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Unformatted text preview: www.pwc.com/ca/taxfacts Tax facts and figures Canada 2011 Canadian individual and corporate tax changes, tax rates, tax deadlines and a wide range of other valuable tax information. 2011 © 2011 PricewaterhouseCoopers LLP. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. This publication is intended to inform readers of developments as of the date of publication, and is neither a definitive analysis of the law nor a substitute for professional advice. Readers should discuss with professional advisers how the information may apply to their specific situations. This publication may be displayed or printed only if for personal non-commercial use and unchanged (with all copyright and other proprietary notices retained). Unauthorized reproduction is expressly prohibited. Key 2011 income tax rates – individuals and corporations For December 31 year end (12-month taxation year). Applies to taxable income above $128,800 ($150,000 for Nova Scotia). Corporations (page 19) Individuals (page 4) Top combined marginal rates Combined rates Canadian dividends Ordinary income and interest Capital gains Federal Alberta British Columbia Manitoba New Brunswick 29.00% 39.00% 43.70% 46.40% 43.30% Newfoundland and Labrador Eligible 17.72% 17.72% 23.91% 26.74% 20.96% 19.58% 27.71% 33.71% 39.15% 30.83% 42.30% 21.15% 20.96% 29.96% Northwest Territories Nova Scotia Nunavut 43.05% 50.00% 40.50% 21.53% 25.00% 20.25% 21.31% 34.85% 25.72% 29.65% 36.21% 28.96% Ontario 46.41% 23.20% 28.19% 32.57% Prince Edward Island Quebec 47.37% 48.22% 23.69% 24.11% 27.33% 31.85% 41.17% 36.35% Saskatchewan 44.00% 22.00% 23.36% 32.08% Yukon 42.40% 21.20% 14.28% to 17.72% 30.41% General and M&P Non-eligible 14.50% 19.50% 21.85% 23.20% 21.65% Tax facts and figures is on our website: www.pwc.com/ca/taxfacts Cette brochure est également disponible en français: www.pwc.com/ca/rensfiscaux Canadian-Controlled Private Corporations (CCPCs) General M&P General M&P General M&P General M&P Active business income 16.5% 26.5% 26.5% 28.5% 27% 30.5% 21.5% 28% 32.5% 28.5% 28.25% 26.5% 32.5% 28.4% 28.5% 26.5% 31.5% 19% 11% 14% 13.5% to $400,000 $400,000 to $500,000 11% 23% 16% 15% 15% 15.5% 27% 15% 15.5% 12% 19% 14.24% 15% 13.5% Investment income 34.67% 44.67% 44.67% 46.67% 45.16% 48.67% n/a 46.17% 50.67% 46.67% 46.41% 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). The firms of the PwC network provide industry-focused assurance, tax and advisory services to enhance value for clients. More than 161,000 people in 154 countries in PwC firms across the PwC network share their thinking, experience and solutions to develop fresh perspectives and practical advice. In Canada, PricewaterhouseCoopers LLP (www.pwc.com/ca) and its related entities have more than 5,700 partners and staff in offices across the country. Tax facts and figures Canada 2011 A message from our tax leader PwC tax contacts In our ever-changing world, timely and relevant tax information is especially important. PwC’s 34th edition of Tax facts and figures will help you stay up to date. This convenient reference source includes Canadian individual and corporate tax rates and deadlines, summaries of recent tax cases and a wide range of other valuable tax information. Alberta To keep you informed throughout the year, we provide a wealth of other tax publications on our website: www.pwc.com/ca/taxpublications. Several are referred to in this booklet. To subscribe, visit www.pwc.com.ca/stayintouch, where you can also update your contact information. Vancouver As well, we invite you to use PwC’s Tax Rate App* for BlackBerrys® – a new tool that brings the latest tax rate information to your fingertips. Halifax/Saint John Calgary Dale Meister dale.s.meister@ca.pwc.com Edmonton Kent Davison kent.davison@ca.pwc.com Brad Sakich brad.a.sakich@ca.pwc.com British Columbia Manitoba Winnipeg David Loewen dave.loewen@ca.pwc.com Maritimes Dean Landry dean.landry@ca.pwc.com Newfoundland and Labrador Allison Saunders allison.j.saunders@ca.pwc.com Greater Toronto Area Cathy Wraggett cathy.a.wraggett@ca.pwc.com Ottawa Brenda Belliveau Southwestern Ontario For more help, please contact your PwC tax advisers or the individuals listed on this page. We are happy to guide you through the myriad tax rules and changes. St. John’s Loris Macor Ontario brenda.c.belliveau@ca.pwc.com loris.macor@ca.pwc.com Quebec Montreal Pierre Lessard pierre.lessard@ca.pwc.com Quebec City Remi Tremblay remi.tremblay@ca.pwc.com Saskatchewan Christopher Kong National Managing Partner – Tax Services PwC Canada Saskatoon Frank Baldry frank.m.baldry@ca.pwc.com Office addresses and telephone numbers are available at: www.pwc.com/ca/offices. * Simply scan this code to download PwC’s Tax Rate App to your BlackBerry® (OS 5.0 and newer). 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. Contents Click on a heading to go to that page Highlights for individuals and corporations: 2011 and beyond ................................................................. 2 Individuals ........................................................................... 4 Individual marginal rates ................................................................... 4 How much tax? Individual tax table ................................................... 5 Personal tax credits ............................................................................ 6 Income tax filing and payment deadlines – individuals and trusts ....... 8 Probate fees (for estates over $50,000) ............................................... 9 Key tax changes ................................................................................ 10 Federal ......................................................................................... 10 Alberta, British Columbia ............................................................. 12 Manitoba, New Brunswick ............................................................ 13 Newfoundland and Labrador, Northwest Territories ..................... 14 Nova Scotia, Nunavut ................................................................... 15 Ontario, Prince Edward Island ...................................................... 16 Quebec, Saskatchewan ................................................................. 17 Yukon ........................................................................................... 18 Individuals and corporations .............................................. 34 CPP/QPP, EI and QPIP premiums .......................................................34 Health care premiums .......................................................................35 Payroll tax rates ................................................................................36 Retirement savings and profit sharing plans ...................................... 37 Investment tax credits and R&D tax credits ........................................38 Sales tax rates and land transfer taxes ...............................................39 Filing deadlines .................................................................................40 Prescribed interest rates – income, capital and payroll taxes .............. 41 Recent tax cases ................................................................................42 International ....................................................................... 43 U.S. top individual income tax rates – federal and state combined ......43 U.S. estate, gift and generation-skipping transfer tax rates ................44 U.S. corporate income tax rates – federal and state ............................45 Canada’s treaty withholding tax rates ................................................46 Corporations ...................................................................... 19 Corporate income tax rates .............................................................. 19 Other federal corporate tax rates ...................................................... 20 Provincial income tax holidays and M&P investment tax credits ....... 21 Capital tax rates ............................................................................... 22 Payment and filing deadlines – income and capital tax ..................... 23 Key tax changes ................................................................................ 24 Federal ......................................................................................... 24 Alberta ......................................................................................... 25 British Columbia, Manitoba .......................................................... 26 New Brunswick ............................................................................ 27 Newfoundland and Labrador, Northwest Territories ..................... 28 Nova Scotia, Nunavut ................................................................... 29 Ontario ........................................................................................ 30 Prince Edward Island, Quebec ...................................................... 31 Saskatchewan ............................................................................... 32 Yukon ........................................................................................... 33 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, 2011, but may change as a result of legislation or regulations issued after that date. Highlights for individuals and corporations: 2011 and beyond 1 Federal British Columbia When the federal minority government was defeated on March 25, 2011, the March 22, 2011 federal budget died, along with outstanding bills and legislation. Because the same party won a majority in the May 2, 2011 federal election, those measures are expected to be reintroduced, and therefore are reflected in this publication. Personal income tax rates: unchanged (p. 12). Personal income tax rates: unchanged (p. 10). Harmonized Sales Tax (HST): referendum to be held from June to July 2011, to determine if the province will keep the HST regime (pp. 12, 26). Corporate income tax rates: decreasing – general and M&P rate from 18% to 16.5% on January 1, 2011, and to 15% on January 1, 2012; small business rate unchanged (p. 24). Eligible dividends: personal taxes increasing in 2011 and 2012 (p. 10). Corporate income tax rates: decreasing – general and M&P rate from 10.5% to 10% on January 1, 2011, but may increase to 12% on January 1, 2012; small business rate from 2.5% to 0% on April 1, 2012, but may be postponed (p. 26). 1 Manitoba Personal income tax rates: unchanged (p. 13). Children’s Arts Tax Credit: new starting 2011 (p. 10). Non-eligible dividends: personal taxes increasing in 2011 (p. 13). “Kiddie tax”: extended to certain capital gains (p. 10). Charitable gifts: rules to limit unintended or excessive benefits tightened (p. 11). Corporate income tax rates: decreasing – general and M&P rate from 12% to 11% at a date to be determined; small business rate unchanged (p. 26). Partnership information returns: filing criteria revised for partnerships with fiscal periods ending after December 31, 2010 (p. 10). General capital tax: eliminated on January 1, 2011; earlier for M&P companies (p. 26). Partnership deferral: eliminated for a corporate partner’s taxation year ending after March 22, 2011 (p. 24). Stop-loss rule on share redemption: extended for share redemptions after March 21, 2011 (p. 24). Avoidance transactions: a “reportable transaction” after 2010 (p. 11). Financial institutions capital tax: eliminated for small financial institutions, for taxation years ending after April 12, 2011 (p. 26). 1 New Brunswick Personal income tax rates: lowest three rates decreased in 2011 (p. 13). Corporate income tax rates: decreasing – general and M&P rate from 11% to 10% on July 1, 2011; small business rate in stages from 5% to 2.5% over next four years (p. 27). Group taxation: federal government exploring options (p. 24). 1 Alberta Newfoundland and Labrador Personal and corporate income tax rates: unchanged (pp. 12, 25). Personal income tax rates: top two rates decreased in 2011 (p. 14). 1 Corporate income tax rates: general and M&P rate unchanged; small business rate decreased from 5% to 4% for taxation years beginning after March 31, 2010 (p. 28). 1. Federal changes increase personal taxes on eligible dividends in the province or territory in 2011 and 2012. 2 Go to Contents Highlights for individuals and corporations: 2011 and beyond 1 Northwest Territories Quebec Personal and corporate income tax rates: unchanged (pp. 14, 28). Personal and corporate income tax rates: unchanged (pp. 17, 31). 1 Capital tax: eliminated on January 1, 2011; earlier for M&P companies (p. 31). 1 Nova Scotia Personal income tax rates: unchanged (p. 15). Quebec Sales Tax rate: increasing from 8.5% to 9.5% on January 1, 2012 (pp. 17, 32). Corporate income tax rates: general and M&P rate unchanged; small business rate decreasing from 5% to 4.5% on January 1, 2011, and to 4% on January 1, 2012 (p. 29). Saskatchewan General capital tax: phased out by July 1, 2012 (p. 29). Non-eligible dividends: personal taxes increasing in 2011 and 2012 (p. 17). 1 Personal income tax rates: unchanged (p. 17). Corporate income tax rates: general and M&P rates unchanged; small business rate decreasing from 4.5% to 2% on July 1, 2011 (p. 32). 1 Nunavut Personal and corporate income tax rates: unchanged (pp. 15, 29). Financial institutions capital tax: relief provided for certain small financial institutions, retroactive to taxation years ending after October 31, 2009 (p. 32). 1 Ontario Personal income tax rates: unchanged (p. 16). Corporate income tax rates: general rate decreasing in stages from 14% to 10% by July 1, 2013; M&P and small business rates unchanged (p. 30). 1 Prince Edward Island Yukon Personal and corporate income tax rates: unchanged (pp. 18, 33). Eligible dividends: personal taxes decreasing in 2011, but increasing in 2012 (p. 18). Non-eligible dividends: personal taxes decreasing in 2011 (p. 18). Personal and corporate income tax rates: unchanged (pp. 16, 31). Non-eligible dividends: personal taxes increasing in 2011 (p. 16). 