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Capital Tax Rates—Financial Institutions

1

Federal

Part VI Tax

2

Sask.

3

   Man.

4

Ont.

5

Type of Entity

Bank

ü

ü

ü

Loan and trust

ü

ü

ü

Life insurance

ü

Investment dealer

ü

Tax rates

10

2012

1.25%

0.7/3.25%

 3.0/4.0%

1.25%

2013

1.25

0.7/3.25

   4.0/5.0

1.25%

2014

1.25

0.7/3.25

      5.0

1.25%

Capital deduction

or exemption

      $1billion

$10 + $10

million

$10

  million

$10 million 

+ certain 

adjustments

Allocation of capital 

deduction or 

exemption among 

related companies

ü

ü

ü

Notes

(1) Credit unions are no longer subject to provincial capital tax. 

(2) Financial institutions for Part VI tax purposes also include certain holding companies. The 

amount of Part VI capital tax payable is reduced by the corporation’s income tax payable 

under Part I.

(3) Effective for taxation years ending on or after November 1, 2009, all financial institutions that 

previously qualified for the lower corporate capital tax rate of 0.7% (for its taxation year ending 

on or after November 1, 2008 and before November 1, 2009) will not be subject to the high 

capital tax rate of 3.25% on the first $1.5 billion of their taxable capital. As a result, a tax rate 

of 0.7% will apply on the first $1.5 billion of taxable capital, and a rate of 3.25% will apply on 

taxable capital in excess of $1.5 billion. However, if the taxable capital of the financial institution 

exceeded $1.5 billion for its taxation year ending on or after November 1, 2008 and before 

November 1, 2009, the entire amount of taxable capital is subject to the 3.25% rate.

Saskatchewan’s $10 million capital exemption is available to all corporations. An additional 

exemption of up to $10 million is available to companies that pay all or a portion of their 

salaries and wages to employees of a permanent establishment in the province.  

(4) Effective for fiscal years ending after April 12, 2011, bank, trust and loan companies with 

taxable paid up capital of less than $4 billion are exempted from capital tax. Effective for 

taxation years ending after April 17, 2012, the capital tax rate is 4%.  The 2013 Manitoba 

budget increased the capital tax rate to 5% (from 4%) for taxation years ending after April 

16, 2013.

(5) Ontario eliminated its capital tax on most financial institutions on July 1, 2010. Life 

insurance corporations that carry on business in Ontario must pay a capital tax equal to 

1.25% of their taxable capital allocable to Ontario.  The capital allowance of $10 million is 

adjusted depending on the company’s taxable capital. The capital tax may be reduced by 

the company’s Ontario income or corporate minimum tax payable for the year.

Current as of September 30, 2013

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