aggressive tax avoidance transactions, similar to proposed federal rules − Ontario will work with the federal government to strengthen the integrity of the tax system, specifically targeting transactions that avoid provincial tax by shifting profit or losses between provinces • Underground economy – Ontario calls on the federal government to do more to combat the underground economy • Enhancing audit – Ontario will expand the use of its automated risk assessment system to identify tax accounts that pose the highest risk of tax loss Technical amendments: Numerous provincial statutes will be amended to improve effectiveness and enforcement.
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CCPC
General and M&P
Active business income to $500,000
16 H 31
3.64 H 14.64
Investment income 16 H 50.67
Figures in bold are combined federal/provincial rates. H = Tax holiday (see page 19)
Other 2013 rates Capital tax Financial institutions: 5% (see page 20) Payroll tax None Sales tax 14% HST (see page 32)
10% PST before April 1, 2013.
Corporate income tax rate changes Effective Before April 1, 2013 date April 1, 2013
CCPC rate 1% 4.5%
Additional highlights Aerospace tax holiday: The holiday is extended 10 years to December 31, 2022. Harmonized Sales Tax (HST): On April 1, 2013, a 14% HST (i.e. 9% provincial component plus the 5% federal Goods and Services Tax (GST)) replaced the combined Provincial Sales Tax (PST)/GST rate of 15.5% (i.e. 10% PST, which applied on the 5% GST). Transitional rules apply.
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Corporations
Mining tax: For taxation years starting after December 31, 2013, mining operators must pay the greater of a: • minimum mining tax – 1% on the first $80 million of the output value of associated operators, and 4% on amounts over $80 million • mining tax on annual profit – based on progressive tax rates from 16% to 28%
Quebec
Corporate income tax rates (for December 31, 2013 year ends) CCPC
General and M&P
Active business income to $500,000
11.9 H 26.9
8H 19
Investment income 11.9 H 46.57
For this and other changes, see our Tax Insights ‘Changes to Quebec’s mining tax regime’ at www.pwc.com/ca/taxinsights.
Figures in bold are combined federal/provincial rates. H = Tax holiday (see page 19)
Research and development (R&D): Changes: • increase the R&D wage tax credit base rate from 17.5% to 27.5% for eligible biopharmaceutical corporations in Quebec that incur R&D expenditures after November 20, 2012, and before January 1, 2018 • include in income, Quebec R&D tax credits received after November 20, 2012, that relate to R&D expenditures incurred for taxation years starting after November 20, 2012
Other 2013 rates Capital tax None Payroll tax 4.26%, 2.7% or reduced rates (see page 33) Sales tax 9.975% QST (see page 32)
For Quebec Pension Plan and Quebec Parental Insurance Plan premiums, see page 31.
Because the Quebec government is in a minority, it is uncertain whether Quebec tax changes that have not been enacted into law will proceed. At the publication date, the November 20, 2012 Quebec budget measures had not been enacted.
Refundable tax credits for on-the-job training periods, for design and for the construction or conversion of vessels: These tax credits must be included in income if they are received after November 20, 2012, and relate to expenditures incurred for taxation years starting after November 20, 2012.
Additional highlights Compensation tax for financial institutions:
Effective date
Before January 1, 2013 January 1, 2013 April 1, 2019
Paid-up capital
Insurance premiums
0.25%
0.55% 0.3%
Refundable tax credit for the development of e-business: Changes to this tax credit intended to benefit corporations actively involved in the information technology sector that contribute to the development of e-business in Quebec, generally apply to taxation years ending or beginning after December 21, 2012.
Payroll Banks and loan, trust and security trading companies 3.9% 2.8% Nil
Savings and credit unions 3.8% 2.2%
Other (excluding insurance companies) 1.5% 0.9%
Health Services Fund: The measure that, starting 2013, would have allowed employers to reduce contributions to this fund for employees who are 65 or older, has been indefinitely deferred. M&P equipment investment tax credit: Enhancements: • extend the tax credit by two years to qualified property acquired before January 1, 2018 • increase the tax credit rate by 5% for qualified property acquired after November 20, 2012, for use mainly in certain administrative regions and regional county municipalities Tax holidays: The holiday for major investment projects was eliminated on November 20, 2012, but investments that already qualified may continue to benefit. A new 10 year holiday is introduced for investment projects of at least $300 million in the manufacturing, data processing and storage, wholesale trade or warehousing sectors.
Trusts: • Tax rate – increases from 24% to 25.75% for inter vivos trusts (including mutual fund and specified investment flow-through trusts), commencing 2013 taxation years • Returns – for taxation years starting after November 20, 2012, changes: – add three situations in which certain trusts liable for Quebec tax must file tax returns – require trusts that reside in Canada outside Quebec and that own rental immovable property in Quebec to file information returns • Non-resident trusts – Commencing 2013 taxation years, the tax rate that applies to an inter vivos trust that does not reside in Canada will increase from 5.3% to 7.05% on property income from the rental of immovable properties located in Quebec. Quebec Sales Tax (QST): On January 1, 2013, the QST was further harmonized with the GST, and the QST rate increased from 9.5% to 9.975%. In addition, starting January 1, 2013, the QST is calculated exclusive of GST (not on the GST included amount). The effective combined GST and QST rate remains 14.975%. See our Tax memos ‘QST to be harmonized with GST by 2013’ and ‘QST harmonization: Draft legislation has important implications for financial services and others’ at www.pwc.com/ca/taxmemo.