1. Federal changes increase personal taxes on eligible dividends in the province or territory in 2011 and 2012. Go to Contents 3 Individuals Individual marginal rates for 2011 This table shows 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 $10,527 to $41,544 Provincial Canadian dividends1 brackets below Brackets Ordinary Capital $10,527 are $ income & gains Eligible Non-eligible not shown. interest % % % % Federal 10,527 15.00 7.50 (2.02) to 0 2.08 16,977 25.00 12.50 (2.02) to 0 10.21 Alberta 10,527 15.00 7.50 (2.02) to 0 2.08 22.70 11.35 (5.70) to 0 7.46 36,146 British 11,088 20.06 10.03 (9.43) to 0 4.16 Columbia 10,527 15.00 7.50 (2.02) to 0 2.08 31,000 27.75 13.88 0.44 to 2.47 15.83 Manitoba 10,527 25.80 12.90 (2.31) to 0 13.40 37,150 27.10 13.55 (1.88) to 0.14 10.58 New Brunswick 10,527 24.10 12.05 (6.11) to 0 6.83 Newfoundland 31,904 0.09 to 2.12 27.50 13.75 11.46 and Labrador 10,527 22.70 11.35 (6.68) to 0 5.46 5.33 23.60 11.80 (6.11) to 0 37,626 Northwest 20.90 10.45 (9.92) to 0 12,919 1.96 to 2.08 Territories 10,527 15.00 7.50 (2.02) to 0 2.08 6.58 to 8.60 29,590 29.95 14.98 11.15 Nova Scotia 10,527 23.79 11.90 (2.11) to 0 3.45 39,612 22.00 11.00 (0.36) to 1.66 5.83 Nunavut 11,878 19.00 9.50 (4.59) to 0 2.08 10,527 15.00 7.50 (2.02) to 0 2.08 Ontario 37,774 10,527 24.15 20.05 12.08 10.03 1.85 to 3.88 (3.93) to 0 7.90 2.77 Prince Edward Island 31,984 10,527 39,060 13,300 10,527 40,919 14,535 10,527 28.80 24.80 32.53 28.53 12.53 28.00 26.00 15.00 14.40 12.40 16.26 14.26 6.26 14.00 13.00 7.50 2.63 to 4.65 (3.01) to 0 9.73 to 11.42 4.09 to 5.78 (1.69) to 0 0.80 to 2.82 (2.02) to 0 (2.02) to 0 18.08 13.08 16.74 11.74 1.74 12.08 9.58 2.08 10,527 22.04 11.02 (13.36) to 0 5.25 10,527 22.20 11.10 3.08 Quebec Saskatchewan Yukon 2 Non-resident (3.00) to 0 Taxable income $41,544 to $83,088 Brackets Ordinary Capital $ income & gains interest % % 41,544 22.00 11.00 41,544 32.00 16.00 7.85 18.96 83,001 72,293 41,544 67,000 41,544 74,300 41,544 63,807 41,544 34.29 32.50 29.70 39.40 34.75 34.40 34.10 35.30 34.50 17.15 16.25 14.85 19.70 17.38 17.20 17.05 17.65 17.25 10.64 8.11 4.17 to 7.85 16.87 10.31 8.41 7.99 11.09 9.96 21.95 19.71 16.21 30.40 24.58 19.71 19.33 21.21 20.21 75,253 41,544 34.20 30.60 17.10 15.30 8.83 3.76 to 7.85 59,180 41,544 38.67 36.95 19.34 18.48 79,224 41,544 31.00 29.00 78,370 75,550 66,519 41,544 63,969 41,544 Taxable income > $128,800 Canadian dividends1 Brackets Ordinary Capital income & gains $ Eligible Non-eligible interest % % % % 13.49 15.83 128,800 29.00 14.50 Canadian dividends1 Eligible Non-eligible % % 17.72 19.58 83,088 36.00 18.00 13.49 23.96 128,800 39.00 19.50 17.72 27.71 100,787 83,088 40.70 38.29 20.35 19.15 19.68 16.28 29.96 26.95 128,800 43.70 21.85 23.91 33.71 83,088 43.40 21.70 22.51 35.40 128,800 46.40 23.20 26.74 39.15 120,796 83,088 40.30 38.40 20.15 19.20 16.73 14.05 27.08 24.71 128,800 43.30 21.65 20.96 30.83 83,088 39.30 19.65 16.73 26.21 128,800 42.30 21.15 20.96 29.96 18.58 14.08 122,345 83,088 40.05 38.20 20.03 19.10 17.08 14.47 25.90 23.58 128,800 43.05 21.53 21.31 29.65 18.87 16.45 22.05 19.90 93,000 83,088 43.50 42.67 21.75 21.34 25.68 24.51 28.08 27.05 150,000 128,800 50.00 46.50 25.00 23.25 34.85 29.91 36.21 31.83 15.50 14.50 12.33 9.51 17.08 14.58 83,088 35.00 17.50 17.97 22.08 128,800 40.50 20.25 25.72 28.96 39.41 35.39 32.98 31.15 38.70 35.80 19.70 17.70 16.49 15.58 19.35 17.90 18.32 15.90 12.50 11.72 16.59 12.50 23.82 20.82 17.81 16.65 30.46 26.83 83,088 43.41 21.70 23.96 28.82 128,800 46.41 23.20 28.19 32.57 98,143 83,088 44.37 42.70 22.19 21.35 23.10 22.23 37.42 35.46 128,800 47.37 23.69 27.33 41.17 78,120 41,544 42.37 38.37 21.19 19.19 23.61 17.97 29.05 24.05 83,088 45.71 22.86 28.32 33.22 128,800 48.22 24.11 31.85 36.35 41,544 35.00 17.50 10.67 20.83 116,911 83,088 41.00 39.00 20.50 19.50 19.13 16.31 28.33 25.83 128,800 44.00 22.00 23.36 32.08 80,970 41,544 41,544 32.16 31.68 32.56 16.08 (0.15) to 7.85 15.84 0.23 to 7.85 16.28 11.61 17.62 17.30 16.03 83,088 38.01 19.01 24.93 128,800 42.40 21.20 83,088 38.48 19.24 23.43 128,800 42.92 21.46 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 Taxable income $83,088 to $128,800 Canadian dividends1 Brackets Ordinary Capital income & gains $ Eligible Non-eligible interest % % % % 7.85 10.83 83,088 26.00 13.00 8.10 to 13.49 19.96 14.28 to 17.72 26.22 30.41 28.98 2. A non-resident will pay tax on taxable income below $10,527 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. Go to Contents Individuals How much tax? Individual tax table for 2011 This table shows the 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 make alternative minimum tax (AMT) apply, affecting the results. For Quebec, the federal income tax amounts shown should be reduced by the 16.5% “Quebec abatement.” See page 17. Federal income tax $1,000,000 $278,325 500,000 133,325 Combined 2011 federal and provincial/territorial income tax Alberta B.C. Manitoba N.B. Nfld. & Lab. N.W.T. N.S. Nunavut Ontario P.E.I. Quebec Sask. Yukon Nonresident $376,628 181,628 $417,871 199,371 $447,700 215,700 $416,878 200,378 $408,668 197,168 $412,075 196,825 $478,717 228,717 $386,857 184,357 $444,225 212,177 $456,497 219,647 $465,586 224,511 $423,570 203,570 $406,755 194,765 $414,259 $1,000,000 199,659 500,000 142,628 155,671 169,300 157,078 154,868 153,775 178,717 143,857 165,767 172,277 176,296 159,570 152,367 156,739 400,000 75,325 103,628 111,971 122,900 113,778 112,568 110,725 128,717 103,357 119,358 124,907 128,081 115,570 109,969 113,819 300,000 250,000 60,825 84,128 90,121 99,700 92,128 91,418 89,200 103,717 83,107 96,153 101,222 103,974 93,570 88,770 92,359 250,000 200,000 46,325 64,628 68,271 76,500 70,478 70,268 67,675 78,717 62,857 72,948 77,537 79,866 71,570 67,571 70,899 200,000 150,000 31,825 45,128 46,421 53,300 48,828 49,118 46,150 53,717 42,607 49,743 53,852 55,759 49,570 46,372 49,439 150,000 100,000 18,189 26,492 25,454 30,964 28,437 28,832 25,902 31,331 23,941 27,402 31,031 32,373 28,772 26,436 29,257 100,000 90,000 15,589 22,892 21,625 26,624 24,597 24,902 22,082 27,006 20,441 23,061 26,730 27,802 24,872 22,635 25,409 90,000 80,000 13,113 19,415 17,973 22,407 20,881 21,096 18,386 22,863 17,065 18,844 22,583 23,334 21,096 19,019 21,744 80,000 70,000 10,913 16,215 14,788 18,467 17,454 17,566 15,155 18,996 14,149 15,373 18,713 19,422 17,596 15,851 18,488 70,000 60,000 8,713 13,015 11,818 14,853 14,044 14,066 12,095 15,129 11,249 12,194 14,958 15,585 14,096 12,683 15,232 60,000 50,000 6,513 9,815 8,848 11,378 10,634 10,616 9,035 11,420 8,349 9,079 11,378 11,748 10,596 9,515 11,976 50,000 40,000 4,421 6,723 5,986 8,011 7,332 7,274 6,083 7,833 5,557 6,072 7,906 8,001 7,222 6,496 8,880 40,000 30,000 2,921 4,223 3,878 5,255 4,836 4,616 3,929 4,838 3,646 3,976 5,106 5,111 4,622 4,292 6,660 30,000 20,000 1,421 1,723 1,872 2,675 2,426 2,346 1,839 2,433 1,746 1,971 2,626 2,258 2,022 2,088 4,440 20,000 Go to Contents Taxable income 104,325 300,000 Taxable income 400,000 5 Individuals Personal tax credits for 2011 Key non-refundable tax credits Non-refundable credits reduce or eliminate tax. For more information on key federal credits, see page 7. For most tax credits: General factor x federal (or provincial/territorial) amount = federal (or provincial/territorial) credit. General factor Charitable donations Dividend tax credit (on grossed-up amount) Basic Spouse Equivalent to spouse Age 65 Disability See page 10 for more information. Federal Basic Under 18 supplement Infirm dependant (18 or over) Caregiver Pension income Child Adoption Children’s fitness Children’s arts CPP/QPP Employment Insurance (EI) Canada Employment Full-time Education (per month) Part-time Full-time Textbook (per month) Part-time Alta. B.C. Man. N.B. (subject to some limitations: see next page) Nfld. & N.W.T. N.S. Nun. Ont. Lab. P.E.I. Que. Sask. Yuk. 10 5.06 10.8 9.1 7.7 5.9 8.79 4 5.05 9.8 20 11 7.04 21 10 3.5 14.7 10.31 3.4 17.4 11 1.75 14.3 12 5.3 13.3 11 5 14.05 11.5 6 21 8.85 7.7 11.5 5.82 4 11.16 6.4 4.5 16.7 10.5 1 24 11.9 8 15 11 5 12.76 15.08 4.51 1,599 741 458 484 487 460 517 n/a 942 407 110 607 Federal amounts Maximum dollar ($) value (before surtaxes) of credits that are based on prescribed amounts 561 815 615 692 503 403 667 398 660 393 415 373 618 210 389 385 195 253 131 51 108 91 77 59 n/a 1,161 563 1,080 n/a 830 222 79 112 40 240 85 202 72 171 61 131 46 66 20 10 3 43 13 36 11 15 5 24 7 10,527 1,579 1,698 6,537 7,341 981 1,101 473 1,310 215 360 4,282 642 983 2,000 2,131 11,128 300 320 1,669 500 75 2,218 787 1,065 400 120 65 20 333 118 160 60 18 10 3 In Quebec, the federal EI amount is lower (it is $623) because Quebec Parental Insurance Plan premiums are also required, for which a federal tax credit is available (see page 34). 6 Credits as percentage (%) of base amount or actual payment 15 First $200 Amount over $200 29 Eligible 16.44 Non-eligible 13.33 Provinces and territories generally use their own amounts to determine credits. Quebec has special rules that affect some credits (see page 7). 492 n/a 905 54 745 762 633 364 443 303 246 431 103 n/a 44 n/a 195 69 n/a 460 475 390 356 475 224 371 171 217 80 64 755 642 617 369 675 394 2,128 n/a 240 98 561 n/a n/a 89 31 112 40 217 77 n/a 244 87 16 5 3 1 25 7 39 12 393 n/a 44 13 n/a 18 5 n/a In Manitoba, commencing 2011: • individuals up to age 24 can claim the fitness credit; and • a non-refundable tax credit for non-fitness activities can be claimed. See page 13. Starting 2011, Newfoundland and Labrador provides a non-refundable tax credit for child care expenses. See page 14. Go to Contents n/a x 1.2 or x 1.56 x 1.1 301 141 150 783 35 n/a 156 55 75 28 8 5 1 x 1.05 In jurisdictions that levy a surtax, the surtax increases the value of the credits by the factors shown. Starting 2010, Ontario provides a refundable tax credit for fitness and non-fitness activities. See page 16. In Saskatchewan, a refundable tax credit provides up to $150 per child aged six to fourteen, for cultural, recreational and sport activity fees. Individuals Key federal credits: additional information See pages 10 and 11 for recent changes to federal credits. The provinces and territories may have comparable thresholds and rules. Special rules To whom the credit may be transferred Carryforward Credit available only if at least $100 is paid in fees to an institution Credit = $60/month for full-time students and certain Spouse, parent or grandparent disabled part-time students; $18/month for other (Maximum combined credits Indefinite part-time students transferable = $750) Credit = $10/month for full-time students and certain disabled part-time students; $3/month for other part-time students Credit is based on amount by which qualifying medical expenses exceed the lesser of $2,052 and Either spouse may claim 3% of net income (generally, expenses for any twelvemonth period ending in the year can be claimed) Tuition Education Textbook Medical CPP/QPP and EI Canada Employment Transit pass Student loan interest Charitable donations Spouse and equivalent to spouse Infirm dependant Caregiver Age Pension Child Children’s fitness Children’s arts For employees, maximum credit = $451 (in Quebec, $426); self-employed persons deduct 50% of CPP/QPP premiums paid for their own coverage (maximum deduction of $2,218) and claim a credit for the non-deductible half of premiums paid (maximum credit $333); self-employed persons do not pay EI premiums Credit is based on employment income Public transit passes (monthly or longer) and certain weekly and electronic payment cards are eligible Interest must be paid on qualifying student loans Eligible donations are limited to 75% of net income Reduced by any net income of the spouse or qualifying dependant Reduced if dependant’s income exceeds $6,076 For providers of in-home care for an adult relative (reduced if relative’s income exceeds $14,624) Reduced if income exceeds $32,961 Maximum credit = $300 Credit available for each child under 18 n/a Either spouse may claim Maximum credit = $75 for children under 16; $150 for children under 18 who qualify for the disability tax credit Quebec’s special credits and rules The following special rules apply to Quebec’s non-refundable tax credits: • the minimum basic personal credit, the Quebec Pension Plan (QPP), Employment Insurance (EI), Health Services Fund and Quebec Parental Insurance Plan (QPIP) credits are combined into a single basic personal credit equal to $10,640; • an adult student can transfer the unused portion of the basic personal credit to a parent (but if this transfer is made, the other dependant [18 or over] credit of $571 cannot be claimed for that student); • most non-refundable credits, such as the basic personal credit and the age credit, can be transferred to a spouse if not used by the taxpayer; • the age, pension and living alone credits are reduced if net family income exceeds $30,875; • a person that lives alone or with a dependant can claim a credit of $249; • a person that qualifies for the living alone credit and lives with an eligible student is eligible for an additional $309 credit; • the maximum education credit of $393 per term (maximum two terms per year) can be claimed by a supporting Quebec parent (but is not transferable) for a child under 18 who attends post-secondary school full-time (part-time for infirm dependants); and • the medical expense credit is based on the amount by which qualifying expenses exceed 3% of net family income (see below for details on the refundable medical expense credit). Either parent may claim n/a Select Quebec refundable tax credits are listed below. Spouse or parent n/a 5 years Commencing 2011, the informal caregivers credit consists of three separate credits. See page 17. Caregivers Respite expenses for informal caregivers Home support for seniors Spouse Medical Basic Disability Adoption Child care For individuals with severe and prolonged impairment Spouse, parent, grandparent, Reduced if child care expenses and attendant care child, grandchild, sibling, Under 18 expenses (claimed as a medical expense for child) aunt, uncle, niece or nephew supplement exceed $2,508 Go to Contents Details 50% of eligible adoption expenses (maximum credit of $10,000) 26% to 75% of qualifying child care expenses (limits apply) Maximum credit of $591, plus supplement of $484 (less if dependant’s income exceeds $21,505) 30% of eligible respite expenses paid for the care of a person who resides with the caregiver and has a significant disability; maximum credit of $1,560 is reduced if family income exceeds $52,080 30% of eligible expenses; maximum credit of $4,680 for independent seniors, and $6,480 for dependent seniors, aged 70 and over, is reduced if family income exceeds $52,080; expenses eligible for this credit will not qualify for the medical expense credit 25% of medical expenses eligible for the non-refundable credit and 25% of amount deducted for impairment support products and services; maximum credit of $1,074 is reduced if family income exceeds $20,785 7 Individuals Income tax filing and payment deadlines for 2011 – individuals and trusts Deadlines falling on holidays or weekends may be extended to the next business day. See page 40 for other filing deadlines. Instalments Required Individuals Trusts Inter vivos Deadline If tax payable in 2011 and either 2010 or 2009 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 trust Testamentary trust Extended deadlines for individuals Tax forms Filing Taxpayer (or spouse) carried on a business T1 (and TP-1-V for Quebec filers) T3 (and TP-646-V for Quebec filers) For the 2011 taxation year of an inter vivos trust, the filing deadline is March 30, 2012. Non-residents are not subject to instalment or filing requirements on these (and certain other) receipts. Instead, 25% Part XIII withholding tax applies (and may be reduced by treaty). Non-resident Mutual fund trusts can elect to have a taxation year that ends on December 15. See page 4. 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. 