Taxation Act, 2007

Part i interpretation and application Interpretation

1 (1) In this Act, “agreeing province” means a province that has entered into an agreement with the Government of Canada under which the Government of Canada will collect taxes payable under the income tax statute of that province and will make payments to that province in respect of the taxes so collected; (“province participante”) “assessment” includes a reassessment and an additional assessment; (“cotisation”) “basic rate of tax” means, with respect to a corporation for a taxation year, the corporation’s basic rate of tax for the year as determined under subsection 29 (2); (“taux d’imposition de base”) “Canadian-controlled private corporation” means a corporation that would be a Canadian-controlled private corporation for the purposes of the Federal Act if the definition of that expression in subsection 125 (7) of that Act were read without reference to clause (d) of the definition; (…

2 This Act applies only in respect of taxation years ending after December 31, 2008. 2007, c. 11, Sched. A, s. 2.

Part II Individuals — Income and other Personal Taxes

Division A — Interpretation and Liability for Tax

3 (1) In this Part, “basic personal income tax” means, in respect of an individual for a taxation year, the amount of tax determined in respect of the individual for the year under section 6, 7 or 7.1; (“impôt de base sur le revenu”) “former Act” means the Income Tax Act; (“ancienne loi”) “highest tax rate” means, (a) 12.16 per cent in respect of taxation years ending after December 31, 2011 and before January 1, 2013, and (b) 13.16 per cent in respect of taxation years ending after December 31, 2012; (“taux d’imposition le plus élevé”) “income earned in Ontario” means, in respect of an individual for a taxation year, the amount of the individual’s income for the year that would be determined to be earned in the year in Ontario if the rules for determining the amount of the individual’s income earned in the year in a province under subsection 120 (4) of the Federal Act applied; (“revenu …

4 (1) The following individuals shall pay taxes in accordance with this Part for a taxation year ending after December 31, 2008: 1. Every individual who is resident in Ontario on the last day of the year and who has no income earned outside Ontario for the year. 2. Every individual who is resident in Ontario on the last day of the year and who has income earned outside Ontario for the year. 3. Every individual who is not resident in Ontario on the last day of the year but who has income earned in Ontario for the year. 2007, c. 11, Sched. A, s. 4 (1). Tax exemption (2) Despite any other provision of this Part, an individual who is exempt from tax under Part I of the Federal Act for a period of time by reason of section 149 of that Act is exempt, to the same extent and for the same period of time, from taxes imposed by this Part, other than taxes under subsection 5 (2). 2007, c. 11, Sched.…

Division B — Personal Income Tax

Subdivision a — Tax Calculation

5 (1) The amount of an individual’s personal income tax payable under this Division for a taxation year is the amount determined as follows: 1. Determine the amount, if any, by which the individual’s basic personal income tax for the year, as determined under this subdivision, exceeds the sum of all non-refundable tax credits under subdivision b that are deducted by the individual for the year. 2. Determine the amount of the individual’s additional tax, if any, payable for the year under subdivision c. 3. Add the amounts determined under paragraphs 1 and 2. 4. Determine the amount, if any, by which the amount determined under paragraph 3 exceeds the sum of all tax credits under subdivision d that are deducted by the individual for the year. 5. Add the following amounts: i. the amount, if any, determined under paragraph 4, ii. the amount, if any, of the individual’s surtax for the year, a…

6 (1) The basic personal income tax for a taxation year of an individual ending after December 31, 2013 is the sum of the following amounts: 1. The amount calculated by multiplying the lowest tax rate for the year by the portion of the individual’s tax base for the year that does not exceed $40,120. 2. The amount calculated by multiplying the second-lowest tax rate for the year by the amount by which the individual’s tax base for the year exceeds $40,120 and does not exceed $80,242. 3. The amount calculated by multiplying the middle tax rate for the year by the amount by which the individual’s tax base for the year exceeds $80,242 and does not exceed $150,000. 4. The amount calculated by multiplying the second-highest tax rate for the year by the amount by which the individual’s tax base for the year exceeds $150,000 and does not exceed $220,000. 5. The amount calculated by multiplying t…

