Capital Tax Rates—Financial Institutions / 79
Qué.
6
N.B.
7
N.S.
8
P.E.I.
Nfld.
9
Type of Entity
Bank
ü
ü
ü
ü
Loan and trust
ü
ü
ü
Life insurance
ü
Investment dealer
Tax rates
10
2012
1.25%
3.0/4.0%
4.0%
5.0%
4.0%
2013
1.25%
4.0
4.0
5.0
4.0
2014
1.25%
4.0
4.0
5.0
4.0
Capital deduction
or exemption
$10 million
+ certain
adjustments
$10
million
$0.5/30
million
$2
million
$0/5
million
Allocation of capital
deduction or
exemption among
related companies
ü
ü
(6) Québec eliminated its capital tax on January 1, 2011. However, life insurance corporations
that carry on business in Québec must pay a capital tax equal to 1.25% of their taxable
capital allocable to Québec. 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 Québec
income tax payable for the year.
Certain financial institutions in Québec must also pay an additional compensation tax (see
the table "Québec Compensation Tax for Listed Financial Institutions").
(7) New Brunswick increased its capital tax rate to 4% (from 3%) effective April 1, 2012. The
New Brunswick government has announced that it will take steps to eliminate the $10
million exemption effective April 1, 2012.
(8) A $30 million capital deduction is available to loan and trust companies with head offices
in Nova Scotia. Other banks, loan or trust companies are entitled to a $500,000 capital
deduction. Insurance companies are entitled to a $5 million capital deduction where taxable
capital employed in Canada is less than $10 million. No capital deduction is permitted if
taxable capital exceeds $10 million.
Life insurance companies were previously subject to capital tax in Nova Scotia as a general
corporation, however, the province eliminated its capital tax on general corporations
effective July 1, 2012.
(9) Corporations in Newfoundland and Labrador with aggregate paid-up capital of $10 million or
less may claim a capital deduction of $5 million. If aggregate paid-up capital is greater than
$10 million, no capital deduction is permitted.
(10) The rates must be prorated for taxation years that straddle the effective date of the rate
changes.
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.