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29
Corporations
Saskatchewan
Corporate income tax rates (for December 31, 2013 year ends) General M&P (non M&P) 12 27
Yukon
Corporate income tax rates (for December 31, 2013 year ends) CCPC
CCPC Active business income to $500,000
10 25
2 13
Investment income 12 46.67
Figures in bold are combined federal/provincial rates.
General M&P (non M&P) 15 30
A rebate of up to 2% of M&P profits allocated to Saskatchewan can reduce the rate from 12% to as low as 10%.
Capital tax Financial institutions: 0.7% or 3.25% (see page 20) Payroll tax None Sales tax 5% PST (see page 32)
Corporate income tax rate changes July 1, 2008 To be determined
M&P 2.5 13.5
15 49.67
Figures in bold are combined federal/territorial rates.
General rate 12% 10%
Capital tax Payroll tax None Sales tax
Additional highlights No additional significant corporate tax changes were announced.
Subject to affordability and sustainability within a balanced budget.
Additional highlights Film Employment Tax Credit: Film productions that were registered by SaskFilm before July 1, 2012, must submit their final applications before January 1, 2015.
30
Non-M&P 4 15
Investment income
Other 2013 rates
Other 2013 rates
Effective date
2.5 17.5
Active business income to $500,000
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Individuals and corporations CPP/QPP, EI and QPIP premiums
CPP All contributors (other than those in Quebec) EI premiums
Premium per $100 insurable earnings Annual maximum contribution
QPP (higher than CPP) Employees with insurable earnings for the year below $2,000 can claim a refund of premiums. Quebec contributors
EI (lower than federal EI premiums due to the QPIP)
2012 $50,100
Maximum pensionable earnings - Basic exemption = Maximum contributory earnings Employer/employee rate Maximum employer/employee contribution Self-employed contribution rate Maximum self-employed contribution Maximum annual insurable earnings
$3,500 $46,600
Annual maximum contribution
$2,307
QPIP premiums
Annual maximum contribution Premium per $100 insurable earnings Annual maximum contribution
$2,356 9.9%
Employee Employer Employee Employer
$4,613 $45,900 $1.83 $2.562 $840 $1,176 $50,100
$4,712 $47,400 $1.88 $2.632 $891 $1,248 $51,100 $3,500
Employee Employer Employee Employer
Maximum annual insurable earnings Premium per $100 insurable earnings
$47,600 4.95%
Maximum annual insurable earnings - Basic exemption = Maximum contributory earnings Employer/employee rate Maximum employer/employee contribution Self-employed contribution rate Maximum self-employed contribution Maximum annual insurable earnings Premium per $100 insurable earnings
2013 $51,100
Employee Employer Employee Employer Selfemployed
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$46,600 5.025% $2,342 10.05% $4,683 $45,900 $1.47 $2.058 $675 $945 $66,000
$47,600 5.10% $2,428 10.20% $4,855 $47,400 $1.52 $2.128 $720 $1,009 $67,500
Self-employed individuals are permitted to deduct half of CPP/QPP premiums paid for their own coverage. The non-deductible half qualifies for a tax credit. As well, a portion of the QPIP premiums paid by self-employed individuals is deductible. Self-employed individuals do not pay EI premiums.
$0.559 $0.782 $369 $516
$377 $528 $0.993
$655
$670
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Individuals and corporations Health care premiums and sales tax rates
Health care premiums
Sales tax rates for 2013
The health care premiums shown are payable by individuals, but may be remitted through payroll withholdings. Premiums will increase on January 1, 2014, by $2.75 for single individuals, $5.00 for two-person families and $5.50 for families of three or more persons. British Columbia
Quebec
Medical Services Plan Prescription Drug Insurance Plan Health Services Fund
of two of > two
Premiums
Frequency
Relief
$66.50 $120.50 $133
Monthly
Low-income earners can get assistance
up to $579 Individuals
Applies only if income from certain sources, excluding remuneration, exceeds $14,000.
Quebec Health contribution
GST only
Single
Family
Net income < $20,000 $20,000 to $42,000 $42,000 to $150,000 ≥ $150,000
Rate Federal
Annual up to $1,000
Exemptions apply (e.g. certain seniors, students) None
The premium will be adjusted on July 1, 2013.
Annual premiums per individual 5% of income > $18,000 $100 + 5% of income > $40,000 $200 + 4% of income > $130,000 $1,000
HST
Thresholds will be indexed starting 2014.
PST (or QST) and GST
Ontario Health Premium
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Taxable income < $25,000 $25,000 to $38,500 $38,500 to $48,600 $48,600 to $72,600 $72,600 to $200,600 ≥ $200,600
Alberta Northwest Territories 5% federal GST only Nunavut Yukon New Brunswick 13% Newfoundland and Labrador Nova Scotia 15% Ontario 13% Prince Edward Island 14% British Columbia 7% 12% Manitoba 8% 13% Quebec 9.975% 14.975% Saskatchewan 5% 10%
Quebec’s sales tax was further harmonized with the GST on January 1, 2013, at which time the QST rate increased from 9.5% to 9.975% and is calculated exclusive of GST. (Before 2013, the 9.5% QST was calculated on the GST-included amount.) The effective rate remains 14.975%. See pages 15 and 29.