7 (1) Despite section 6, the basic personal income tax for a taxation year ending before January 1, 2016 of an individual that is an inter vivos trust to which subsection 122 (1) of the Federal Act applies is calculated by multiplying the trust’s tax base for the year by the highest tax rate for the year. 2007, c. 11, Sched. A, s. 7 (1); 2015, c. 20, Sched. 40, s. 3 (1). Inter vivos trust with income earned outside Ontario or non-resident (2) Despite section 6 and subsection (1), the basic personal income tax for a taxation year ending before January 1, 2016 of an inter vivos trust that is an individual described in paragraph 2 or 3 of subsection 4 (1) is the amount that would otherwise be determined under subsection (1) to be the trust’s basic personal income tax for the year multiplied by the trust’s Ontario allocation factor for the year. 2007, c. 11, Sched. A, s. 7 (2); 2015, c. 20, …

7.1 (1) Despite section 6, the basic personal income tax for a taxation year ending after December 31, 2015 of an individual that is a trust, other than a graduated rate estate or a qualified disability trust, is the total of, (a) the amount calculated by multiplying the trust’s tax base for the year by the top marginal tax rate for the year; and (b) the amount determined under subsection (3), if the trust is a trust to which subsection 122 (2) of the Federal Act applies. 2015, c. 20, Sched. 40, s. 4. Trust with income earned outside Ontario or non-resident, 2016 and subsequent taxation years (2) Despite section 6 and subsection (1), the basic personal income tax for a taxation year ending after December 31, 2015 of a trust, other than a graduated rate estate or a qualified disability trust, that is an individual described in paragraph 2 or 3 of subsection 4 (1), is the total of, (a) the…

Subdivision b — Non-Refundable Tax credits

8 The following rules apply in determining the amount of any tax credits deductible by an individual under this subdivision: 1. A trust is not entitled to a tax credit under this subdivision for a taxation year other than a tax credit for charitable donations under subsection 9 (21). 2. In calculating the total amount of tax credits that an individual, other than a trust, may deduct under this subdivision, the individual shall deduct the tax credits to which he or she is entitled under section 9 in the same order as the subsections relating to those tax credits are listed in that section. 3. A reference to an individual’s basic personal income tax for a taxation year is deemed to be a reference to the amount that would be the individual’s basic personal income tax for the year if the individual’s Ontario allocation factor were one. 4. A reference in a subsection of section 9 to a tax cre…

9 (1) Subject to the rules in section 8, an individual may deduct, in computing the amount of his or her tax payable under this Division for a taxation year, the tax credits described in this section to which the individual is entitled for the year. 2007, c. 11, Sched. A, s. 9 (1). Personal tax credit (2) If an individual is entitled to a deduction under paragraph 118 (1) (a), (b) or (c) of the Federal Act for a taxation year, the individual is entitled to a personal tax credit for the year calculated by multiplying the lowest tax rate for the year by $8,881. 2007, c. 11, Sched. A, s. 9 (2); 2009, c. 18, Sched. 28, s. 4 (1). Tax credit for spouse or common-law partner (3) If an individual is entitled to a deduction under paragraph 118 (1) (a) of the Federal Act for a taxation year, the individual is entitled to a tax credit for the year for a spouse or common-law partner calculated using…

10 Despite section 9, an individual described in paragraph 2 or 3 of subsection 4 (1) is entitled to deduct, in computing tax payable under this Division for a taxation year, an amount in respect of each tax credit described in subsections 9 (2) to (9) and (12) to (22) not exceeding the amount calculated using the formula, A × B

in which, “A” is the amount of the tax credit determined without reference to this section, and subsections 6 (2), 7 (2) and 7.1 (2), and “B” is the individual’s Ontario allocation factor for the year. 2007, c. 11, Sched. A, s. 10; 2015, c. 20, Sched. 40, s. 7. Section Amendments with date in force (d/m/y) 2015, c. 20, Sched. 40, s. 7 - 01/01/2016

Subdivision c — Additional Taxes

11 (1) This section applies if the tax payable by an individual under Part I of the Federal Act for a taxation year that ends before January 1, 2016 is determined under section 127.5 of that Act. 2016, c. 5, Sched. 28, s. 3 (1). Same (2) Every individual to whom this section applies for a taxation year that ends before January 1, 2016 shall pay an additional tax for the year calculated using the formula, (A – B) × C × D in which, “A” is the amount, if any, by which the individual’s minimum amount for the year as determined under section 127.51 of the Federal Act exceeds the special foreign tax credit of the individual for the year, as determined under subsection 127.54 (2) of the Federal Act, “B” is the amount that, but for section 120 of the Federal Act, would be determined under Division E of Part I of the Federal Act to be the individual’s tax payable under the Federal Act for the yea…

