Other corporate income tax issues

This collection agreement also resulted in some other changes to the current Ontario tax 

system. These changes include the following:

• Management fees—the add-back of certain management fees, rents, royalties and similar

payments to non-residents of Canada was eliminated

• Ontario tax credit for R&D expenses—the Ontario deduction for the federal investment tax

credit (ITC) that relates to Ontario R&D was replaced with a 4.5% non-refundable Ontario 

tax credit on R&D expenses incurred in Ontario.

Harmonization of other Ontario corporate taxes

Ontario capital tax—Under the federal/Ontario tax collection agreement, Ontario’s capital tax 

base was harmonized with the federal Large Corporations Tax (LCT) base for taxation years 

ending after 2008. Ontario’s capital tax for corporations other than financial institutions was 

eliminated on July 1, 2010. 

Ontario’s capital tax for financial institutions, which was generally harmonized with the LCT 

rules before the federal/Ontario tax collection agreement came into effect, was eliminated 

on July 1, 2010 for financial institutions other than life insurance corporations (see the table 

"Capital Tax Rates—Financial Institutions").

Ontario CMT—The CRA also administers Ontario’s CMT regime under the tax collection 

agreement for taxation years ending after 2008 (see the table "Ontario Corporate Minimum Tax 

(CMT)—At a Glance").

Ontario Harmonization  /  97

Current as of September 30, 2013

© 2013 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms

affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.