Before 2013, the Health contribution was $200. Low-income earners were exempt. Annual premiums per individual 6% of income > $20,000 $300 + 6% of income > $36,000 $450 + 25% of income > $48,000 $600 + 25% of income > $72,000 $750 + 25% of income > $200,000 $900
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Total rate 5% GST
A 5% First Nation GST applies instead in certain First Nations. Nova Scotia’s 15% HST rate will decline to 14% by July 1, 2014, and to 13% by July 1, 2015. See pages 13 and 26. Before April 1, 2013: • Prince Edward Island imposed a 10% PST, which applied on the 5% GST, for a combined rate of 15.5% (see pages 14 and 28) • British Columbia imposed a 12% HST (see pages 10 and 23)
Manitoba’s rate is 7% (total rate is 12%) before July 1, 2013. See pages 11 and 24.
Individuals and corporations Payroll tax rates
Associated employers must aggregate their payroll costs to apply the thresholds.
Manitoba Newfoundland and Labrador In the Northwest Territories and Nunavut, payroll tax is paid by employees through payroll withholdings. See page 27 for changes to Ontario’s Employer Health Tax thresholds in 2014.
Health and Post-Secondary Education Tax
Northwest Territories Nunavut
Payroll tax
Ontario
Employer Health Tax
Quebec
Health Services Fund
Rate
Total payroll
Payroll tax
2.15% 4.3% 0% 2% 0%
Over $2,500,000 $1,250,000 to $2,500,000 $0 to $1,250,000 Over $1,200,000 $0 to $1,200,000
Payroll x 2.15% (Payroll – $1,250,000) x 4.3% $0 (Payroll – $1,200,000) x 2% $0
2%
Over $0
Payroll x 2%
1.95% 0% 4.26% Reduced rates 2.7%
Over $400,000 $0 to $400,000 Over $5,000,000 $1,000,000 to $5,000,000 $0 to $1,000,000
(Payroll - $400,000) x 1.95% $0 Payroll x rate
Reduced rates for employers with annual payrolls between $1 million and $5 million depend on both the calendar year and the employer’s total payroll. Every Quebec employer with a payroll of $1 million or more must allot at least 1% of payroll to training, or contribute the shortfall to a provincial fund. In limited cases, corporations may be exempt from contributing to the Health Services Fund, and refunds may be made. Financial institutions (excluding insurers) and investment holding corporations may also be subject to a compensation tax on payroll. See page 29. Employees, employers and the self-employed must contribute to the Quebec Parental Insurance Plan (QPIP) and individuals may be required to contribute to the Health Services Fund. See pages 31 and 32.
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33
Individuals and corporations Retirement savings and profit sharing plans
For registered retirement savings plans (RRSPs), defined contribution registered pension plans (RPPs) and deferred profit sharing plans (DPSPs), the amount that can be contributed in a year is the lesser of: • 18% of earned income for the previous year (for RRSPs) or of pensionable earnings for the current year (for RPPs and DPSPs) • fixed-dollar limits
The table below outlines these limits. For example, for RRSPs, the $24,270 fixed dollar limit applies in 2014 if earned income in 2013 (i.e. the previous year) exceeds $134,833 (because 18% of $134,833 is $24,270).
Different rules apply for defined benefit plans.
% of earnings
Other factors, such as past service pension adjustments, may affect these limits and are not shown, nor are special rules that may apply to transfers and deceased taxpayers.
Dollar limits
Contribution limits The PA reflects the value of benefits accruing to the individual for the year in a DPSP and/or an RPP, whether defined benefit or defined contribution.
2012 2013 2014 2015
Limits apply to: Reduced by:
Increased by: A PAR may restore RRSP contribution room when a member withdraws from a defined benefit RPP and the amount received is less than the total PAs.
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Stated in: Employer’s contribution Deadlines
Individual’s contributions
Registered retirement savings plan (RRSP)
Defined contribution Deferred profit sharing plan registered pension plan (RPP) (DPSP)
18% of earned income for the previous year
18% of pensionable earnings for the year
Maximum contribution
Earned income (previous year)
$22,970 $23,820 $24,270
> $127,611 > $132,333 > $134,833
Maximum contribution
Pensionable earnings (current year)
Maximum contribution
Pensionable earnings (current year)
$23,820 $24,270
> $132,333 > $134,833
$11,910 $12,135
> $66,167 > $67,417
Indexed
All contributions
Combined employer/employee contributions
Employer contributions
Pension Adjustment (PA) for the previous year
DPSP contributions for the year (Terms of plan may impose lower limits)
Defined contribution RPP contributions for the year (Terms of plan and employer’s profits may impose lower limits)
Unused contribution limits of previous years and pension adjustment reversals (PARs) Previous year’s Notice of Assessment n/a 60 days after the calendar year end (i.e. March 1, but February 29 for leap years; adjusted for deadlines that fall on weekends)
n/a Documents provided by the employer or plan administrator 120 days after employer’s year end December 31
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n/a
Employee contributions to DPSPs are not permitted.
Individuals and corporations R&D tax credits Federal changes: • reduce the 20% ITC rate to 15% for taxation years ending after 2013 (pro-rated for taxation years straddling January 1, 2014) • provide that capital property acquired, generally after 2013, is no longer eligible for ITCs
Federal SR&ED investment tax credit rates The federal investment tax credit (ITC) and refund rates shown apply to expenditures incurred in 2013. Unused federal ITCs may reduce federal taxes payable for the previous three years and the next twenty.