12 (1) This section applies to an individual for a taxation year ending before January 1, 2016 if, (a) the individual is resident in Ontario on the last day of the taxation year; (b) the individual is a specified individual in relation to the taxation year; and (c) the individual is liable to pay an amount of tax under subsection 120.4 (2) of the Federal Act for the taxation year. 2007, c. 11, Sched. A, s. 12 (1); 2016, c. 5, Sched. 28, s. 4 (1). Additional tax (2) Every individual to whom this section applies for a taxation year shall pay an additional tax for the year calculated by multiplying the highest tax rate for the year by the individual’s split income for the year. 2007, c. 11, Sched. A, s. 12 (2). Minimum tax amount (3) Despite any other provision of this Part, if an individual is a specified individual in relation to a taxation year the tax payable under this Division for the…

12.1 (1) This section applies to an individual for a taxation year ending after December 31, 2015 if, (a) the individual is resident in Ontario on the last day of the taxation year; (b) the individual is a specified individual in relation to the taxation year; and (c) the individual is liable to pay an amount of tax under subsection 120.4 (2) of the Federal Act for the taxation year. 2016, c. 5, Sched. 28, s. 5. Additional tax (2) Every individual to whom this section applies for a taxation year shall pay an additional tax for the year calculated by multiplying the top marginal tax rate for the year by the individual’s split income for the year. 2016, c. 5, Sched. 28, s. 5. Minimum tax amount (3) Despite any other provision of this Part, if an individual is a specified individual in relation to a taxation year ending before January 1, 2018, the tax payable under this Division for the yea…

Subdivision d — Additional Tax Credits before Surtax

13 (1) In determining the amount of a tax payable under this Division for a taxation year ending before January 1, 2014, an individual who is resident in Ontario on the last day of the year may deduct a dividend tax credit equal to the sum of, (a) for a taxation year ending before January 1, 2010, 38.4828 per cent of the amount determined in respect of the individual for the year under paragraph 121 (a) of the Federal Act; (a.1) for a taxation year ending after December 31, 2009 and before January 1, 2014, 33.75 per cent of the amount determined in respect of the individual for the year under paragraph 121 (a) of the Federal Act; and (b) for a taxation year ending before January 1, 2014, the specified percentage of the amount determined in respect of the individual for the year under paragraph 121 (b) of the Federal Act. 2007, c. 11, Sched. A, s. 13 (1); 2009, c. 34, Sched. U, s. 2 (1); …

14 In determining the amount of tax payable under this Division for a taxation year, an individual who is resident in Ontario on the last day of the year may deduct a tax credit for overseas employment calculated using the formula, A/B × C

in which, “A” is 11.16 per cent, “B” is the percentage in paragraph 117 (2) (d) of the Federal Act, and “C” is the amount deductible by the individual for the year under section 122.3 of the Federal Act. 2007, c. 11, Sched. A, s. 14; 2009, c. 34, Sched. U, s. 3; 2012, c. 9, s. 4. Section Amendments with date in force (d/m/y) 2009, c. 34, Sched. U, s. 3 - 01/01/2009 2012, c. 9, s. 4 - 01/01/2012

15 (1) In determining the amount of tax payable under this Division for a taxation year, an individual may deduct a tax credit in respect of minimum tax not exceeding the lesser of, (a) the amount of the individual’s basic personal income tax for the year, less all amounts deductible for the year under subdivision b and sections 13, 14, 19.1 and 20.1; and (b) the amount of the individual’s carryforward amount for the year in respect of minimum tax, as determined under subsection (3). 2007, c. 11, Sched. A, s. 15 (1); 2008, c. 7, Sched. S, s. 3; 2014, c. 7, Sched. 29, s. 3; 2016, c. 5, Sched. 28, s. 6 (1); 2023, c. 21, Sched. 13, s. 1 (1). Restriction (2) No amount may be deducted by an individual for a taxation year under this section if the individual is required to pay an amount under section 11 or 19.2 for the same year. 2007, c. 11, Sched. A, s. 15 (2); 2016, c. 5, Sched. 28, s. 6 (2…