8 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. Go to Contents Taxpayer (or spouse) died Balance due June 15 If a non-resident receives: • rental income on Canadian real property and April 30 elects to file under section 216, filing deadline is (no extension) two years after end of year the income was paid or credited (June 30 if NR6 was filed); or • certain Canadian pension, retirement and social assistance benefits and elects to file under section 217, filing deadline is June 30. If a taxpayer (or his/her spouse) died: If taxpayer died in: • November 1 to December 15, filing deadline is 6 months after date of death (June 15 if individual • November or December, balance due date is or his/her spouse carried on a business); 6 months after date of • December 16 to December 31, filing deadline is death; or 6 months after date of death; or • January, February, March • after year end, but before the filing deadline for or April, balance due that year (i.e., April 30 or June 15), filing deadline for the previous year is for that previous year is later of 6 months after 6 months after date date of death and filing deadline that would of death. otherwise apply. 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 (estates over $50,000) $500,000 value $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 $7,132 $30,427 Manitoba New Brunswick Newfoundland and Labrador Before April 1, 2011, Nova Scotia’s fee was $902 + 1.523% of portion > $100,000. 0.5% of estate $90 + 0.5% of portion > $1,000 Northwest Territories $200 to $400 Nova Scotia $920 + 1.553% of portion > $100,000 Nunavut $200 to $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 $400 Quebec Nominal fee Saskatchewan Yukon $77,017 $400 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 Go to Contents 9 Individuals Key tax changes Federal Top federal rates Ordinary income 2010 2011 Capital gains 29% 14.50% Dividends Eligible Non-eligible 15.88% 19.58% 17.72% 2011 Bracket Rate $0 15% “Kiddie tax”: For capital gains realized after March 21, 2011, the “kiddie tax” will apply to certain capital gains included in a minor’s income. Federal rates $41,544 $83,088 $128,800 22% 26% 29% When the federal minority government was defeated on March 25, 2011, the March 22, 2011 federal budget died, along with outstanding bills and legislation. Because the same party won a majority in the May 2, 2011 federal election, those measures are expected to be reintroduced, and therefore are reflected in this publication. Personal tax system: Indexing increased federal tax brackets and most personal tax credits by 1.4% for 2011. Dividends: Dividend gross-up Dividend tax credit (on grossed-up dividend) Top federal rate 2010 44% Eligible dividends 2011 2012 41% 38% 17.9739% 16.4354% 17.72% 19.29% Children’s Arts Tax Credit: Commencing 2011, parents can claim a non-refundable tax credit on up to $500 of fees paid for enroling each child under 16 in an eligible program of artistic, cultural, recreational or developmental activities. An additional $500 is available for children under 18 who qualify for the disability tax credit. Canada Revenue Agency (CRA) access to documents: The CRA’s revised policy on access to taxpayer and third-party documents demonstrates its heightened interest in supporting documents that help determine tax obligations and entitlements. This signals that taxpayers may receive more frequent requests for supporting documents. See our Tax Memo “CRA Access to Documents” at www.pwc.com/ca/taxmemo. Automobile deductions and benefits: • 2011 prescribed rates – these will remain at their 2010 levels for purposes of determining automobile deduction limits and taxable benefits. • Sample logbook – commencing 2010, self-employed individuals can use a logbook maintained for a sample period that represents a motor vehicle’s use to support motor vehicle expenses, in certain circumstances. Also, see Car expenses and benefits – A tax guide at www.pwc.com/ca/carexpenses. 10 Retirement savings plans and profit sharing plans: Contribution limits will increase. See page 37. Pension benefit Defined benefit registered pension plans (RPPs): The maximum pension benefit that can be paid from these plans is increasing as shown: 2010 2011 2012 (per year of service) $2,494 $2,552 Indexed Registered retirement savings plans (RRSPs) and registered retirement income funds (RRIFs): Anti-avoidance rules for RRSPs and RRIFs will include rules similar to the “advantage,” “prohibited investment” and “non-qualified investment” rules applicable to Tax-Free Savings Accounts, for transactions occurring and investments acquired after March 22, 2011. Transitional rules may apply. See our Tax Memo “Federal Budget Includes RRSP Anti-Avoidance Rule” at www.pwc.com/ca/taxmemo. 15.0198% 15.88% Partnership information returns: For partnerships with fiscal periods ending after December 31, 2010, the requirement to file a partnership information return based on the number of partners is replaced with one related to financial thresholds and partner structure. See our Tax Memo “Partnership Information Returns – Who Must File Starting 2011?” at www.pwc.com/ca/taxmemo. Individual pension plans (IPPs): Measures that affect defined benefit RPPs that are created primarily for one individual require: • minimum withdrawals from an IPP for members over 71, beginning 2012; and • past service contributions made after March 22, 2011, to first: – be funded out of the member’s existing RRSP assets (or account balance under a defined contribution RPP); or – reduce the member’s accumulated RRSP contribution room. Employee profit sharing plans (EPSPs): The rules for EPSPs will be reviewed to assess if technical improvements are required. Pension plan wind-ups: For members whose pension benefits have been reduced because of underfunding, the amount that can be transferred from the pension plan to a retirement savings vehicle on a tax-deferred basis will be the amount that could have been transferred if: • the plan had been fully funded, and • the members’ benefits had not been reduced. Go to Contents Individuals Registered education savings plans (RESPs): Commencing 2011, asset transfers between RESPs for siblings will be allowed if certain conditions are met. Mineral exploration tax credit for flow-through shares: This credit is extended one year to flow-through share agreements entered into before April 1, 2012. Family Caregiver Tax Credit: Commencing 2012, caregivers of dependants with a mental or physical infirmity can claim a $2,000 non-refundable tax credit (indexed after 2012). Non-resident trusts (NRTs) and offshore investment funds: Draft legislation released on August 27, 2010, refines the NRT rules, generally for taxation years ending after 2006, and the offshore investment fund rules, for taxation years ending after March 4, 2010. See our Tax Memo “August 27, 2010 Draft Legislation Implements 2010 Budget Proposals and Other Previously Announced Measures” at www.pwc.com/ca/taxmemo. Charitable gifts: Changes: • permit the Canada Revenue Agency to disallow charitable tax relief if the donated property is returned to the donor after March 21, 2011; • defer charitable tax relief on the donation of: – a non-qualifying security (NQS) for up to five years if the qualified donee disposes of the NQS to another party (other than when the consideration is the NQS of any person) for dispositions made after March 21, 2011; and – an option granted by a taxpayer after March 21, 2011, to a qualified donee to acquire the taxpayer’s property, until the donee exercises the option and acquires the property; and • limit the capital gains tax exemption on a donation of publicly listed flow-through securities acquired by a taxpayer pursuant to an agreement entered into after March 21, 2011. Education measures: Enhancements: • allow certain fees for exams taken after 2010 to qualify for the tuition tax credit; and • starting 2011, allow full-time students at educational institutions outside Canada in a course leading to a degree that is at least three (down from 13) consecutive weeks to: – claim the tuition, education and textbook tax credits; and – receive educational assistance payments from an RESP. Medical Expense Tax Credit: Commencing 2011, eligible expenses that can be claimed under this credit in respect of a dependent adult relative are not limited to $10,000. Avoidance transactions: Draft legislation 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 those that are part of a series of transactions completed after 2010. See our Tax Memo “New Federal Reporting Regime for Aggressive Tax Planning: Draft Legislation Released” at www.pwc.com/ca/taxmemo. Payments to non-residents: The Canada Revenue Agency issued final versions of three forms that non-residents must file in support of reducing withholding tax rates on payments from Canadians to reflect treaty benefits. See our Tax Memo “Payments to non-residents: CRA issues new treaty-based withholding forms” at www.pwc.com/ca/taxmemo. Tax treaties and social security agreements: Recent developments are shown below. See page 46. Ratified and entered into force Signed but awaiting ratification Under negotiation Negotiations to commence Tax treaties Greece Turkey Switzerland China Hong Kong Social security agreements None Registered disability savings plans (RDSPs): For RDSP withdrawals made after royal assent (earlier in some cases), RDSP beneficiaries with a life expectancy of five years or less can increase their annual RDSP withdrawals, without repaying grants or bonds received by the RDSP. Child Tax Credit: Commencing 2011, the rule that limits the number of child tax credit claimants to one per domestic establishment is repealed. Volunteer Firefighters Tax Credit: Volunteer firefighters who serve 200 hours or more annually can claim a non-refundable tax credit based on $3,000, starting 2011. Go to Contents 11 Individuals Alberta British Columbia Top combined federal/provincial rates Ordinary income 2010 2011 Capital gains 39.00% 19.50% Dividends Eligible Non-eligible 15.88% 27.71% 17.72% 2011 Bracket Rate Alberta rate $0 10% Top combined federal/provincial rates Alberta is the only province or territory with a single rate. Highlights of changes Personal tax system: Indexing increased Alberta’s personal tax credits by 0.9% for 2011. Dividends: Dividend gross-up Dividend tax credit (on grossed-up dividend) Top combined rate 2010 44% Eligible dividends 2011 2012 41% 38% 10% 15.88% 17.72% 19.29% Ordinary income Capital gains 43.70% 21.85% 2010 2011 Dividends Eligible Non-eligible 21.45% 33.71% 23.91% 2011 British Columbia rates Bracket $0 $36,146 $72,293 $83,001 $100,787 Rate 5.06% 7.70% 10.5% 12.29% 14.7% Can be reduced for low incomes. Highlights of changes Personal tax system: Indexing increased British Columbia’s tax brackets and most personal tax credits by 0.8% for 2011. Dividends: Dividend gross-up Dividend tax credit (on grossed-up dividend) Top combined rate Eligible dividends 2010 2011 2012 44% 41% 38% 10.83% 10.31% 9.76% 21.45% 23.91% 26.11% Medical Services Plan: Monthly premiums are increasing as follows: Single Effective date Before January 1, 2011 January 1, 2011 January 1, 2012 $57 $60.50 $64 Family (2 persons) (> 2 persons) $102 $114 $109 $121 $116 $128 Harmonized Sales Tax (HST): British Columbia will honour the results of a referendum that will be held from June to July 2011, to determine if the 12% HST will be replaced with the former 7% Social Services Tax and the 5% Goods and Services Tax. If the HST regime is retained: • the HST rate will decrease from 12% to 11% on July 1, 2012, and to 10% on July 1, 2014 (i.e., the provincial component will decrease from 7% to 6% and then to 5%); and • in 2011, families will receive $175 for each child under 18, and low- and modest-income seniors will receive $175. 12 Go to Contents Individuals New Brunswick Manitoba Top combined federal/provincial rates Ordinary income Capital gains 46.40% 23.20% 2010 2011 Dividends Eligible Non-eligible 25.09% 38.21% 26.74% 39.15% Bracket Rate 2011 $0 10.8% Manitoba rates $31,000 $67,000 12.75% 17.4% Top combined federal/provincial rates Ordinary income Can be reduced for low incomes. 2010 2011 Highlights of changes Personal tax system: Changes to Manitoba’s personal amounts follow: 2010 Personal amounts Basic Spouse/equivalent to spouse Dividends: Dividend gross-up Dividend tax credit (on grossed-up dividend) Top combined rate 2011 2012 2013 $8,384 $8,634 $8,884 $9,134 Eligible dividends 2010 2011 2012 44% 41% 38% 11% 25.09% 26.74% 28.12% 2010 1.75% 38.21% 21.65% 2011 Bracket Rate $0 9.1% New Brunswick rates $37,150 $74,300 $120,796 12.1% 12.4% 14.3% Can be reduced for low incomes. The thresholds and personal amounts for 2011 and 2012 are indexed using a 2% rate. For 2012, if the indexation factor exceeds 2%, the thresholds and amounts will be based on that factor. The thresholds and amounts will continue to be indexed after 2012. Non-eligible dividends 2010 2011 25% 2.5% 43.30% Dividends Eligible Non-eligible 19.19% 30.83% 20.96% Highlights of changes Personal tax system: New Brunswick’s tax brackets and most personal tax credits increased by 2% for 2011. A planned reduction to the 2011 top personal tax rate from 14.3% to 12.7% will not be implemented and personal tax reductions scheduled for 2012 will be delayed. As a result, New Brunwick’s tax rates, brackets and personal amounts follow: 2014 $8,134 Capital gains 39.15% Highest Children’s Arts and Cultural Activity Tax Credit: Commencing 2011, a non-refundable tax credit can be claimed on up to $500 of fees for artistic, cultural, recreational or developmental activities for each child under 16. An additional $500 is available for children under 18 who qualify for the disability tax credit. Fitness Tax Credit: Commencing 2011, individuals age 16 to 24 can claim this credit. The maximum credit is $54 ($108 for individuals with a disability). Fertility Treatment Tax Credit: This credit is enhanced retroactive to October 1, 2010. Primary Caregiver Tax Credit: Starting 2011, the maximum annual credit increased from $1,020 to $1,275 per care recipient. Mineral Exploration Tax Credit: This credit is extended by three years to flowthrough share agreements entered into before April 1, 2015. Income tax rates and thresholds Lowest Personal amounts Basic Spouse/equivalent to spouse $118,427 13.3% $72,843 12.5% $36,421 9.3% $8,777 $7,453 2011 2012 14.3% $120,796 $123,212 12.4% $74,300 $75,786 12.1% $37,150 $37,893 9.1% $0 $8,953 $9,132 $7,602 $7,754 Dividends: Eligible dividends 2010 2011 2012 44% 41% 38% Dividend gross-up Dividend tax credit (on 12% grossed-up dividend) Top combined rate 19.19% 20.96% 22.47% Community Enterprise Development Tax Credit: This credit is extended by three years to December 31, 2014. Go to Contents 13 Individuals Northwest Territories Newfoundland and Labrador Top combined federal/provincial rates 2010 2011 Ordinary income 43.40% 42.30% Capital gains 21.70% 21.15% Dividends Eligible Non-eligible 22.79% or 20.77% 31.33% 20.96% 29.96% 2011 Bracket Rate Newfoundland & Labrador rates $0 $31,904 $63.807 7.7% 12.5% 13.3% Can be reduced for low incomes. 2010 2011 Highlights of changes Personal tax system: Newfoundland and Labrador’s tax brackets and most personal tax credits increased by 2% for 2011. Changes to its tax rates and age amount follow: Income tax rates Age amount Highest Middle 2010 14.4% 12.65% $4,340 2011 13.3% 12.5% $5,100 Eligible dividends 2010 2011 before July 1 after June 30 44% 41% 9.6% 22.79% 21.53% Dividends Eligible Non-eligible 19.81% 29.65% 21.31% 2012 38% 2010 20.96% 22.47% 2011 25% 5% 31.33% 2011 Bracket Rate $0 5.9% Northwest Territories rates $37,626 $75,253 $122,345 8.6% 12.2% 14.05% Highlights of changes Personal tax system: Indexing increased Northwest Territories’ tax brackets and most personal tax credits by 1.4% for 2011. 