Copyright 2009, Blake, Cassels & Graydon LLP
Originally published in Blakes Bulletin on Tax, April 2009
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 Years
|
Calendar Year |
Previous Rate |
New Rate |
|
2009 |
33% |
33% |
|
2010 |
32% |
31% |
|
2011 |
30.5% |
28.25% |
|
2012 |
29% |
26.25% |
|
2013 |
29% |
25.5% |
|
2014 |
29% |
25% |
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.
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