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Notes

(1) For Accounting Standards for Private Enterprise (ASPE) and IFRS purposes, a corporation’s

recorded income tax liabilities and assets in their financial statements should be measured

using tax rates that are considered to be “substantively enacted” at the balance sheet

date. In general, where there is a majority government, federal and provincial tax changes

are considered to be “substantively enacted” for ASPE and IFRS purposes when a

tax bill containing the detailed legislation is tabled for first reading in the House of

Commons or the provincial legislature. In the case of a minority government, however,

the “substantively enacted” test is more stringent and requires the enabling legislation to

have passed third reading in the House of Commons or the provincial legislature.

For U.S. GAAP purposes, a corporation’s recorded income tax liabilities and assets in

their financial statements should be measured using tax rates that are considered to be

enacted at the balance sheet date. In general, tax rate changes are considered enacted

once the relevant bill has received Royal Assent.

When tax rate changes are considered enacted or ”substantively enacted”, the effect

of the change in tax rate is reflected in the period in which the changes are enacted or

“substantively enacted”. The effect of the change is recorded in income as a component

of deferred tax expense in the period that includes the date of enactment or substantive

enactment. For example, if a bill becomes “substantively enacted” for ASPE or IFRS

purposes (enacted for U.S. GAAP purposes) on December 31, the tax rate changes

should be reflected in the corporation’s financial statements for the quarter that includes

December 31.

(2) The federal and provincial tax rates shown in the tables apply to income earned by a

Canadian-controlled private corporation (CCPC). In general, a corporation is a CCPC if the

corporation is a private corporation and a Canadian corporation, provided it is not controlled

by one or more non-resident persons, by a public corporation, by a corporation with a

class of shares listed on a designated stock exchange, or by any combination of these,

and provided it does not have a class of shares listed on a designated stock exchange.

The tax rates included in this table reflect federal and provincial income tax rate changes that

were substantively enacted as at December 31, 2014.

(3) The general corporate tax rate applies to active business income earned in excess of the

small business income threshold.

(4) A general tax rate reduction is available on qualifying income. Income that is eligible for

other reductions or credits, such as small business income, M&P income and investment

income subject to the refundable provisions, is not eligible for this rate reduction. The

general rate reduction does not apply to the portion of taxable income of a corporation

earned from a “personal services business”.

Substantively Enacted Income Tax Rates for Income Earned

by a CCPC

for 2013 and 2014—As at December 31, 2014

Current as of December 31, 2014