29.96% Child Care Tax Credit: Starting 2011, parents can claim a non-refundable tax credit amount equal to the child care expenses that are deductible from their income. Volunteer Firefighters’ Tax Credit: Volunteer firefighters who serve at least 200 hours annually can claim a non-refundable tax credit based on $3,000, starting 2011. 14 43.05% Dividend gross-up Dividend tax credit (on grossed-up dividend) Top combined rate Non-eligible dividends 11% 20.77% Capital gains Dividends: Dividends: Dividend gross-up Dividend tax credit (on grossed-up dividend) Top combined rate Top combined federal/territorial rates Ordinary income Go to Contents Eligible dividends 2010 2011 2012 44% 41% 38% 11.32% 19.81% 11.5% 21.31% 22.81% Individuals Nova Scotia Nunavut Top combined federal/provincial rates Ordinary income 2010 2011 Capital gains 50.00% 25.00% Dividends Eligible Non-eligible 33.37% 36.21% 34.85% 2011 Nova Scotia rates 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. 2010 2011 Highlights of changes Personal tax system: If Nova Scotia tables a budget surplus in its 2012-2013 fiscal year, for 2012 the $150,000 bracket and 21% rate will be eliminated, but a 10% surtax on provincial income tax exceeding $10,000 will be reinstated. Increases in personal amounts follow: Personal amounts 2010 2011 Basic $8,231 $8,481 Other Increase of 3.04% in 2011 over 2010 Dividend gross-up Dividend tax credit (on grossed-up dividend) Top combined rate 2010 44% Capital gains 40.50% 20.25% Indexed Dividends Eligible Non-eligible 23.64% 28.96% 25.72% 2011 Bracket Rate $0 4% Nunavut rates $39,612 $79,224 7% 9% $128,800 11.5% Highlights of changes Personal tax system: Indexing increased Nunavut’s tax brackets and most personal tax credits by 1.4% for 2011. Dividends: After 2011 Dividend gross-up Dividend tax credit (on grossed-up dividend) Top combined rate Includes spouse, age, disability, infirm dependant, caregiver and pension income credits. Dividends: Top combined federal/territorial rates Ordinary income Eligible dividends 2010 2011 2012 44% 41% 38% 6.11% 5.82% 5.51% 23.64% 25.72% 27.56% Eligible dividends 2011 2012 41% 38% 8.85% 33.37% 34.85% 36.06% If Nova Scotia tables a budget surplus in its 2012-2013 fiscal year, the top 2012 combined rate will be 32.42% on eligible dividends and 33.06% on non-eligible dividends. Affordable Living Tax Credit and Poverty Reduction Credit: Effective July 1, 2011, these payments will be indexed by 2.2%. Probate fees: These fees increased on April 1, 2011. See page 9. Go to Contents 15 Individuals Prince Edward Island Ontario Ontario rates Bracket $0 $37,774 $75,550 Dividends 2011 Rate 5.05% 9.15% 11.16% Eligible Non-eligible Can be reduced Surtax: 20% of basic provincial tax in excess of $4,078 26.57% 32.57% for low incomes. + 36% of basic provincial tax in excess of $5,219. 28.19% Top combined federal/provincial rates Ordinary income 2010 2011 Capital gains 46.41% 23.20% Highlights of changes Personal tax system: Indexing increased Ontario’s tax brackets and most personal tax credits by 1.8% for 2011. Dividends: Dividend gross-up Dividend tax credit (on grossed-up dividend) Top combined rate 6.4% 26.57% 28.19% 2010 2011 47.37% 23.69% Highlights of changes Dividends: 2010 44% Eligible dividends 2011 2012 41% 38% 10.5% 25.70% 27.33% Non-eligible dividends 2010 2011 25% 2.1% 28.70% 1% 39.66% 41.17% Equity Tax Credit: During 2011, this non-refundable tax credit of up to $7,000 will be available to individuals who invest in eligible businesses. 29.54% Children’s Activity Tax Credit: Commencing 2010, parents can claim this refundable tax credit of up to $50 for each child under 16 who is enrolled in a physical activity or other qualifying program. An additional $50 credit is available for children under 18 who qualify for the disability tax credit. Ontario Trillium Benefit: Starting July 1, 2012, the Ontario Sales Tax Credit, the Ontario Energy and Property Tax Credit and the Northern Ontario Energy Credit will be combined, paid monthly and called the Ontario Trillium Benefit. 16 Capital gains Dividend gross-up Dividend tax credit (on grossed-up dividend) Top combined rate Eligible dividends 2010 2011 2012 44% 41% 38% Prince Edward Island rates Bracket $0 $31,984 $63,969 Dividends 2011 Rate 9.8% 13.8% 16.7% Eligible Non-eligible Can be reduced Surtax: 10% of basic provincial 25.70% 39.66% for low incomes. tax in excess of $12,500. 27.33% 41.17% Top combined federal/provincial rates Ordinary income Go to Contents Individuals Quebec Saskatchewan Top combined federal/provincial rates Ordinary income 2010 2011 Capital gains 48.22% 24.11% Dividends Eligible Non-eligible 30.68% 36.35% 31.85% Quebec is the only jurisdiction that does not use the federal definition of taxable income. 2011 Federal 2011 Bracket Rate $0 16% Quebec rates $39,060 $78,120 20% 24% Top combined federal/provincial rates Ordinary income Bracket $0 $41,544 $83,088 $128,800 Rate 12.53% 18.37% 21.71% 24.22% 44% 22% 2010 2011 Federal rates that apply in Quebec have been reduced by the 16.5% “Quebec abatement.” Highlights of changes Personal tax system: Indexing increased Quebec’s tax brackets and most personal tax credits by 1.27% for 2011. Eligible dividends 2010 2011 2012 44% 41% 38% 2010 Basic $13,348 Spouse/equivalent to spouse Child $4,944 31.85% 2011 Bracket Rate Saskatchewan rates $0 $40,919 $116,911 11% 13% 15% 2011 $14,535 $5,514 Dividends: 11.9% 30.68% Dividends Eligible Non-eligible 21.64% 30.83% 23.36% 32.08% Highlights of changes Personal tax system: Indexing increased Saskatchewan’s tax brackets and most personal tax credits by 1.4% for 2011. The following personal amounts increased by more than 1.4%: Personal amounts Dividends: Dividend gross-up Dividend tax credit (on grossed-up dividend) Top combined rate Capital gains 32.81% Tax credit for experienced workers: Commencing 2012, this new tax credit will eliminate or reduce the income tax paid by individuals 65 or over on eligible work income over $5,000. When fully phased in, in 2016, up to $10,000 of income can be exempt. Informal caregivers of adult persons: Commencing 2011, this refundable tax credit will consist of separate credits for: • informal caregivers who house, in the strict sense of the term, an eligible relative; • informal caregivers who cohabit with an eligible relative unable to live alone; and • certain informal caregivers caring for an elderly spouse. Dividend gross-up Dividend tax credit (on grossed-up dividend) Top combined rate Eligible dividends 2010 2011 2012 44% 41% 38% 11% 21.64% 23.36% Non-eligible dividends 2010 2011 2012 25% 6% 24.81% 5% 4% 30.83% 32.08% 33.33% Saskatchewan Pension Plan (SPP): Draft rules that generally apply starting 2010: • require SPP contributions to be based on an individual’s registered retirement savings plan (RRSP) limit; • allow an increase to the annual SPP contribution limit from $600 to $2,500; and • extend to SPPs certain tax rules that apply to registered pension plans and RRSPs. Voluntary retirement saving plan: Quebec will allow this type of plan to be patterned on the pooled registered pension plan framework. Quebec pension plan: The contribution rate will increase annually by 0.15% from January 1, 2012, to January 1, 2017, causing the rate to rise from 9.9% to 10.8%. Health contribution: The health contribution will increase from $100 in 2011 to $200 in 2012, unless family income is below a threshold. Quebec Sales Tax (QST): The QST rate will increase from 8.5% to 9.5% on January 1, 2012. Go to Contents 17 Individuals Yukon Top combined federal/territorial rates Dividends Eligible Non-eligible 18.80% 30.49% 42.40% 21.20% 14.28% to 17.72% 30.41% Ordinary Capital income gains 2010 2011 2011 Bracket Rate Yukon rates $41,544 $83,088 9.68% 11.44% $0 7.04% $128,800 12.76% Can be reduced Surtax: 5% of basic territorial for low incomes. tax in excess of $6,000. Highlights of changes Personal tax system: To match federal brackets and tax credits, indexing increased Yukon’s tax brackets and most personal tax credits by 1.4% for 2011. Dividends: Dividend gross-up Dividend tax credit (on grossed-up dividend) Top combined rate 2010 44% 10.83% Eligible dividends 2011 41% 2012 38% 15.08% 18.80% 14.28% to 17.72% 15.93% to 19.29% Non-eligible dividends 2010 2011 25% 4.45% 4.51% 30.49% 30.41% The rate that applies depends on the level of the taxpayer’s other income, with the higher rate applying if the taypayer has no other income. 18 Go to Contents Corporations Corporate income tax rates To compute rates for off-calendar year ends, refer to pages 24 to 33. For income not earned in a province or territory, see pages 20 and 24. 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 20). Twelve-month taxation year ended December 31, 2011 Canadian-Controlled Private Corporations (CCPCs) (%) General and Manufacturing and Active business income earned Processing (M&P) (%) in Canada to $500,000 Basic federal rate The general rate reduction does not apply to certain types of income. See Federal corporate income tax rate changes (page 24). Provincial abatement Less: General rate reduction or M&P deduction Small business deduction Plus: Refundable investment tax Federal rate Corporations subject to Ontario income tax may also be liable for Ontario corporate minimum tax. See page 30. Alberta British Columbia Manitoba New Brunswick Newfoundland and Labrador Northwest Territories Nova Scotia Nunavut Ontario General M&P General M&P Prince Edward Island Quebec Saskatchewan Yukon General M&P General M&P Investment income 38 -10 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 or M&P rates. -11.5 n/a 16.5 n/a Investment income: See Refundable Investment Tax on page 20 for more details. -17 n/a 11 Provincial/ Provincial/ Combined Territorial Territorial 10 26.5 3 10 26.5 2.5 12 28.5 01 or 121 10.5 27 5 14 H 30.5 4H 5H 21.5 11.5 28 4 16 32.5 4.51 H or 161 H 12 28.5 4 11.75 H 28.25 4.5 H 10 H 26.5 16 H 32.5 1H 11.9 H 28.4 8H 12 28.5 3.24 10 26.5 15 31.5 4 2.5 19 2.5 $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 Combined 14 13.5 111 or 231 16 15 15 15.51 or 271 15 15.5 12 19 14.24 15 13.5 Provincial/ Combined Territorial 10 44.67 10 44.67 12 46.67 10.5 45.16 14 H 48.67 n/a 11.5 46.17 16 50.67 12 46.67 11.75 H 46.41 n/a 16 H 50.67 11.9 H 46.57 12 46.67 n/a 15 49.67 n/a Due to rounding the combined rate differs slightly from the sum of the federal and provincial rates for New Brunswick (see page 27) and Ontario (see page 30). Special rules apply to manufacturing and processing income in Ontario (see page 30) and Saskatchewan (see page 32). H Tax holidays are available to certain corporations. See the table on page 21. 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. Go to Contents 19 Corporations Other federal corporate tax rates for 2011 See Federal corporate income tax rate changes on page 24. Rate Income not earned in a province or territory 26.5% Corporations affected All corporations Description Income tax is calculated as follows: Basic federal rate Less: General rate reduction Federal rate Special rules 38% - 11.5% 26.5% 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). Therefore, the federal rate is 26.5%, instead of 16.5% (see page 19). Non-resident corporations, except: • transportation, communications and iron-ore mining companies; and • insurers (other than in special circumstances). The 25% rate may be reduced by the relevant tax treaty (generally to the withholding Applies to after-tax profits that are not invested in qualifying property tax rate on dividends, which is usually 5%, 10% or 15%). in Canada. Some treaties prohibit the imposition of branch tax or provide that the tax is payable only on earnings exceeding a threshold. 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; or • a non-CCPC pays an eligible dividend when it has a positive balance in its low rate income pool (LRIP). 33-1/3% Private corporations Certain public corporations Payable on taxable dividends received from certain taxable Canadian corporations. Refundable Investment Tax 6-2/3% Canadian-controlled private corporations (CCPCs) Increases the total federal rate that applies to investment income of a CCPC to 34.67% (see page 19). 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 Applies to banks, trust and loan corporations and life insurance companies with capital employed in Canada over $1 billion. The threshold is shared among related corporations. 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. All corporations Before 2006, imposed on taxable capital employed in Canada over $50 million. The $50 million threshold was shared among related corporations; associated corporations in the case of CCPCs. A notional LCT, calculated as if the LCT rate and capital tax threshold were 0.225% and $10 million, respectively, is relevant for certain purposes (e.g., a CCPC’s small business limit). Branch Tax Part III.1 Tax on Excess Eligible Dividend Designations Refundable Part IV Tax Large Corporations Tax (LCT) 20 25% 20% or 30% Nil 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. 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. Go to Contents Corporations Provincial income tax holidays and M&P investment tax credits Income tax holidays Other restrictions may apply. Eligible corporations Newfoundland and Labrador Companies meeting job creation and other conditions Designated after December 31, 2001 Holiday Outside Northeast Avalon region In Northeast Avalon region Designated before January 1, 2002 CCPCs in designated growth sectors, incorporated between April 1, 2003, and March 31, 2006 Full holiday for 15 years, phased out over next 5 years: Full holiday for 10 years, phased out over next 5 years Outside Northeast Avalon region Additional 50% federal tax rebate For 5 years 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 Prince Edward Aviation- and aerospace-related firms in Slemon Park Island Bioscience companies with more than 10 employees and $750,000 annual payroll Businesses that undertake major investment projects 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 Quebec Income not taxed each year Income attributable to new or expanded business For 3 years Nova Scotia Small and medium-sized corporations that carry on M&P in a remote resource region This threshold is equal to the federal small business limit (see page 19). $500,000 of active business income For 10 years No limit To December 31, 2012 Income attributable to P.E.I. operations For 10 years No limit March 30, 2001 to December 31, 2010 75% of eligible business income Reduced or eliminated when paid-up capital exceeds $20 million No new applications have been accepted since June 12, 2003. 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 P.E.I. by exportfocused corporations. Nova Scotia has not accepted new applications since January 8, 2011 (see page 29). For Nova Scotia, the cost of the M&P property must exceed $50,000. Rate British Columbia 3% Manitoba 10% Nova Scotia 10% Prince Edward Island 10% Quebec 5% to 40% 6% Saskatchewan 7% 5% For M&P property acquired After Before March 31, 2000 March 11, 1992 December 31, 2009 December 31, 1992 March 13, 2008 March 26, 1999 March 31, 2004 October 27, 2006 July 31, 2001 January 1, 2015 CarryRefundable forward 3 years 10 years n/a No cut-off January 1, 2016 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. Go to Contents Carryback 3 years 7 years 20 years 10 years n/a No 70% 100% No Sometimes No Depends on level of consolidated paid-up capital. 