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Notes

(1) These thresholds apply for taxation years ending after June 30, 2010. For earlier taxation

years the threshold amounts were $10 million and $5 million respectively, and only one

of these thresholds had to be met. Religious organizations and investment, mutual fund,

mortgage investment and deposit insurance corporations are exempt from CMT.

(2) By basing CMT on financial statement income, certain Ontario tax preference items are

ignored such as capital cost allowance claims in excess of book depreciation, the untaxed

portion of capital gains, non-taxable life insurance proceeds included in book income, and

items deducted for tax purposes, but ignored for accounting purposes, such as capital

gains reserves.

By the same token, other expenses deducted for financial statement purposes are not

required to be added back to income, such as warranty provisions, pension expenses,

financing or share issue costs, and real estate soft costs required to be capitalized for

income tax purposes.

(3) CMT is calculated based on financial statement income, therefore certain adjustments

must be made in order to ensure that profits are taxable only in the corporation that earned

them and are not double-counted. Adjustments include those shown in the table.

(4) The 2.7% tax is effective for taxation years ending after June 30, 2010 and applies after

deducting any CMT losses carried forward from previous years (see note (5)). This rate was

4% for taxation years ending before July 1, 2010.

(5) CMT losses (based on the corporation’s book losses and adjusted in the same way

as income) can be carried forward and applied to reduce CMT income in any of the

subsequent 20 years. CMT losses cannot be carried back to offset a prior year’s CMT

income.

(6) Net CMT paid may be carried forward and applied against a corporation’s regular Ontario

income tax liability in the subsequent 20 years to the extent that regular income tax (net

of all credits) exceeds gross CMT in those years. The carryforward period is also 20 years

for CMT credits outstanding at the beginning of a corporation’s first taxation year ending

after 2008. There is no ability to carry back CMT paid to reduce a prior year’s regular Ontario

income tax liability.

If CMT applies in a year, it will form part of the corporation’s instalment base for the

following year.

Ontario Corporate Minimum Tax (CMT)—At a Glance / 95

Current as of September 30, 2013