In respect of unused ITCs on scientific research and experimental development expenditures.
Investment tax credit (ITC) rate Generally, a CCPC’s $3 million expenditure limit in respect of the 35% credit is reduced by: • $10 for every $1 by which its previous year’s taxable income exceeded $500,000, up to $800,000 • $0.075 for every $1 of its previous year’s taxable capital employed in Canada above $10 million, up to $50 million Thresholds are on an associated basis.
35% of annual qualified
Qualified SR&ED in Canada
expenditures up to threshold Qualifying ($3 million or less) Canadian-Controlled Private Corporations + 20% of qualified (CCPCs) expenditures not eligible for the 35% rate
Other corporations Individuals
Refund rate 100% of ITCs on current expenditures computed at the 35% rate + 40% of ITCs on capital expenditures computed at the 35% rate and of ITCs computed at the 20% rate
20%
n/a 40% of ITCs
The SR&ED ITC is also available for certain salaries or wages incurred in respect of SR&ED carried on outside Canada (limited to 10% of salaries and wages directly attributable to SR&ED carried on in Canada).
Provincial and territorial R&D tax credits
Only corporations are eligible for R&D tax credits, except in Newfoundland and Labrador, Quebec and Yukon, where individuals can also claim the credits.
Alberta’s maximum annual credit is $400,000. See page 23 for changes to Alberta’s program.
British Columbia’s refundable tax credit is 10% of the lesser of eligible BC R&D expenditures and the federal expenditure limit (i.e. $3 million or less). Rate
Alberta Qualifying CCPCs
British Columbia
Other corporations
Manitoba In Ontario, corporations that have taxable income under $500,000 and taxable capital under $25 million can claim the innovation tax credit on up to $3 million of expenditures. Those with taxable income between $500,000 and $800,000 or taxable capital between $25 million and $50 million are eligible for a partial credit.1 100% of current expenditures and 40% of capital expenditures are eligible. 20% of qualifying payments (up to $20 million annually on an associated basis) to an Ontario eligible research institute.
10%
In some cases, Quebec’s 35% credit is available on 80% of payments to certain eligible entities (e.g. universities and public research centres).
Yes
n/a
Yes/No
3 years 10 years
New Brunswick Newfoundland and Labrador
15%
Nova Scotia Ontario
Yes Innovation tax credit
10%
Business research institute tax credit
20%
Quebec
Saskatchewan
4.5% 17.5% R&D wage tax credit to 37.5% University, public research centre, research consortium and private 35% partnership tax credits Qualifying CCPCs Other corporations
Yukon
1. Ontario and Quebec thresholds are in respect of the previous year, on a worldwide associated basis.
Carry- Carryback forward
No 20%
R&D tax credit
Quebec Canadian-controlled corporations with less than $50 million in assets can claim the 37.5% rate on up to $3 million of R&D wages. For those with assets between $50 million and $75 million, the rate is gradually reduced to 17.5%. The rate is 17.5% for all other taxpayers. 50% of payments to unrelated subcontractors are eligible for the credit. 1 See page 29 for changes to Quebec’s program.
Refundable?
Yukon’s rate is 20% on R&D expenditures made to the Yukon College.
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15%
Manitoba’s credit is: • fully refundable for certain eligible expenditures incurred after 2009 • partially refundable for in-house R&D expenditures incurred after 2010 See page 24 for changes to Manitoba’s program.
n/a Can be carried back to taxation years ending after 2008.
No
3 years 20 years
Yes
n/a
No
3 years 10 years
Yes
n/a
Applies to R&D expenditures incurred before March 19, 2009, and certain R&D expenditures incurred after March 31, 2012.
For R&D expenditures incurred after March 31, 2012, Saskatchewan’s refundable tax credit is 15% of the lesser of eligible Saskatchewan R&D expenditures and the federal expenditure limit (i.e. $3 million or less). 35
Individuals and corporations Land transfer tax and registration fees
The provinces and territories charge land transfer taxes and registration fees on the purchase of real property within their boundaries.
Some exemptions or refunds are available. Higher rates may apply to non-residents. Additional fees may be imposed (e.g. on the registration of the deed or mortgage).
Calculation Alberta
$50 + 0.02% of value 1% of portion < $200,000 + 2% of portion > $200,000 $80 + 0.5% of portion between $30,000 and $90,000 + 1% of portion between $90,000 and $150,000 + 1.5% of portion between $150,000 and $200,000 + 2% of portion > $200,000
British Columbia Manitoba New Brunswick Minimum of $60 in Nunavut and $100 in Northwest Territories.
In Ontario and Toronto, land transfer tax applies to registered and unregistered transfers, including dispositions of a beneficial interest in land.