100% Saskatchewan’s credit is refundable for purchases after April 6, 2006. 21 Corporations Capital tax rates To compute rates for off calendar year ends, refer to pages 24 to 33. General capital tax was eliminated in Manitoba and Quebec on January 1, 2011, and in Ontario on July 1, 2010. For Manitoba, the nil rate applies for taxation years ending after April 12, 2011. Financial institutions capital tax was eliminated in British Columbia on April 1, 2010, in Ontario on July 1, 2010, and in Quebec on January 1, 2011. See Insurance Industry: Key Tax Rates and Updates at www.pwc.com/ca/ insurancekeytaxrates for rates that apply to insurance companies. Quebec also imposes a compensatory tax on payroll (see page 31). Twelve-month taxation year ended December 31, 2011 Rate Exemption If taxable capital < $10 million Corporations Nova Scotia in general If taxable capital > $10 million Federal (Part VI Financial Institutions Capital Tax) If taxable paid-up capital < $4 billion Manitoba If taxable paid-up capital > $4 billion New Brunswick Newfoundland If paid-up capital < $10 million and Labrador If paid-up capital > $10 million Financial institutions (except insurance) Nova Scotia 0.15% 0.075% 1.25% Nil 3% Head office in N.S. Other Trust and loan corporations Banks Prince Edward Island Quebec (compensatory tax on paid-up capital) If taxable paid-up capital < $1.5 billion If taxable paid-up capital < $1.5 billion If taxable in taxation year ending Saskatchewan paid-up after October 31, 2008 capital and before > $1.5 billion November 1, 2009 Other $10 million 4% $5 million Nil $30 million $500,000 5% 0.25% On first $1.5 billion of taxable paid-up capital On taxable paid-up capital > $1.5 billion See page 32 for more information. 22 $5 million Nil $1 billion n/a Go to Contents $2 million Nil 0.7% Up to $20 million 3.25% Associated or related corporations may be required to share the exemption. Corporations Payment and filing deadlines – income and capital tax Federal income tax payments include tax payments for: • Financial Institutions Capital Tax; • Tax on Corporations Paying Dividends on Taxable Preferred Shares; • Additional Tax on Authorized Foreign Banks; and • General capital tax in Nova Scotia and Ontario. 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. Deadline Capital tax was eliminated in Manitoba and Quebec on January 1, 2011, and in Ontario on July 1, 2010. For Manitoba’s capital tax deadlines, see its financial institutions capital tax deadlines (below). For Ontario’s and Quebec’s, see their income tax deadlines (above). Financial institutions capital tax was eliminated in British Columbia on April 1, 2010, in Ontario on July 1, 2010, and in Quebec on January 1, 2011. However, Quebec’s 0.25% compensatory tax on paid-up capital remains. For British Columbia, the capital tax balance due and filing deadline is 184 days after year end. For Ontario’s capital tax deadlines, see its income tax deadlines (above). Federal All jurisdictions except: • Alberta Income • Quebec tax Alberta Quebec Corporations in general Federal Nova Scotia Other provinces and territories Federal Manitoba Capital tax Financial institutions Two $3,000 thresholds apply; one for federal purposes and the other for all provinces and territories combined, except Alberta and Quebec. Instalments Waiver conditions Federal balance due deadlines also apply to Part IV tax (page 20). However, no Part IV tax instalments are required. Deadline Balance due Extended deadline (income tax only) Filing deadline 3 months, if the corporation: • was a CCPC throughout the current year; • claimed the small business deduction;1 and Total tax1 is < $3,000 • had taxable income, on an associated basis, in taxation 2 months years ending in the previous calendar year < the total 6 months Last day of after after business limit for those taxation years. each month year end year end 1 1 Alberta income tax < $2,000 3 months for CCPCs that: or • claimed Alberta’s small business deduction; and • had taxable income < $500,000. CCPC qualifies for extended balance due deadline Quebec income and capital tax1 < $3,000 No extended deadline No general capital tax Same as Nova Scotia income tax (above). The federal government administers and collects general capital taxes payable to Nova Scotia. No general capital tax Same as federal income tax (above) 15th day of months 3, 6, 9 Capital tax for current year < $5,000 and 12 of the year New Brunswick Newfoundland and Labrador 20th day of each month Nova Scotia Prince Edward Island Quebec Saskatchewan Last day of each month Other provinces and territories 6 months after year end None Same as Quebec income tax (above) Capital tax for current year < $4,800 No financial institutions capital tax Last day of 6th month after year end In Manitoba, corporations that qualify for the waiver must nevertheless make one instalment three months after year end. For example, in Saskatchewan the balance payable would be June 30 for a December 15 year end. 1. In current or previous year. Go to Contents 23 Corporations Key tax changes Federal Federal corporate income tax rate changes: Corporate income tax rates (for December 31, 2011 year ends) The general and M&P rates do not apply to certain corporations (e.g., mutual fund corporations, mortgage investment corporations and investment corporations). CCPC General and M&P Active business income to $500,000 16.5 11 The federal government’s goal is to achieve combined 25% federal/provincial and federal/ territorial rates. Investment income 34.67 Other 2011 rates Capital tax General: None Financial institutions: 1.25% (see page 22) Payroll tax None Sales tax 5% GST (see page 39) For Canada Pension Plan and Employment Insurance premiums, see page 34. When the federal minority government was defeated on March 25, 2011, the March 22, 2011 federal budget died, along with outstanding bills and legislation. Because the same party won a majority in the May 2, 2011 federal election, those measures are expected to be reintroduced, and therefore are reflected in this publication. The following key tax changes related to individuals (see pages 10 and 11) also affect corporations: • Canada Revenue Agency (CRA) access to documents • Automobile deductions and benefits • Partnership information returns • Retirement savings plans and profit sharing plans • Defined benefit registered pension plans (RPPs) • Registered retirement savings plans (RRSPs) and registered retirement income funds (RRIFs) • Individual pension plans (IPPs) • Employee profit sharing plans (EPSPs) • Pension plan wind-ups • Charitable gifts • Mineral exploration tax credit for flow-through shares • Non-resident trusts (NRTs) and offshore investment funds • Avoidance transactions • Payments to non-residents • Tax treaties and social security agreements Effective date Before January 1, 2011 January 1, 2011 January 1, 2012 General Income not earned and M&P in a province or rates territory 18% 16.5% 15% 28% 26.5% 25% Partnership deferral: New measures curtail the deferral of partnership income for corporate partners with taxation years ending after March 22, 2011, that use partnerships with misaligned year ends. See our Tax Memo “2011 federal budget ends deferral of corporate income tax through the use of partnerships” at www.pwc.com/ca/taxmemo. Stop-loss rule on share redemption: With certain exceptions, an existing rule reduces the loss realized by a corporation from the disposition of a share by the amount of tax-free dividends received, or deemed to be received, on the share on or before the disposition. The exceptions to this rule are eliminated, with respect to any deemed dividend arising on the redemption of shares held by a corporation, for redemptions after March 21, 2011, unless the corporation and the shareholder are both private corporations and the shareholder is not a financial institution. Capital cost allowance (CCA): Enhancements extend: • the 50% straight-line accelerated CCA rate to eligible M&P machinery and equipment acquired before 2014; and • the Class 43.2, 50% declining balance CCA rate to equipment acquired after March 21, 2011, that generates electricity using waste heat. Group taxation: The federal government issued a consultation paper that explores possible approaches for a new system for taxing corporate groups in Canada. See our Tax Memo “Taxation of Corporate Groups – Consultation Paper Released” at www.pwc.com/ca/taxmemo. Foreign affiliate amendments: Draft legislation released on August 27, 2010, affects the taxation of Canadian corporations with foreign affiliates. See our Tax Memo “August 27, 2010 Draft Legislation Implements 2010 Budget Proposals and Other Previously Announced Measures” at www.pwc.com/ca/taxmemo. Real estate investment trusts (REITs): Draft legislation released on December 16, 2010, affects the tax rules that apply to REITs. See our Tax Memo “Proposed Changes to Real Estate Investment Trust (REIT) Tax Rules” at www.pwc.com/ca/taxmemo. 24 Go to Contents Corporations Federal Court of Appeal (FCA) decisions: Draft income tax proposals counter what the federal government considers to be taxpayer-friendly FCA decisions in: • Collins v. The Queen; • Lehigh Cement Limited v. The Queen (see page 42); and • The Queen v. National Life Assurance Company of Canada. Alberta Corporate income tax rates (for December 31, 2011 year ends) Active business income to $500,000 10 26.5 3 14 See our Tax Memo “Finance Proposes Legislative Measures to Counter FCA Decisions” at www.pwc.com/ca/taxmemo. Qualifying environmental trusts (QETs): Changes that generally apply starting 2012 for QETs created after 2011: • expand the range of trusts eligible for QET treatment; • expand the list of eligible investments for a QET; and • reduce the tax rate payable by a QET to the corporate income tax rate. Hiring Credit for Small Business: Employers that paid Employment Insurance (EI) premiums in 2010 of $10,000 or less will receive a credit of up to $1,000 if their 2011 EI premiums exceed those paid in 2010. CCPC General and M&P Investment income 10 44.67 Figures in bold are combined federal/provincial rates. Other 2011 rates Capital tax Payroll tax None Sales tax Additional highlights Group taxation: Alberta supports the federal government’s initiative on the taxation of corporate groups, provided that it produces a “fair distribution of corporate income tax revenue among the provinces.” Oil sands properties: Measures will bring the taxation of oil sands properties more in line with that of the conventional oil and gas sector. Financial statement reporting: For fiscal years beginning after December 31, 2010: • most “publicly accountable enterprises” must adopt International Financial Reporting Standards (IFRS); and • private enterprises must adopt either IFRS or Accounting Standards for Private Enterprises (ASPE). These changes could affect the measurement and reporting of income taxes for financial statement purposes and the calculation of Canadian taxes payable. See our Tax Memos “IFRS and Tax: The Rubber has Hit the Road” and “The Move to IFRS: CRA Guidance” at www.pwc.com/ca/taxmemo. Memorandum of Understanding (MOU): The competent authorities of Canada and the United States released a MOU regarding the conduct of mandatory binding arbitration proceedings under the mutual agreement procedure of the Canada-U.S. tax treaty. See our Tax Memo “Memorandum of Understanding (MOU) on the Canada-U.S. Tax Treaty Arbitration Process” at www.pwc.com/ca/taxmemo. Tax Information Exchange Agreements (TIEAs): Canada is negotiating 11 TIEAs and has signed 13. One TIEA has entered into force (with the former Netherlands Antilles). Go to Contents 25 Corporations British Columbia Manitoba Corporate income tax rates (for December 31, 2011 year ends) Corporate income tax rates (for December 31, 2011 year ends) CCPC General and M&P Active business income to $500,000 10 26.5 2.5 13.5 Investment income 10 44.67 General and M&P Figures in bold are combined federal/provincial rates. 12 28.5 Other 2011 rates 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 2011 rates Capital tax None Payroll tax Sales tax 12% HST (see page 39) Capital tax General: None Financial institutions: Nil or 3% (see page 22) Payroll tax Nil to 4.3% (see page 36) Sales tax 7% PST (see page 39) Corporate income tax rate changes Corporate income tax rate changes General and CCPC rates M&P rates Before January 1, 2011 10.5% 2.5% Effective January 1, 2011 date 10% April 1, 2012 0% General and M&P rates Subject to balanced budget requirements. If the HST regime survives the referendum, these rates will increase in 2012 (see Harmonized Sales Tax below). Additional highlights Harmonized Sales Tax (HST): British Columbia will honour the results of a referendum that will be held from June to July 2011, to determine if the 12% HST will be replaced with the former 7% Social Services Tax and the 5% Goods and Services Tax. If the HST regime is retained: • the HST rate will decrease from 12% to 11% on July 1, 2012, and to 10% on July 1, 2014 (i.e., the provincial component will decrease from 7% to 6% and then to 5%); • the general and M&P rate will increase from 10% to 12% on January 1, 2012; and • the decline in the CCPC rate to 0% scheduled for April 1, 2012, will be postponed. Effective date Before December 1, 2010 December 1, 2010 To be determined CCPC rate 1% 0% n/a 12% 11% Applies to active business income up to $400,000. Additional highlights General capital tax: Before Manitoba’s $10 million capital tax deduction. Capital tax was eliminated on July 1, 2008, for corporations that use more than 50% of their labour and capital in Manitoba in M&P activities. On taxable capital employed in Manitoba > $20 million and > $21 million < $21 million < $20 million Taxation year commencing after January 1, 2010 After 2010 Nil 2.2% 0.2% Nil These changes do not apply to Crown corporations. Financial institutions capital tax: Financial institutions with taxable capital under $4 billion will be exempt from this tax, for taxation years ending after April 12, 2011. 