Subdivision e — Ontario Surtax

16 (1) Subject to subsections (4) and (5), the amount of surtax for a taxation year of an individual is the sum of, (a) 20 per cent of the amount, if any, by which the gross tax amount of the individual for the year exceeds, (i) $4,257 if the year ends before January 1, 2010, or (ii) $4,006 if the year ends after December 31, 2009; and (b) 36 per cent of the amount, if any, by which the gross tax amount of the individual for the year exceeds, (i) $5,370 if the year ends before January 1, 2010, or (ii) $5,127 if the year ends after December 31, 2009. 2009, c. 34, Sched. U, s. 4; 2015, c. 20, Sched. 40, s. 8 (1); 2017, c. 8, Sched. 30, s. 1 (1). Gross tax amount (2) For the purposes of subsection (1) and subject to subsection (3), the gross tax amount for a taxation year of an individual is the amount determined as follows: 1. Determine the amount, if any, by which the individual’s basic p…

Subdivision f — Averaging and Adjustments

17 There shall be added, in computing the tax payable for a taxation year under this Division by an individual who resides in Ontario on the last day of the taxation year, an amount equal to 38.5 per cent of the amount added under section 120.31 of the Federal Act in computing the individual’s tax payable for the year under the Federal Act. 2007, c. 11, Sched. A, s. 17.

18 There shall be added, in computing the tax payable for a taxation year under this Division by an individual who resides in Ontario on the last day of the taxation year, an amount equal to 38.5 per cent of the amount added under section 120.3 of the Federal Act in computing the individual’s tax payable under the Federal Act for the year. 2007, c. 11, Sched. A, s. 18.

19 There shall be added, in computing the tax payable under this Division for a taxation year by an individual who resides in Ontario on the last day of the taxation year, an amount equal to 38.5 per cent of the amount of the individual’s tax payable for the year under section 40 of the Income Tax Application Rules (Canada). 2007, c. 11, Sched. A, s. 19.

Subdivision g — Ontario Dividend Tax Credit, 2016 and subsequent taxation years

19.1 In determining the amount of tax payable under this Division for a taxation year ending after December 31, 2015, an individual who is resident in Ontario on the last day of the year may deduct an Ontario dividend tax credit under this section equal to the sum of, (a) 29.5 per cent of any amount required under subparagraph 82 (1) (b) (i) of the Federal Act to be included in computing the individual’s income for the year, if the year ends before January 1, 2018; (a.1) 23.8257 per cent of any amount required under subparagraph 82 (1) (b) (i) of the Federal Act to be included in computing the individual’s income for the year, if the year ends after December 31, 2017 and before January 1, 2019; (a.2) 25.195 per cent of any amount required under subparagraph 82 (1) (b) (i) of the Federal Act to be included in computing the individual’s income for the year, if the year ends after December …

Subdivision h — Minimum Tax, 2016 and subsequent taxation years

19.2 (1) This section applies if the tax payable by an individual under Part I of the Federal Act for a taxation year ending after December 31, 2015 is determined under section 127.5 of that Act. 2016, c. 5, Sched. 28, s. 8. Same (2) Every individual to whom this section applies for a taxation year ending after December 31, 2015 shall pay an additional tax for the year equal to the sum of the individual’s basic additional tax for the year and the individual’s surtax on additional tax for the year. 2016, c. 5, Sched. 28, s. 8. Basic additional tax (3) An individual’s basic additional tax for a taxation year ending before January 1, 2024 is equal to the amount calculated using the formula, (A – B) × C × D in which, “A” is the amount, if any, by which the individual’s minimum amount for the year as determined under section 127.51 of the Federal Act exceeds the special foreign tax credit of …

Subdivision i — Additional Tax Credits after Surtax

20 (1) Except as otherwise provided in subsection (9), an individual may deduct in computing his or her tax payable under this Division for a taxation year a tax credit equal to the amount, if any, by which twice the individual’s personal amount for the year exceeds the amount of tax otherwise payable by the individual for the year. 2007, c. 11, Sched. A, s. 20 (1). Who includes amount in respect of qualified dependant, etc. (2) If an individual resides with a cohabiting spouse or common-law partner on December 31 in the taxation year and if the individual’s income for the year exceeds the income of the cohabiting spouse or common-law partner for the year, the individual may include an eligible amount in his or her personal amount for the taxation year with respect to a person who is, (a) a qualified dependant at any time in the taxation year in respect of whom the individual or the coha…