General
Fair market value of property
$100 + 0.4% of portion > $500 0.15% of portion < $1,000,000 + 0.1% of portion > $1,000,000 $100 + Up to 1.5% (determined by municipality) 0.5% of portion < $55,000 + 1% of portion between $55,000 and $250,000 + 1.5% of portion > $250,000
Value of property
Family dwelling As above + 0.5% of portion > $400,000 (one or two units) 0.5% of portion < $55,000 + 1% of portion between $55,000 and $400,000 General Addition for + 1.5% of portion between $400,000 and $40 million Toronto + 1% of portion > $40 million Family dwelling As above + 0.5% of portion between $400,000 and $40 million (one or two units) + 1% of portion > $40 million Prince Edward Island
General
Value of consideration
Greater of assessed value and consideration for the transfer
1% of value, if value > $30,000
Non-residents As above + 1% of value ($550 minimum) and corporations (Depends on land size and corporate ownership) 0.5% of portion < $50,000 Quebec + 1% of portion between $50,000 and $250,000 + 1.5% of portion > $250,000 0.5% of portion between $500,000 and $1 million Addition for Montreal + 1% of portion > $1 million Saskatchewan 0.3% ($25 minimum) 0.2% of portion < $5,000 + 0.25% of portion between $5,000 and $10,000 Yukon + 0.175% of portion between $10,000 and $25,000 + 0.125% of portion > $25,000 36
Value of property
Greater of assessed value and consideration for the transfer
$75 + 0.5% of value
Newfoundland and Labrador Northwest Territories Nunavut Nova Scotia Ontario
Value used
Purchase price Greatest of: • consideration furnished; • consideration stipulated; and • fair market value of property.
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Value of property
Individuals and corporations Filing deadlines
Deadlines falling on holidays or weekends may be extended to the next business day. In addition to income tax returns, individuals, trusts, corporations and partnerships may be subject to other filing requirements. Several are noted below. See page 6 for individual and trust income tax deadlines. For corporate income tax and financial institution capital tax deadlines, see pages 18 and 20, respectively. Earlier deadlines apply to publicly traded trusts and publicly traded partnerships for posting information relating to T3s and T5013s to the CDS Innovations Inc. website.
Jurisdiction or form Trusts Income reporting
Other Tax shelter Partnership
Information returns
Federal, Quebec (T3 slip/relevé 16) Federal, Quebec (T4/relevé 1, T5/ relevé 3, etc.) Federal, Quebec Federal, Quebec (T5013/relevé 15)
Federal: NR4 Federal: T106 (transactions with non-arm’s length parties) Federal: T1135 T1141 Foreign T1142 property/trust Transactions with nonresidents
Federal: T1134 Notice of objection
Federal, all provinces
Filing deadline
Details and exceptions
90 days after trust year end Last day of February
Last day of March
n/a If filer’s business activity is discontinued, deadline is 30 days after discontinuance.
March 31 deadline for partnership information returns applies to partnerships with only individual members. Otherwise: • for partnerships with only corporate members: five months after end of fiscal period • for partnerships with both individual and corporate members: earlier of last day of March and five months after end of fiscal period • in all cases, if partnership discontinues, earlier of normal filing deadline and 90 days after discontinuance
Individuals: April 30 Corporations: 6 months after year end For trusts, form NR4 is due 90 days after the trust’s year end. Trusts: 90 days after year end For individuals, forms T106, T1135, T1141 and T1142 are due June 15 if the taxpayer or Partnerships (T106, T1135 and T1142 only): same as for partnership information the taxpayer’s spouse carried on a business in the year. return Individuals, corporations, trusts and partnerships:15 months after year end
n/a
90 days after mailing date of assessment In all jurisdictions, for an individual or a testamentary trust: the later of one year after the or reassessment filing due date and 90 days after mailing date of the assessment or reassessment.
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37
Individuals and corporations Prescribed interest rates – income, capital and payroll taxes
Rates left blank were not available when Tax facts and figures was published.
Federal prescribed rates also apply to provincial/ territorial personal and corporate income tax collected by the Canada Revenue Agency.
2012
Compounding schedule
Q3 Q4 Q1 Q2 Jul. - Sep. Oct. - Dec. Jan. - Mar. Apr. - Jun. 5% 1% 3% 1% 4.5% 0.5%
7%
9%
Underpayments Daily
Federal: Income tax, financial institutions capital tax, source deductions, CPP and EI
Overpayments
Corporations Other
Taxable benefits
Underpayments Overpayments Underpayments Manitoba: Financial institutions capital tax and Health and Post-Secondary Education Tax Some overpayments Monthly Underpayments New Brunswick: Financial institutions capital tax Overpayments Underpayments Daily Financial institutions capital tax Overpayments Newfoundland and Labrador: Underpayments Health and Post-Secondary Monthly Education Tax Overpayments Underpayments Nova Scotia: Financial institutions capital tax Overpayments Daily Underpayments Ontario: Employer Health Tax Overpayments Refunds from objection or appeal Underpayments Prince Edward Island: Monthly Overpayments Financial institutions capital tax Refunds from objection or appeal Underpayments Quebec: Corporate and personal income tax, Daily financial institutions capital tax and Health Overpayments Services Fund contributions Taxable benefits Underpayments Not Saskatchewan: Financial institutions capital tax compounded Overpayments Alberta: Corporate income tax
1.5%
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Q3 Jul. - Sep.
13.5% (1.06% per month) New Brunswick does not pay interest on overpayments 5% 1% 7% 3% 5% Nova Scotia does not pay interest on overpayments 6% 0% 3% 19.56% (1.5% per month) Prince Edward Island does not pay interest on overpayments 19.56% (1.5% per month) 6% 1.3% 1% 6% 3%
Quebec charges an additional 10% per year on underpaid instalments if less than 75% for individuals, or 90% for corporations, of the required amount is paid.
