Page 89

Capital Tax Rates—Financial Institutions / 81

Que.

N.B.

N.S.

P.E.I.

Nfld.

Type of Entity

Bank

Loan and trust

Life insurance

Investment dealer

Tax rates

2013

1.25%

4.0%

5.0%

4.0%

2014

1.25

4.0

5.0

4.0

2015

1.25

4.0

5.0

4.0

Capital deduction

or exemption

$10 million

+ certain

adjustments

$10

million

$0.5/30

million

$0/5

million

Allocation of capital

deduction or

exemption among

related companies

(6) Quebec eliminated its capital tax on January 1, 2011. However, life insurance corporations

that carry on business in Quebec must pay a capital tax equal to 1.25% of their taxable

capital allocable to Quebec. 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 Quebec

income tax payable for the year.

Certain financial institutions in Quebec must also pay an additional compensation tax

(see the table "Quebec Compensation Tax for Financial Institutions").

(7) 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.

(8) 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.

(9) The rates must be prorated for taxation years that straddle the effective date of the rate

changes.