Originally published in Blakes Bulletin on Tax, April
In the 2009 Ontario budget, the provincial government announced
reductions in statutory corporate income tax rates. Beginning July
1, 2010, provincial corporate income tax rates will be reduced in
stages, ultimately falling to 10% as of July 1, 2013. Together with
previously enacted reductions in federal rates, the combined
federal-provincial rate applicable to corporations on income earned
in Ontario will fall to 25% for corporations with taxation years
beginning on or after July 1, 2013. This phased-in reduction will
eventually result in Ontario having a general corporate income tax
rate of 10%, which, along with British Columbia (10%), Alberta
(10%) and New Brunswick (8%), will be among the lowest corporate
income tax rates in Canada by 2013.
The chart below shows the combined general federal-provincial
corporate income tax rates for income earned in Ontario, showing
the effect of the proposed changes.
Combined Federal-Ontario General Corporate Income Tax
Rate for Corporations with Calendar Year Taxation
The changes to the Ontario rate are effective July 1 of each
year, whereas the federal rate changes on January 1. Corporations
with taxation years that straddle either or both effective dates
will be subject to a prorated blended rate that reflects the
portion of the taxation year that is after the effective date.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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