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2013
Q1 Q2 Jan. - Mar. Apr. - Jun.
Q4 Oct. - Dec.
International US top individual income tax rates – federal and state combined (2013)
Combined state and federal rates generally apply to employment income, interest and non-qualified dividends, among other things. These rates are shown on the right for the top four federal brackets, which are set out below. Top four federal taxable income ranges ($US) Single Married filing jointly Federal marginal rate
Fourth $87,850 to $183,250 $146,400 to $223,050 28%
Third $183,250 to $398,350 $223,050 to $398,350 33%
Second $398,350 to $400,000 $398,350 to $450,000 35%
In Arizona, 32.54% applies to single filers, 32.24% to married joint filers. In California: • 44.3%, 46.3% and 51.9% apply to single filers, 42.3%, 44.3% and 50.9% to married joint filers • the rate is 52.9% on incomes over $1 million
Top Above $400,000 Above $450,000 39.6%
In Connecticut, 39.7% and 41.7% apply to single filers, 39% and 41.5% to married joint filers.
The tables do not take into account: • deductibility of state taxes for federal tax purposes, which will reduce the tax rates shown • full or partial deductibility of federal taxes for state tax purposes, which may reduce the tax rates shown for Alabama, Iowa, Louisiana, Missouri, Montana and Oregon • other taxes that may apply (e.g. alternative minimum taxes) • special rates for certain types of income (e.g. long-term capital gains, qualified dividends) or in certain circumstances (e.g. to non-residents of a state who have income from that state) • city or county income taxes • marginal rates that apply under the status ‘married filing separately’ or ‘head of household’
In Hawaii, 38% and 44% apply to single filers, 36.25% and 43% to married joint filers.
In Maryland, 33.5% applies to single filers, 33.25% to married joint filers. In Massachusetts, the rates are 6.75% higher on short-term capital gains.
In New Hampshire, the rates are 5% higher on interest and dividends. In New York, the rate is 48.42% on incomes over $1,029,250 for single filers and over $2,058,550 for married joint filers. In Ohio, 33.45% applies to single filers, 33.93% to married joint filers. In Oregon, 37.9% applies to single filers, 37% to married joint filers.
In Tennessee, the rates are 6% higher on interest and dividends.
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Federal Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington Washington D.C. West Virginia Wisconsin Wyoming
Fourth
Combined federal and state rates (%)
28 33 28 32.54 or 32.24 35 37.3 32.63 34 34.75 28 34 38 or 36.25 35.4 33 31.4 36.98 32.9 34 34 35.95 33.5 or 33.25 33.25 32.25 35.85 33 34 34.9 34.84 28 28 34.37 32.9 34.65 35.75 31.13 33.45 or 33.93 33.25 37.9 or 37 31.07 33.99 35 28 28 28 33 35.8 33.75 28 36.5 34.5 34.75 28
Third
33 38 33 37.54 40 44.3 or 42.3 37.63 39.7 or 39 39.75 33 39 44 or 43 40.4 38 36.4 41.98 37.9 39 39 40.95 38.75 38.25 37.25 40.85 38 39 39.9 39.84 33 33 39.37 37.9 39.85 40.75 36.63 38.93 38.25 42.9 36.07 38.99 40 33 33 33 38 41.8 38.75 33 41.95 39.5 40.75 33
Second
35 40 35 39.54 42 46.3 or 44.3 39.63 41.7 or 41.5 41.75 35 41 46 42.4 40 38.4 43.98 39.9 41 41 42.95 40.75 40.25 39.25 42.85 40 41 41.9 41.84 35 35 41.37 39.9 41.85 42.75 38.99 40.93 40.25 44.9 38.07 40.99 42 35 35 35 40 43.95 40.75 35 43.95 41.5 42.75 35
Top
39.6 44.6 39.6 44.14 46.6 51.9 or 50.9 44.23 46.3 46.35 39.6 45.6 50.6 47 44.6 43 48.58 44.5 45.6 45.6 47.55 45.35 44.85 43.85 47.45 44.6 45.6 46.5 46.44 39.6 39.6 48.57 44.5 46.45 47.35 43.59 45.53 44.85 49.5 42.67 45.59 46.6 39.6 39.6 39.6 44.6 48.55 45.35 39.6 48.55 46.1 47.35 39.6
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International US estate, gift and generation-skipping transfer tax rates
A US estate tax, gift tax or generation-skipping transfer tax liability may arise for US citizens and Canadian residents, as follows: Various deductions and adjustments are allowed in calculating the tax base for estate tax purposes.
Circumstances
Estate tax imposed on
Gift tax imposed on
US citizens (residing in Canada or elsewhere)
Transfers: • on death • of property during lifetime
Fair market value (FMV) of taxpayer’s worldwide assets at death.
Canadian residents (who are not US citizens)
Individual: • dies owning US-situs assets (e.g. shares of US corporations, US real estate, US business assets), or • transfers real or tangible US-situs assets during lifetime
Taxpayer’s US-situs assets at death. If FMV of worldwide assets FMV of gifts of US real property < US$5.25 million (based on 2013 and US-situs tangible personal rates), there is no US estate tax on property. US assets due to the unified credit.
FMV of gifts of all property regardless of where the property is located.