26 Go to Contents Corporations New Brunswick Manufacturing Investment Tax Credit: This credit is extended by three years to December 31, 2014. Taxpayers can elect to renounce all or part of the credit. Corporate income tax rates (for December 31, 2011 year ends) Cultural Industries Printing Tax Credit: This new 15% refundable credit can be claimed on costs incurred and paid after April 12, 2011, and before 2015, for printing, assembly and binding performed in Manitoba to produce eligible books (generally, Canadian-authored non-periodical publications). Book Publishing Tax Credit: This credit is extended by three years to December 31, 2014. Enhancements for amounts incurred and paid after April 12, 2011: • allow non-refundable monetary advances and labour costs used to publish an electronic or digital version of an eligible literary work to qualify for the credit; and • increase the bonus for printing on recycled paper from 10% to 15%. Green Energy Equipment Tax Credit: This credit will increase from 10% to 15% for geothermal heating system installations after April 12, 2011, and from: • 5% to 7.5% for manufacturers and purchasers of qualifying geothermal heat pumps; and • 10% to 15% on other eligible installation costs for geothermal heating systems. Neighbourhoods Alive! Tax Credit: This new 30% non-refundable tax credit is available to corporations that donate funds to charitable organizations to create new social enterprises after April 12, 2011, and before 2020. The maximum annual tax credit is $15,000. CCPC General and M&P Active business income to $500,000 Investment income 10.5 27 5 16 10.5 45.16 Figures in bold are combined federal/provincial rates. Although 34.67% (federal) + 10.5% (New Brunswick) = 45.17%, the exact rate is 45.163%. Other 2011 rates Capital tax General: None Financial institutions: 3% (see page 22) Payroll tax None Sales tax 13% HST (see page 39) Corporate income tax rate changes Effective date General and M&P rates Before July 1, 2010 12% July 1, 2010 11% July 1, 2011 10% January 1, 2012 CCPC rate 5% 4.5% The CCPC rate will decline in stages to 2.5% over the next three years. The rate was to decline to 8% on July 1, 2012, but this reduction was rescinded. Co-op Education and Apprenticeship Tax Credits: Certain components of these credits are extended by three years to December 31, 2014. The province is also examining ways to simplify the application process. Additional highlights Film Tax Credit: This credit will be phased out in New Brunswick’s 2011-2012 fiscal year. Odour Control Tax Credit: This credit is extended by three years to December 31, 2014. Taxpayers can elect to renounce all or part of the credit. Digital Media Tax Credit: The province intends to create this credit, but no details have been announced. Online tax payments: Effective May 1, 2011, businesses can pay Manitoba taxes through financial institution online bill payment systems. Go to Contents 27 Corporations Newfoundland and Labrador Northwest Territories Corporate income tax rates (for December 31, 2011 year ends) General M&P (non M&P) 14 H 30.5 Corporate income tax rates (for December 31, 2011 year ends) CCPC 5H 21.5 4H 15 14 H 48.67 Active business income to $500,000 Investment income 11.5 28 4 15 11.5 46.17 Figures in bold are combined federal/provincial rates. H = Tax holiday (see page 21) The M&P credit can be claimed only by companies that manufacture or process at a permanent establishment in the province. Capital tax None Payroll tax 2% (see page 36) Sales tax None Capital tax General: None Financial institutions: 4% (see page 22) Payroll tax Nil or 2% (see page 36) Sales tax 13% HST (see page 39) CCPC rate 5% 4% Additional highlights Health and Post-Secondary Education Tax: The thresholds at which the province’s payroll tax (see page 36) applies increased as follows: 28 Payroll tax is paid by employees. Additional highlights No significant corporate tax changes were announced. Corporate income tax rate changes Rates Figures in bold are combined federal/territorial rates. Other 2011 rates Other 2011 rates Taxation years before April 1, 2010 beginning after March 31, 2010 CCPC General and M&P Investment Active business income to $500,000 income Total payroll before January 1, 2011 after December 31, 2010 2% over $1,000,000 over $1,200,000 0% $0 to $1,000,000 $0 to $1,200,000 Go to Contents Corporations Nova Scotia Nunavut Corporate income tax rates (for December 31, 2011 year ends) General and M&P 16 32.5 Corporate income tax rates (for December 31, 2011 year ends) CCPC to $400,000 4.5 H 15.5 Investment $400,000 to $500,000 income 16 H 16 27 50.67 CCPC General and M&P Active business income to $500,000 Investment income 12 28.5 Active business income 4 15 12 46.67 Figures in bold are combined federal/provincial rates. H = Tax holiday (see page 21) Figures in bold are combined federal/territorial rates. Other 2011 rates Other 2011 rates Capital tax General: 0.15% or 0.075% (see page 22) Financial institutions: 4% (see page 22) Payroll tax None Sales tax 15% HST (see page 39) Capital tax None Payroll tax 2% (see page 36) Sales tax None Corporate income tax rate changes Additional highlights No significant corporate tax changes were announced. CCPC rate Before January 1, 2011 Effective January 1, 2011 date January 1, 2012 Applies to active business income up to $400,000. Payroll tax is paid by employees. 5% 4.5% 4% Additional highlights General capital tax: Effective date Before July 1, 2010 July 1, 2010 July 1, 2011 July 1, 2012 Taxable capital Taxable capital < $10 million > $10 million 0.3% 0.15% 0.2% 0.1% 0.1% 0.05% Nil Film Industry Tax Credit: For productions with principal photography commencing after November 30, 2010, enhancements to this credit: • eliminate the cap on total production costs; and • provide that employees must be resident in Nova Scotia only during the production period. Digital Media Tax Credit: For productions with principal photography starting after November 30, 2010, employees must be resident in Nova Scotia only during the production period. M&P Investment Tax Credit: No new applications for this credit have been accepted since January 8, 2011. Corporations have one year from the date an application is approved to purchase the M&P equipment and submit a claim for the credit. Go to Contents 29 Corporations Ontario Capital tax rates: Corporate income tax rates (for December 31, 2011 year ends) Before July 1, 2010, capital tax was eliminated or reduced as follows: > 50% Eliminated. % of salaries and wages related to M&P and resource activities > 20% and < 50% Reduced proportionately (straight-line). CCPC General M&P (non M&P) 11.75 H 28.25 Active business income to $500,000 10 H 26.5 Investment income 4.5 H 15.5 11.75 H 46.41 In Ontario, the manufacturing rate applies to profits from manufacturing and processing, farming, mining, logging and fishing operations carried on in Canada and allocated to Ontario. See Corporate Minimum Tax below. General rate Figures in bold are combined federal/provincial rates. H = Tax holiday (see page 21) Effective date Although 34.67% (federal) + 11.75% (Ontario) = 46.42%, the exact rate is 46.414%. Capital tax None Payroll tax Nil or 1.95% (see page 36) Sales tax 13% HST (see page 39) Corporate income tax rate changes Effective date Before July 1, 2010 July 1, 2010 July 1, 2011 July 1, 2012 July 1, 2013 14% 12% 11.5% 11% 10% 12% 5.5% Small business clawback rate General M&P 4.25% 3.25% 10% 4.5% 0% M&P rate CCPC rate Before July 1, 2010, the benefit of the small business deduction was clawed back when taxable income of associated corporations exceeded $500,000 and eliminated completely once taxable income, on an associated basis, reached $1,500,000. Corporations subject to Ontario income tax may have a CMT liability based on adjusted book income. CMT is payable only to the extent that it exceeds the regular Ontario income tax liability. Thresholds apply on an associated basis. Functional currency (mining): For taxation years beginning after December 31, 2010, mine operators in Ontario that calculate their Canadian tax results using a functional currency other than the Canadian dollar under the Canadian Income Tax Act can elect under the Ontario Mining Tax Act to file their Ontario mining tax returns in that functional currency. Research and development (R&D): Ontario will work with the federal government to improve the effectiveness of federal R&D tax support by strengthening administration, enhancing collaboration between the business and education sectors, and making the system fairer for small businesses that perform R&D. Group taxation: Ontario supports the federal government’s initiative for a formal system for the taxation of corporate groups, provided it increases the competitiveness of Canada’s corporate tax system and ensures that the provinces receive the revenues to which they are entitled. Additional highlights Corporate Minimum Tax (CMT): The CMT rate decreased from 4% to 2.7% on July 1, 2010. The thresholds for CMT to apply increased as follows: 30 After Ontario’s $15 million capital tax deduction. Book Publishing Tax Credit: For expenditures incurred after March 29, 2011, the period for qualifying marketing expenditures will start one year before and end one year after the publication date. This replaces a 12-month period. Other 2011 rates General rate Before July 1, 2010 0.15% July 1, 2010 Financial institutions Taxable capital employed in Ontario > $400 million ≤ $400 million Deposit-taking Other 0.3% 0.45% 0.36% Nil Taxation years ending before July 1, 2010 after June 30, 2010 Total assets > $5 million > $50 million or and Annual gross revenues > $10 million > $100 million Tax Collection Agreement (TCA): During its review of the TCA in 2011, Ontario will work with the federal government to ensure consistency with current needs, best practices, new technology and changes in federal/provincial partnership. Technical amendments: Ontario will amend numerous provincial statutes to improve effectiveness and enforcement. No details have been provided. Go to Contents Corporations Prince Edward Island Quebec Corporate income tax rates (for December 31, 2011 year ends) General and M&P Corporate income tax rates (for December 31, 2011 year ends) CCPC 16 H 32.5 1H 12 16 H 50.67 CCPC General and M&P Investment Active business income to $500,000 income Active business income to $500,000 Investment income 11.9 H 28.4 8H 19 11.9 H 46.57 Figures in bold are combined federal/provincial rates. H = Tax holiday (see page 21) Figures in bold are combined federal/provincial rates. H = Tax holiday (see page 21) Other 2011 rates Other 2011 rates Capital tax General: None Financial institutions: 5% (see page 22) Payroll tax None Sales tax 10% PST (see page 39) Capital tax General: None Financial institutions: 0.25% compensatory tax on paid-up capital (see page 22) Payroll tax 4.26%, 2.7% or reduced rates (see page 36) Sales tax 8.5% QST (see page 39) Corporate income tax rate changes Additional highlights Capital tax rates: CCPC rate Effective date Before April 1, 2010 April 1, 2010 Before January 1, 2011, capital tax was eliminated or reduced as follows: % of activities attributable > 50% Eliminated. to M&P (based on M&P > 20% and < 50% Reduced proportionately (straight-line). assets and labour) 2.1% 1% Additional highlights Financial institutions capital tax: Retroactive to taxation years commencing after September 30, 2006, the capital tax base will include accumulated other comprehensive income. This income results from accounting changes relating to fiscal years beginning after September 30, 2006. Effective Before January 1, 2011 date January 1, 2011 General rate 0.12% Financial institutions 0.24% Nil Compensatory tax for financial institutions: For taxation years ending after March 30, 2010, and beginning before April 1, 2014, the tax rate will increase: • for salaries paid by: – banks, loan companies, trust companies and securities trading companies from 2% to 3.9%; – savings and credit unions from 2.5% to 3.8%; and – other financial institutions (excluding insurance companies) from 1% to 1.5%; and • for insurance companies from 0.35% to 0.55%. Refundable tax credit for the production of cellulosic ethanol in Quebec: Corporations that produce cellulosic ethanol in Quebec from renewable materials can receive a new refundable tax credit of up to $0.15 per litre until March 31, 2018. Go to Contents 31 Corporations Saskatchewan Mining duties: The tax rate and the credit rate on duties refundable for losses is increasing, as follows: Effective date Before March 31, 2010 March 31, 2010 January 1, 2011 January 1, 2012 Corporate income tax rates (for December 31, 2011 year ends) Rate 12% 14% 15% 16% General M&P (non M&P) 12 28.5 Refundable tax credit for book publishing: After March 17, 2011, the digital version of an eligible book, and a book that is part of an eligible group of books, may qualify for this tax credit. Refundable tax credit for sound recording production: After March 17, 2011, a sound recording sold in a format other than on a physical medium (e.g., a downloadable file) can qualify for this credit. 10 26.5 3.24 14.24 Investment income 12 46.67 Figures in bold are combined federal/provincial rates. A rebate of up to 2% of M&P profits allocated to Saskatchewan is available, which can reduce the rate from 12% to as low as 10%. Other 2011 rates Capital tax General: None Financial institutions: 0.7% or 3.25% (see page 22) Payroll tax None Sales tax 5% PST (see page 39) Investments in tax-advantaged funds: Amendments to the statutes for incorporating investment corporations, such as the Fonds de solidarité des travailleurs du Québec (FTQ) or Fondaction and Capital régional et coopératif Desjardins, will, among other things: • recognize investments made for business succession; • increase recognition of investments in local venture capital funds; and • increase the limit applicable to the strategic investment category. Quebec Sales Tax (QST): The QST rate will increase from 8.5% to 9.5% on January 1, 2012. Transitional rules will apply. 32 CCPC Active business income to $500,000 Corporate income tax rate changes CCPC rate Effective date Before July 1, 2011 July 1, 2011 4.5% 2% Additional highlights Financial institutions capital tax: Retroactive to taxation years ending after October 31, 2009, financial institutions that qualified for the 0.7% capital tax rate in taxation years ending after October 31, 2008, and before November 1, 2009, will be subject to a: • 0.7% capital tax rate on their first $1.5 billion of taxable capital; and • 3.25% capital tax rate on taxable capital exceeding $1.5 billion. Go to Contents Corporations Yukon Corporate income tax rates (for December 31, 2011 year ends) CCPC General M&P (non M&P) 15 31.5 2.5 19 Active business income to $500,000 Non-M&P 4 15 M&P 2.5 13.5 Investment income 15 49.67 Figures in bold are combined federal/territorial rates. Other 2011 rates Capital tax Payroll tax None Sales tax Corporate income tax rate changes Threshold up to which CCPC rate applies $400,000 Effective Before January 1, 2011 date January 1, 2011 $500,000 Additional highlights No additional significant corporate tax changes were announced. Go to Contents 33 Individuals and corporations CPP/QPP, EI and QPIP premiums 2010 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. Self-employed individuals do not pay EI premiums. Quebec EI premiums are lower due to the QPIP. Employees with insurable earnings for the year below $2,000 can claim a refund of premiums. 