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

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