Generation-skipping transfer tax may apply in addition to estate or gift tax. A transfer is generation-skipping and subject to the US generation-skipping transfer tax if it is: • subject to either gift or estate tax, and • made to a person who is two or more generations younger than the donor (e.g. a grandchild)
Rates are additive. For example, tax on $14,000 would be $2,600 (i.e. [18% x $10,000] + [$4,000 x $20%]). For gift tax, apply the rates to the cumulative taxable lifetime transfers made (generally, based on the fair market value of the transferred property) and subtract the gift tax previously payable. Canadian residents (who are not US citizens) can reduce their estate tax liability by claiming a unified credit equal to the greater of: • US$13,000 • the amount of the unified credit (i.e. US$2,045,800 in 2013) given to a US citizen, pro-rated by the value of the individual’s US assets divided by his or her worldwide assets The unified credit is equal to the amount of tax that applies at the exemption level.
2012 $0 $10,000 $20,000 $40,000 $60,000 $80,000 Threshold $100,000 $150,000 $250,000 $500,000 $750,000 $1,000,000 Estate tax Exemption Generation-skipping (US$) transfer tax Gift tax Estate tax Unified credit Generation-skipping ($US) transfer tax Gift tax
The gift tax unified credit is a lifetime exclusion. In 2013, an annual exclusion of US$14,000 (US$13,000 in 2012) or US$143,000 to a non-US citizen spouse (US$139,000 in 2012) per donee also applies.
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2013 18% 20% 22% 24% 26% 28% 30% 32% 34%
35%
37% 39% 40%
$5,120,000
$5,250,000
$1,772,800
$2,045,800
For 2012 and 2013, the total of the estate tax and gift tax exemption cannot exceed US$5,120,000 and US$5,250,000, respectively. Generation-skipping transfer tax has a separate US$5,250,000 (US$5,120,000 in 2012) exemption.
International US corporate income tax rates – federal and state (2013)
Rates apply to income from the thresholds shown to the next threshold (or to all higher income if there is no higher threshold). The threshold refers to taxable income for federal purposes, and to taxable or net income, depending on the state.
State rates and brackets ($US) In Connecticut, if annual gross revenues are at least $100 million, a 20% surcharge applies.
Federal rates and brackets ($US)
General Personal service Personal holding
Accumulated earnings
Threshold
Rate (%)
$100,000 $335,000 $10,000,000 $15,000,000 $18,333,333
39 34 35 38 35 35 20
$0 Personal service Other
$150,000 $250,000
20
A deduction for domestic production activities reduces the effective tax rate on this income to 31.85%. Additional tax applies to undistributed income. May apply in addition to regular tax.
The tables do not take into account: • lower rates (federally and in some states) that apply only to income below $100,000 • other taxes that may be imposed (e.g. minimum taxes, franchise taxes, capital taxes) • special rates that may apply to certain types of corporations (e.g. S-Corporations, banks, insurance corporations) or on certain types of income (e.g. capital gains, income from domestic production activities; see above) • city or county income taxes • the deductibility of state taxes for federal tax purposes • the deductibility of federal taxes for state tax purposes in Alabama, Iowa, Louisiana and Missouri
Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Personal property Illinois General Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska
Threshold
Rate (%)
$0 $90,000 $0 $100,000 $0 $0 $0 $0 $50,000 $0 $100,000 $0 $0 $0 $0 $100,000 $250,000 $50,000 $100,000 $100,000 $200,000 $75,000 $250,000 $0 $0 $0 $0 $10,000 $0 $0 $100,000
6.5 9.4 6.968 6.5 8.84 4.63 7.5 8.7 5.5 6 6.4 7.4 2.5 7 7.75 10 12 7 6 7 8 8.33 8.93 8.25 8 6 9.8 5 6.25 6.75 7.81
In Michigan, a 6% corporate income tax replaced the Michigan Business Tax (MBT) on January 1, 2012. However, taxpayers with certificated or awarded credits can elect to continue to pay MBT until all credits are used or expired.
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For Indiana, the rate is 8% before July 1, 2013, and 7.5% after June 30, 2013. Nevada New Hampshire New Jersey New Mexico Manufacturers Small business (Net income < $390,000) Other North Carolina North Dakota Ohio Oklahoma New York
Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington Washington D.C. West Virginia Wisconsin Wyoming
Threshold
Rate (%)
No income tax $0 8.5 $0 9 $0 4.8 $500,000 6.4 $1,000,000 7.6 $0 6.5 $0 6.5 $290,000 7.1 $350,000 11.45 $0 7.1 $0 6.9 $50,000 5.15 No income tax $0 6 $0 6.6 $10,000,000 7.6 $0 9.99 $0 9 $0 5 No income tax $0 6.5 No income tax $0 5 $25,000 8.5 $0 6 No income tax $0 9.975 $0 7 $0 7.9 No income tax
In Wisconsin, businesses with at least $4 million in annual gross receipts pay a 3% surcharge on their tax (maximum surcharge is $9,800).