34 Maximum pensionable earnings - Basic exemption = Maximum contributory earnings CPP/QPP premiums Employer/employee rate (all contributors) Maximum employer/employee contribution Self-employed contribution rate Maximum self-employed contribution Maximum annual insurable earnings Employee All contributors Premium per $100 insurable earnings (other than Employer those in Quebec) Employee Annual maximum contribution Employer EI premiums Maximum annual insurable earnings Employee Premium per Quebec $100 insurable earnings Employer contributors Employee Annual maximum contribution Employer Maximum annual insurable earnings Employee Premium per $100 insurable earnings QPIP Employer premiums Employee (Quebec Annual maximum contribution Employer only) Premium per $100 insurable earnings Selfemployed Annual maximum contribution Go to Contents 2011 $47,200 $48,300 $3,500 $43,700 $44,800 4.95% $2,163 $2,218 9.9% $4,326 $4,435 $43,200 $44,200 $1.73 $1.78 $2.422 $2.492 $747 $787 $1,046 $1,101 $43,200 $44,200 $1.36 $1.41 $1.904 $1.974 $588 $623 $823 $873 $62,500 $64,000 $0.506 $0.537 $0.708 $0.752 $316 $344 $443 $481 $0.899 $0.955 $562 $611 The QPP rate will increase after 2011. See page 17. Individuals and corporations Health care premiums The health care premiums shown are payable by individuals, but may be remitted through payroll withholdings. Premiums will increase on January 1, 2012, by $3.50 for single individuals and $7 for all families. Premiums $60.50 of two $109 Family of > two $121 Frequency Relief Monthly Low-income earners can get assistance Single British Columbia Medical Services Plan Quebec Health contribution Individuals Health Services Fund Applies only if income from certain sources, excluding remuneration, exceeds $13,305. Taxable income Up to $20,000 $20,000 to $25,000 $25,000 to $36,000 $36,000 to $38,500 $38,500 to $48,000 Ontario Health $48,000 to $48,600 Premium $48,600 to $72,000 $72,000 to $72,600 $72,600 to $200,000 $200,000 to $200,600 $200,600 and over $100 up to $1,000 Annual Low-income earners are exempt Gives rise to a credit Premium will increase to $200 for 2012. Annual premiums (per individual) Nil 6% of income > $20,000 $300 $300 + 6% of income > $36,000 $450 $450 + 25% of income > $48,000 $600 $600 + 25% of income > $72,000 $750 $750 + 25% of income > $200,000 $900 Go to Contents 35 Individuals and corporations Payroll tax rates for 2011 Associated employers must aggregate their payroll costs to apply the thresholds. Rate Manitoba Newfoundland and Labrador’s payroll tax thresholds increased on January 1, 2011. See page 28. Newfoundland and Labrador Health and Post-Secondary Education Tax Northwest Territories Nunavut Payroll tax Ontario Employer Health Tax Quebec In the Northwest Territories and Nunavut, payroll tax is paid by employees through payroll withholdings. Health Services Fund 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 to a provincial fund the difference between that amount and the amount actually spent on training. 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 compensatory tax on payroll. See page 31. 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 34 and 35. 36 Go to Contents Individuals and corporations Retirement savings and profit sharing plans For registered retirement savings plans (RRSPs), money purchase 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); and • fixed dollar limits. The table below outlines these limits. For example, for RRSPs, the $22,970 fixed dollar limit applies in 2012 if earned income in 2011 (i.e., the previous year) exceeds $127,611 (because 18% of $127,611 is $22,970). Also known as defined contribution plans. For defined benefit plans, different rules apply. Registered retirement savings plan (RRSP) 18% of earned income for the previous year % of earnings 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 money purchase. 2010 2011 2012 2013 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. Stated in: Employer’s contribution Deadlines Individual’s contributions Deferred profit sharing plan (DPSP) 18% of pensionable earnings for the year Maximum contribution 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. Money purchase registered pension plan (RPP) Earned income (previous year) $22,000 $22,450 $22,970 > $122,223 > $124,722 > $127,611 Maximum contribution Pensionable earnings (current year) Maximum contribution Pensionable earnings (current year) $22,450 $22,970 > $124,722 > $127,611 $11,225 $11,485 The fixed-dollar DPSP contribution limit is half of the fixed-dollar money purchase RPP contribution limit for the year. > $62,361 > $63,806 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) Employee contributions to DPSPs are not permitted. Money purchase 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 Go to Contents n/a 37 Individuals and corporations Investment tax credits and R&D tax credits Federal investment tax credit rates Generally includes new buildings and/or machinery and equipment to be used primarily in Canada in manufacturing or processing, mining, oil and gas, logging, farming or fishing. The federal investment tax credit (ITC) and refund rates shown apply to expenditures incurred in 2011. Investment tax credit (ITC) rate Unused federal ITCs may reduce federal taxes payable for the previous three and the next twenty years. 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. 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; and • $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. Alberta’s maximum annual credit is $400,000. 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. Ontario In some cases, Quebec’s 35% credit is available on 80% of payments to certain eligible entities (e.g., universities and public research centres). n/a 100% of ITCs on current 35% of annual qualified expenditures computed at Qualifying expenditures up to threshold the 35% rate Canadian-Controlled ($3 million or less) + 40% of ITCs on capital Qualified Private Corporations + 20% of qualified expenditures computed at SR&ED (CCPCs) expenditures not eligible the 35% rate and of ITCs in Canada for the 35% rate computed at the 20% rate Other corporations Individuals 20% 20% n/a 40% of ITCs Business research institute tax credit 20% R&D tax credit 4.5% 17.5% R&D wage tax credit to 37.5% University, public research centre, research consortium and private 35% partnership tax credits 1. Ontario and Quebec thresholds are in respect of the previous year, on a worldwide associated basis. Go to Contents Carry- Carryback forward Yes Provincial income tax n/a No Yes/No 3 years 10 years Yes n/a No Manitoba’s credit is: • fully refundable for certain eligible expenditures incurred after 2009; and • partially refundable for in-house R&D expenditures after 2010. 3 years 20 years 15% 10% Saskatchewan Yukon Credit against Refundable? 10% Innovation tax credit Yukon’s rate is 20% on R&D expenditures made to the Yukon College. 38 10% Qualified property in Atlantic provinces, Gaspé region and Atlantic offshore region Rate Quebec Refund rate British Columbia’s refundable tax credit is 10% of the lesser of eligible B.C. R&D expenditures and the federal expenditure limit (i.e., $3 million or less). Alberta Qualifying CCPCs British Columbia Other corporations Manitoba New Brunswick Newfoundland and Labrador Nova Scotia 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 In respect of unused ITCs on scientific research and experimental development expenditures. 15% Provincial income and capital tax Provincial income tax Provincial income and capital tax Prov./terr. income tax Can be carried back to taxation years ending after 2008. n/a Applies to R&D expenditures incurred before March 19, 2009. Yes 3 years 10 years n/a Individuals and corporations Sales tax rates and land transfer taxes Sales tax rates for 2011 Land transfer tax and registration fees Rate Federal Jurisdictions with no sales tax Harmonized jurisdictions Non-harmonized jurisdictions Total rate PST on GST 5% GST Alberta Northwest Territories Nunavut Yukon British Columbia New Brunswick Newfoundland and Labrador Nova Scotia Ontario Manitoba Prince Edward Island Quebec Saskatchewan 5% federal GST only Quebec’s sales tax is imposed on essentially the same base as the GST. The rate will increase to 9.5% on January 1, 2012. 12% n/a A 5% First Nation GST applies instead in certain First Nations. If the HST regime survives British Columbia’s referendum, the HST rate will decrease after 2011. See pages 12 and 26. 13% 12% 15.5% 13.925% 10% 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 $70 + 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 15% 13% 7% 10% 8.5% 5% The provinces and territories charge land transfer taxes and registration fees on the purchase of real property within their boundaries. Manitoba No Yes New Brunswick No Minimum of $60 in Nunavut and $100 in Northwest Territories. $75 + 0.25% of value Newfoundland and Labrador Northwest Territories Nunavut Nova Scotia Ontario General $100 + 0.4% of portion > $500 0.15% of portion < $1,000,000 + 0.1% of portion > $1,000,000 $85.18 + 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 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 Non-residents As above + 1% of value ($550 minimum) and corporations (Depends on land size and corporate ownership) Quebec Addition for Montreal Saskatchewan Yukon Go to Contents 1% of value, if value > $30,000 0.5% of portion < $50,000 + 1% of portion between $50,000 and $250,000 + 1.5% of portion > $250,000 0.5% of portion > $500,000 0.3% ($25 minimum) 0.2% of portion < $5,000 + 0.25% of portion between $5,000 and $10,000 + 0.175% of portion between $10,000 and $25,000 + 0.125% of portion > $25,000 Value used Value of property Fair market value of property Greater of assessed value and consideration for the transfer Value of property Value of consideration Greater of assessed value and consideration for the transfer Purchase price Greatest of: • consideration furnished; • consideration stipulated; and • fair market value of property. Value of property 39 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 8 for individual and trust income tax filing and payment deadlines and page 23 for corporate and capital tax filing and payment deadlines. 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 For partnerships with fiscal periods ending after 2010, the criteria for filing a partnership information return has changed. See page 10. Other Tax shelter Partnership Information returns Transactions with nonresidents Foreign property/trust Notice of objection 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 T1142 Federal: T1134-A T1134-B 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 Partnerships: (T106, T1135 and T1142 For individuals, forms T106, T1135, T1141 and T1142 are due June 15 if the taxpayer or 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 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. 180 days for Ontario assessments and reassessments for taxation years ending before 2009. 40 n/a Go to Contents 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 (CRA). Q1 Q2 Jan. - Mar. Apr. - Jun. Underpayments Daily In Alberta, effective February 10, 2010, the rates at which refund interest is calculated are half of the rates previously in effect. Federal: Income tax, financial institutions capital tax, source deductions, CPP and EI Overpayments Corporations Other 3% Taxable benefits Alberta: Corporate income tax British Columbia: Financial institutions capital tax Monthly Federal rates apply to: • general capital taxes collected by the CRA on behalf of Nova Scotia; and • Ontario corporate income and capital tax payments made to the CRA . 2010 Compounding schedule Manitoba: Capital tax and Health and Post-Secondary Education Tax New Brunswick: Financial institutions capital tax Newfoundland and Labrador: Financial institutions capital tax and Health and Post-Secondary Education Tax Underpayments Overpayments Underpayments Overpayments Underpayments Some overpayments Underpayments Overpayments 5.25% 0.25% 6.25% 6.5% Q3 Jul. - Sep. Q4 Oct. - Dec. 7% 13.5% (1.06% per month) New Brunswick does not pay interest on overpayments Underpayments 15.39% (1.2% per month) 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: Financial institutions Monthly capital tax Overpayments Underpayments Quebec: Corporate and personal income tax, Daily Overpayments capital tax and Health Services Fund contributions Taxable benefits Underpayments Not Saskatchewan: Financial institutions capital tax compounded Overpayments 2011 Q3 Q4 Q1 Q2 Jul. - Sep. Oct. - Dec. Jan. - Mar. Apr. - Jun. 5% 1% 3% 1% 4.5% 0.5% 5.5% 6% 0.5% 1% 8.73% (0.7% per month) 5% 3% 1% 5% 6% 0% 2% 3% 19.56% (1.5% per month) 5% 6% 1.15% 5.25% 2.25% 1.25% 1% 5.5% 2.5% 6% 3% Quebec charges an additional 10% per year on underpaid instalments if less than 75% of the required amount is paid. Go to Contents 41 Individuals and corporations Recent tax cases Tax cases provide insight into the types of issues the Canada Revenue Agency (CRA) pursues, trends in judicial attitudes, and tax principles advanced by the courts. General anti-avoidance rule (GAAR): In The Queen v. Collins & Aikman Products Co., the Federal Court of Appeal (FCA) upheld the Tax Court of Canada (TCC) decision that GAAR did not apply to a cross-border reorganization that resulted in a tax-free return of capital to the taxpayer’s foreign parent. The Minister has not sought leave to appeal to the Supreme Court of Canada (SCC). In Lehigh Cement Limited v. The Queen, the FCA held that GAAR did not apply to a series of transactions that were undertaken to enable the taxpayer to avoid Part XIII withholding tax on interest payments made on a loan from a related Belgian company by having an arm’s length Belgian bank purchase the right to receive all interest payments on the loan. The SCC dismissed the Minister’s application for leave to appeal. Proposed legislation negates the effect of the FCA’s decision. See our Tax Memo “Finance Proposes Legislative Measures to Counter FCA Decisions” at www.pwc.com/ca/taxmemo. Sham doctrine: In Paul Antle et al. v. The Queen, the FCA found that the Barbados spousal trust settled by the taxpayer was not properly constituted and never came into existence. The SCC dismissed the taxpayers’ application for leave to appeal. See our Tax Memo “The FCA Decision in Antle” at www.pwc.com/ca/taxmemo. Trust residency: In St. Michael Trust Corp. (also known as Garron Family Trust et al.) v. The Queen, the FCA upheld the TCC decision that rejected a rule of residency of a trust based solely on the residency of the trustees, instead favouring a “central management and control test.” The taxpayers have requested leave to appeal to the SCC. Deduction for capital losses: In The Toronto-Dominion Bank v. The Queen, the TCC held that the taxpayer had subscribed for shares at an inflated price and this created an artificial and undue capital loss on the disposition of the shares. Therefore the capital loss was disallowed. The taxpayer has appealed to the FCA. Deduction for non-capital losses: In S.T.B. Holdings Ltd. v. The Queen, the TCC found that the taxpayer could deduct non-capital losses of a subsidiary it wound up shortly after its acquisition and write-down inventory acquired on the wind-up, because the taxpayer carried on the same business as the wound-up subsidiary. The TCC also held that the taxpayer was holding property of the wound-up company for profit or with a reasonable expectation of profit, making losses realized on the sale of the property on income account. 