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International Canada’s treaty withholding tax rates
This table summarizes treaty withholding tax rates (%) on payments arising in Canada. Rates in square brackets after an arrow are set out in a protocol, replacement treaty or new treaty that is signed, but not in force. To the left of the arrow are the rates that are being replaced, i.e. the rate or rates in the existing treaty or protocol or, if no treaty is in
Algeria Argentina Armenia Australia Austria Azerbaijan Bangladesh Barbados Belgium Brazil Bulgaria Cameroon 1 Chile China P.R. (not Hong Kong) Colombia, Rep. of Croatia Cyprus Czech Rep. Denmark Dominican Rep. Ecuador Egypt Estonia Finland France Gabon Germany Greece Guyana Hong Kong Hungary
N
N
Dividends
Related-party interest3
Royalties4
15 10 or 15 5 or 15 5 or 15 5 or 15 10 or 15 15 15 5 or 15 15 or 25 10 or 151 15 10 or 15
15 12.5 10 10 10 10 15 15 10 15 10 15 15
0 or 15 3, 5, 10 or 15 10 10 0 or 10 5 or 10 10 0 or 10 0 or 10 15 or 25 0 or 101 15 15
10 or 15
10
10
5 or 15 5 or 15 15 5 or 15 5 or 15 18 5 or 15 15 5 or 15 5 or 15 5 or 15 15 5 or 15 5 or 15 15 25 [5 or 15] 5 or 15
10 10 15 10 10 18 15 15 10 10 10 10 10 10 15 25 [10] 10
101 10 0 or 10 10 0 or 10 0 or 18 10 or 151 15 101 0 or 10 0 or 10 10 0 or 10 0 or 10 10 25 [10] 0 or 10
Iceland India Indonesia Ireland Israel Italy Ivory Coast Jamaica Japan Jordan Kazakhstan Kenya Korea (South) Kuwait Kyrgyzstan Latvia Lebanon Lithuania Luxembourg Madagascar Malaysia Malta Mexico Moldova Mongolia Morocco Namibia Netherlands New Zealand Nigeria Norway Oman
Dividends
N
N N
N
Related-party interest3
42
Royalties4
5 or 15 10 0 or 10 15 or 25 15 10, 15 or 20 10 or 15 10 10 5 or 15 10 0 or 10 15 15 0 or 15 5 or 15 10 0, 5 or 10 15 15 10 15 15 10 5 or 15 10 10 10 or 15 10 10 5 or 15 10 101 1 15 or 25 15 15 5 or 15 10 10 5 or 15 10 10 151 151 0 or 10 5 or 15 10 101 25 [5 or 15] 25 [10] 25 [5 or 10] 5 or 15 10 101 5 or 15 10 0 or 10 25% imposed by Canada 15 15 15 15 15 0 or 10 5 or 15 10 0 or 10 5 or 15 10 10 5 or 15 10 5 or 10 15 15 5 or 10 25 [5 or 15] 25 [10] 25 [0 or 10] 5 or 15 10 0 or 10 15 [10] 15 [5 or 10] 15 [5 or 15] 12.5 or 15 12.5 12.5 5 or 15 10 0 or 10 1 5 or 15 10 0 or 10
N Negotiation or renegotiation of tax treaty or protocol underway, or concluded (but not signed).
1. 2. 3.
force, the 25% rate imposed by Canada. If two or more dividend rates are provided, the lower (lowest two for Vietnam) applies if the recipient is a company that owns or controls a specified interest of the payor.
If the other state (Canada for treaty with Oman) concludes a treaty with another country providing for a lower rate (higher for Kenya), the lower rate (higher for Kenya) will apply in respect of specific payments or with limits, in some cases. For the United States, the nil rate applies subject to the Limitation of Benefits article. Canadian withholding tax does not apply to interest (except for ‘participating debt interest’) paid to arm’s length non-residents.
Dividends
Pakistan 15 Papua New Guinea 15 1 Peru 10 or 15 Philippines 15 Poland 15 [5 or 15] Portugal 10 or 15 Romania 5 or 15 Russia 10 or 15 Senegal 15 Serbia 25 [5 or 15] Singapore 15 Slovak Republic 5 or 15 Slovenia 5 or 15 South Africa 5 or 15 Spain N 15 Sri Lanka 15 Sweden 5 or 15 Switzerland 5 or 15 Tanzania 20 or 25 Thailand 15 Trinidad and Tobago 5 or 15 Tunisia 15 Turkey 15 or 20 Ukraine 5 or 15 United Arab Emirates 5 or 15 United Kingdom N 5 or 15 United States 5 or 15 Uzbekistan 5 or 15 Venezuela 10 or 151 Vietnam 5, 10 or 15 Zambia 15 Zimbabwe 10 or 15
Related-party interest3
Royalties4
15 10 15 15 15 [10] 10 10 10 15 25 [10] 15 10 10 10 15 15 10 10 15 15 10 15 15 10 10 10 02 10 10 10 15 15
0 or 15 10 15 10 0 or 10 [5 or 10] 10 5 or 10 0 or 10 15 25 [10] 15 0 or 10 10 6 or 10 0 or 10 0 or 10 0 or 10 0 or 10 20 5 or 15 0 or 10 0, 15 or 20 10 0 or 10 0 or 10 0 or 10 0 or 10 5 or 10 5 or 10 7.5 or 10 15 10
4. A nil royalty rate generally applies to: • copyright royalties and payments for a literary, dramatic, musical or other artistic work (but not royalties for motion picture films or works on film or videotape or other means of reproduction for use in television) • royalties for computer software or a patent, or for information concerning industrial, commercial or scientific experience (but not royalties for a rental or franchise agreement)
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