42 Transfer pricing: In GlaxoSmithKline Inc. v. The Queen, the issue was whether the intercompany price of the drug should be based on comparable uncontrolled prices (CUPs) of generic versions of the drug. The FCA found that the business realities, such as the use of the brand name, should be taken into account, bringing into question the comparability of those generic CUPs. The SCC granted leave to appeal to the SCC. See our Tax Memo “Taxpayer Wins Appeal in Transfer Pricing Case (GlaxoSmithKline) – “Business Reality” Prevails” at www.pwc.com/ca/taxmemo. Late-filed T1135: In Leonard Asper Holdings Inc. v. The Attorney General of Canada, the Federal Court dismissed applications for judicial review of the Tax Services Office’s decision to deny the taxpayer’s request for relief from penalties and arrears reassessed due to late filing of T1135 forms, notwithstanding that the related foreign income was fully reported for tax purposes. The taxpayer has appealed to the FCA. See our Tax Memo “Late-Filed T1135: Court Denies Waiver of Penalties and Interest in Asper Holdings” at www.pwc.com/ca/taxmemo. Late-filing penalty: In Exida.com Limited Liability Company v. The Queen, the FCA held that a non-resident corporation was required to pay late-filing penalties although it had no taxes payable. Guarantee fees: In The Queen v. General Electric Capital Canada Inc., the FCA decided that the taxpayer could deduct guarantee fees paid to its U.S.-based parent because they were equal to or below an arm’s length price. The Minister has not sought leave to appeal to the SCC. See our Tax Memo “Guarantee Fees: Federal Court of Appeal Confirms GE Capital Canada Inc. Decision” at www.pwc.com/ca/taxmemo. Stock option payments: In Imperial Tobacco Canada Limited v. The Queen, the TCC held that payments made by Imperial Tobacco to its employees to eliminate an employee stock option plan in the context of a going-private transaction were capital in nature and not deductible. The taxpayer has appealed to the FCA. See our Tax Memo “Deduction Denied for Amounts Paid to Employees for Stock Options in course of Going-Private Transaction (Imperial Tobacco case)” at www.pwc.com/ca/taxmemo. Foreign tax credits: In 4145356 Canada Limited v. The Queen, the TCC held that foreign taxes paid by a partnership, of which the taxpayer was a member, were “paid by the taxpayer” and therefore the taxpayer was entitled to a foreign tax credit. The TCC did not consider the proposed “foreign tax credit generator” rules, which were announced after the transactions at issue. The Minister has appealed to the FCA. Go to Contents International U.S. top individual income tax rates – federal and state combined (2011) 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 three federal brackets, which are set out below. In Arizona, 32.54% applies to single filers, 32.24% to married joint filers. Top three federal taxable income ranges ($US) Newly passed U.S. legislation extends 2010 federal marginal rates to 2011 and 2012. Single Married filing jointly Federal marginal rate Third $83,600 to $174,400 $139,350 to $212,300 28% Second $174,400 to $379,150 $212,300 to $379,150 33% Combined federal and state rates (%) Top Above $379,150 35% 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; and • marginal rates that apply under the status “married filing separately” or “head of household.” In Hawaii, 37% and 44% apply to single filers, 36.25% and 43% to married joint filers. In Massachusetts, the rates are 6.7% higher on short-term capital gains. In Michigan, the rates are 0.1% lower after September 30, 2011. In New Hampshire, the rates are 5% higher on interest and dividends. In North Carolina, the rates are up to 0.23% higher under proposed legislation. In Ohio, 33.45% applies to single filers, 33.93% to married joint filers. In Oregon, 38.8% and 44% apply to single filers, 37% and 43.8% to married joint filers. In Tennessee, the rates are 6% higher on interest and dividends. Go to Contents 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 Third 28 33 28 32.54 or 32.24 35 37.3 32.63 33 34.95 28 34 37 or 36.25 35.8 33 31.4 36.98 34.45 34 34 36.5 33 33.3 32.35 35.85 33 34 34.9 34.84 28 28 34.37 32.9 34.85 35.75 31.81 33.45 or 33.93 33.5 38.8 or 37 31.07 33.99 35 28 28 28 33 35.8 33.75 28 36.5 34.5 34.75 28 Second 33 38 33 37.54 40 42.3 37.63 38 39.95 33 39 44 or 43 40.8 38 36.4 41.98 39.45 39 39 41.5 38.25 38.3 37.35 40.85 38 39 39.9 39.84 33 33 39.37 37.9 40.85 40.75 37.42 38.93 38.5 44 or 43.8 36.07 38.99 40 33 33 33 38 41.8 38.75 33 41.5 39.5 40.75 33 Top 35 40 35 39.54 42 44.3 39.63 41.5 41.95 35 41 46 42.8 40 38.4 43.98 41.45 41 41 43.5 40.5 40.3 39.35 42.85 40 41 41.9 41.84 35 35 43.97 39.9 43.97 42.75 39.86 40.93 40.5 46 38.07 40.99 42 35 35 35 40 43.95 40.75 35 43.5 41.5 42.75 35 In California, the rate is 45.3% on incomes over US$1 million. 43 International U.S. estate, gift and generation-skipping transfer tax rates A U.S. estate tax, gift tax or generation-skipping transfer tax liability may arise for U.S. 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 U.S. citizens Transfers: (residing in • on death; or Canada or • of property during lifetime. elsewhere) Fair market value (FMV) of taxpayer’s worldwide assets at death. Canadian residents (who are not U.S. citizens) Individual: • dies owning U.S.-situs assets (e.g., shares of U.S. corporations, U.S. real estate, U.S. business assets); or • transfers real or tangible U.S.-situs assets during lifetime. Gift tax imposed on FMV of gifts of all property regardless of where the property is located. Taxpayer’s U.S.-situs assets at death. (If FMV of worldwide assets FMV of gifts of U.S. real property < US$1.2 million, estate tax is and U.S.-situs tangible personal imposed only on U.S. real estate property. and U.S. business assets.) Generation-skipping transfer tax may apply in addition to estate or gift tax. A transfer is generation-skipping and subject to the U.S. 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). Newly passed U.S. legislation reinstates estate and generation-skipping taxes for 2010 to 2012. However, for 2010: • the estate tax is optional at the election of the estate; and • the generation-skipping tax rate is zero. Unless legislation is passed before 2013, the 2001 estate tax rate regime will be re-established in 2013. 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. For 2010, the estate tax exemption applies if the election to opt out of estate tax is not made. Canadian residents (who are not U.S. citizens) can reduce their estate tax liability by claiming a unified credit equal to the greater of: • US$13,000; and • the amount of the unified credit (i.e., US$1,730,800 in 2011) given to a U.S. citizen, pro-rated by the value of the individual’s U.S. assets divided by his or her worldwide assets. The unified credit is equal to the amount of tax that applies at the exemption level. 2010 The gift tax unified credit is a lifetime exclusion. In 2011, an annual exclusion of US$13,000 (US$136,000 to a non-U.S. citizen spouse) per donee also applies. 44 Go to Contents 2011 to 2012 $0 18% $10,000 20% $20,000 22% $40,000 24% $60,000 26% $80,000 28% $100,000 30% $150,000 32% Threshold $250,000 34% $500,000 $750,000 $1,000,000 $1,250,000 35% $1,500,000 $2,000,000 $2,500,000 $3,000,000 Estate tax Exemption Generation-skipping $5,000,000 $5,000,000 (US$) transfer tax (0% rate) Gift tax $1,000,000 Estate tax Unified credit Generation-skipping Nil $1,730,800 ($US) transfer tax Gift tax $330,800 2013 37% 39% 41% 43% 45% 49% 53% 55% $1,000,000 $345,800 For 2011 and 2012, the total of the estate tax and gift tax exemption cannot exceed US$5 million. Generationskipping transfer tax has a separate US$5 million exemption. These amounts will be indexed for 2012. International U.S. corporate income tax rates – federal and state (2011) Rates apply to income from the thresholds shown to the next threshold (or to all higher income if there is no higher threshold). The threshold refers to taxable income for federal purposes, and to taxable or net income, depending on the state. State rates and brackets ($US) In Connecticut, if annual gross revenues are at least $100 million, a 10% surcharge applies. Federal rates and brackets ($US) Threshold $100,000 $335,000 $10,000,000 $15,000,000 $18,333,333 General Personal service Personal holding Accumulated earnings $0 Personal service Other $150,000 $250,000 Rate (%) 39 34 35 38 35 35 15 15 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. Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois 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; and • the deductibility of federal taxes for state tax purposes in Alabama, Iowa, Louisiana and Missouri. Indiana Threshold Personal property General Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Business Income Tax Minnesota Mississippi Missouri Montana Nebraska $0 $90,000 $0 $100,000 $0 $0 $0 $0 $5,000 $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 Rate (%) 6.5 9.4 6.968 6.5 8.84 4.63 7.5 8.7 5.5 6 6.4 7.6 2.5 7 8.5 10 12 7 6 7 8 8.33 8.93 8.25 8.25 4.95 9.8 5 6.25 6.75 7.81 Taxpayers subject to the Michigan Business Tax (MBT) pay a surcharge equal to 21.99% of MBT (maximum surcharge is $6 million). MBT includes the Business Income Tax. Go to Contents In North Carolina, a 3% surcharge will apply under proposed legislation, increasing the rate to 7.107%. Threshold 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 Rate (%) No income tax Manufacturers Small business (Net income < $390,000) Other $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 6.4 No income tax $0 6 $0 6.6 $250,000 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 8.5 $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). 45 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 Bolivia Brazil Bulgaria Cameroon 1 Chile China P.R. (not Hong Kong) Colombia, Rep. of Costa Rica Croatia Cuba Cyprus Czech Rep. Denmark Dominican Rep. Ecuador Egypt Estonia Finland France Gabon Germany Greece Guyana Hong Kong N Dividends 15 10 or 15 5 or 15 5 or 15 5 or 15 10 or 15 15 15 5 or 15 N N N 10 or 15 25 N N N Royalties4 15 0 or 15 12.5 3, 5, 10 or 15 10 10 10 10 10 0 or 10 10 5 or 10 15 10 15 0 or 10 10 0 or 10 25% imposed by Canada 15 or 25 15 15 or 25 1 1 10 or 15 10 0 or 10 15 15 15 10 or 15 15 15 N N Related-party interest3 10 10 1 [5 or 15] 25 [10] 25 [10] 25% imposed by Canada 5 or 15 10 10 25% imposed by Canada 15 15 0 or 10 5 or 15 10 10 5 or 15 10 0 or 10 18 18 0 or 18 1 5 or 15 15 10 or 15 15 15 15 1 5 or 15 10 10 5 or 15 10 0 or 10 5 or 15 10 0 or 10 15 10 10 5 or 15 10 0 or 10 5 or 15 10 0 or 10 15 15 10 25% imposed by Canada Dividends Hungary Iceland India Indonesia Ireland Israel 5 or 15 5 or 15 15 or 25 10 or 15 5 or 15 15 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 N N N N Related-party interest3 1. 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. 2. For the United States, the nil rate applies between related persons, subject to the Limitation of Benefits article. 3. Canadian withholding tax does not apply to interest (except for “participating debt interest”) paid to arm’s length non-residents. 46 Royalties4 0 or 10 0 or 10 10, 15 or 20 10 0 or 10 0 or 15 0 or 10 15 [5 or 15] 15 [10] [0, 5 or 10] 15 15 10 15 15 10 5 or 15 10 10 10 or 15 10 10 1 5 or 15 10 10 1 15 or 25 15 15 5 or 15 10 10 5 or 15 10 10 1 1 15 15 0 or 10 1 5 or 15 10 10 25 [5 or 15] 25 [10] 25 [5 or 10] 1 5 or 15 10 10 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 15 15 12.5 or 15 12.5 12.5 5 or 15 10 0 or 10 1 5 or 15 10 0 or 10 Negotiation or renegotiation of tax treaty or protocol underway. 10 10 15 10 10 15 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. Pakistan Papua New Guinea 1 Peru Philippines Poland Portugal Romania Russia Senegal Serbia and Montenegro Singapore Slovak Republic Slovenia South Africa Spain Sri Lanka Sweden Switzerland Tanzania Thailand Trinidad and Tobago Tunisia 5 Turkey Ukraine United Arab Emirates United Kingdom United States Uzbekistan Venezuela Vietnam Zambia Zimbabwe Dividends N 15 15 10 or 15 15 15 10 or 15 5 or 15 10 or 15 15 N N N Related-party interest3 15 10 15 15 15 10 10 10 15 Royalties4 0 or 15 10 15 10 0 or 10 10 5 or 10 0 or 10 15 25% imposed by Canada 15 5 or 15 5 or 15 5 or 15 15 15 5 or 15 5 or 15 20 or 25 15 5 or 15 15 15 or 20 5 or 15 5 or 15 5 or 15 5 or 15 5 or 15 1 10 or 15 5, 10 or 15 15 10 or 15 15 10 10 10 15 15 10 10 15 15 10 15 15 10 10 10 2 0 10 10 10 15 15 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); and/or • 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). 5. For Turkey, the rates apply after 2011. Before 2012, the rates are 25%. Go to Contents Key 2011 income tax rates – individuals and corporations For December 31 year end (12-month taxation year). Applies to taxable income above $128,800 ($150,000 for Nova Scotia). Corporations (page 19) Individuals (page 4) Top combined marginal rates Combined rates Canadian dividends Ordinary income and interest Capital gains Federal Alberta British Columbia Manitoba New Brunswick 29.00% 39.00% 43.70% 46.40% 43.30% Newfoundland and Labrador Eligible 17.72% 17.72% 23.91% 26.74% 20.96% 19.58% 27.71% 33.71% 39.15% 30.83% 42.30% 21.15% 20.96% 29.96% Northwest Territories Nova Scotia Nunavut 43.05% 50.00% 40.50% 21.53% 25.00% 20.25% 21.31% 34.85% 25.72% 29.65% 36.21% 28.96% Ontario 46.41% 23.20% 28.19% 32.57% Prince Edward Island Quebec 47.37% 48.22% 23.69% 24.11% 27.33% 31.85% 41.17% 36.35% Saskatchewan 44.00% 22.00% 23.36% 32.08% Yukon 42.40% 21.20% 14.28% to 17.72% 30.41% General and M&P Non-eligible 14.50% 19.50% 21.85% 23.20% 21.65% Tax facts and figures is on our website: www.pwc.com/ca/taxfacts Cette brochure est également disponible en français: www.pwc.com/ca/rensfiscaux Canadian-Controlled Private Corporations (CCPCs) General M&P General M&P General M&P General M&P Active business income 16.5% 26.5% 26.5% 28.5% 27% 30.5% 21.5% 28% 32.5% 28.5% 28.25% 26.5% 32.5% 28.4% 28.5% 26.5% 31.5% 19% 11% 14% 13.5% to $400,000 $400,000 to $500,000 11% 23% 16% 15% 15% 15.5% 27% 15% 15.5% 12% 19% 14.24% 15% 13.5% Investment income 34.67% 44.67% 44.67% 46.67% 45.16% 48.67% n/a 46.17% 50.67% 46.67% 46.41% 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). The firms of the PwC network provide industry-focused assurance, tax and advisory services to enhance value for clients. More than 161,000 people in 154 countries in PwC firms across the PwC network share their thinking, experience and solutions to develop fresh perspectives and practical advice. In Canada, PricewaterhouseCoopers LLP (www.pwc.com/ca) and its related entities have more than 5,700 partners and staff in offices across the country. www.pwc.com/ca/taxfacts Tax facts and figures Canada 2011 Canadian individual and corporate tax changes, tax rates, tax deadlines and a wide range of other valuable tax information. 2011 © 2011 PricewaterhouseCoopers LLP. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. This publication is intended to inform readers of developments as of the date of publication, and is neither a definitive analysis of the law nor a substitute for professional advice. Readers should discuss with professional advisers how the information may apply to their specific situations. This publication may be displayed or printed only if for personal non-commercial use and unchanged (with all copyright and other proprietary notices retained). Unauthorized reproduction is expressly prohibited. ...
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