20.1 In determining the amount of tax payable under this Division for a taxation year ending after December 31, 2013 and before January 1, 2016, an individual who is resident in Ontario on the last day of the year may deduct an Ontario dividend tax credit under this section equal to the sum of, (a) 22.5 per cent of any amount required under subparagraph 82 (1) (b) (i) of the Federal Act to be included in computing the individual’s income for the year in respect of dividends paid before January 1, 2014; (b) 29.5 per cent of any amount required under subparagraph 82 (1) (b) (i) of the Federal Act to be included in computing the individual’s income for the year in respect of dividends paid after December 31, 2013; and (c) 36.3158 per cent of any amount required under subparagraph 82 (1) (b) (ii) of the Federal Act to be included in computing the individual’s income for the year. 2014, c. 7,…

21 (1) An individual who was resident in Ontario on the last day of a taxation year ending after December 31, 2016, and who had income for the year that included income earned in a country other than Canada (in this section referred to as a “foreign country”) in respect of which an amount of non-business-income tax was paid by the individual to the government of that country for the year, may deduct in computing the individual’s tax payable under this Division for the year an amount equal to the total of all amounts, each of which is the individual’s foreign tax credit for the year in respect of a foreign country. 2017, c. 8, Sched. 30, s. 4 (2). Same (2) For the purposes of subsection (1), an individual’s foreign tax credit for a taxation year in respect of a foreign country is the lesser of “A” and “B” where, “A” is the amount, if any, by which “C” exceeds “D” where, “C” is the amount …

21.1 (1) Subject to subsection (2), an individual is an eligible individual for a taxation year for the purposes of this section if the individual was resident in Canada at the beginning of the year. 2018, c. 17, Sched. 42, s. 6. Same (2) An individual is not an eligible individual for a taxation year if, (a) the individual is not resident in Ontario on the last day of the taxation year; (b) the individual is not resident in Canada, (i) at any time in the calendar year containing the taxation year, or (ii) if the individual dies in the taxation year, at any time in the period that begins on the first day of the calendar year containing the taxation year and ends on the last day of the taxation year; (c) the individual is a trust referred to in subdivision k of Division B of Part I of the Federal Act; (d) the individual’s tax payable under Part I of the Federal Act for the taxation year i…

22 (1) In determining the amount of tax payable for a taxation year under this Division, an individual who is resident in Ontario on the last day of the year and who has been issued one or more tax credit certificates under the Community Small Business Investment Funds Act, 1992 in respect of the year with respect to investments in shares issued by one or more corporations registered under Part III of that Act, may deduct from the amount of his or her tax otherwise payable for the year a tax credit equal to the lesser of “A” and “B” where, “A” is the sum of the tax credits listed on those tax credit certificates issued in respect of the year, and “B” is the maximum tax credit permitted for the year in respect of investments made by the individual in corporations registered under Part III of that Act. 2007, c. 11, Sched. A, s. 22 (1). Interpretation, maximum tax credit (2) The maximum tax…

Subdivision j — Indexing and Rounding

23 (1) Subject to the regulations, each amount expressed in dollars in the following provisions shall be adjusted in accordance with this section for every taxation year ending after December 31, 2009 or for every taxation year otherwise indicated: 1. Paragraphs 1 and 2 of subsection 6 (1) with respect to taxation years ending after December 31, 2014. 1.1 Paragraph 3 of subsection 6 (1), except for the amount of $150,000, with respect to taxation years ending after December 31, 2014. 2. Subsections 9 (2) to (6), (8), (10), (11), (12) and (20). 2.1 Subsection 9 (6.1) with respect to taxation years ending after December 31, 2017. 3. Paragraphs 118.2 (2) (b.1), (l.5) and (l.7) of the Federal Act, as they apply in determining the amount of an individual’s medical expense tax credit deductible under subsection 9 (20). 4. Subclauses 16 (1) (a) (ii) and (b) (ii) with respect to taxation years e…

Division C — Ontario Health Premium Ontario Health Premium

24 (0.1) For the purposes of this section, an individual’s combined income for a taxation year is the amount calculated using the formula, X + Y in which, “X” is the individual’s taxable income for the year, and “Y” is, (a) if the year ends after December 31, 2023 and section 12.1 applies to the individual for the year, the individual’s split income for the year, and (b) in any other case, nil. 2023, c. 21, Sched. 13, s. 2 (1) Liability for Ontario Health Premium (1) An individual who, in respect of a taxation year, is described in paragraph 1 or 2 of subsection 4 (1) shall pay an Ontario Health Premium for that year. 2007, c. 11, Sched. A, s. 24 (1). Calculation of Ontario Health Premium (2) An individual’s Ontario Health Premium for a taxation year is calculated using the formula in the following paragraph that applies to the individual for the year: 1. If the individual’s combined inc…

25 The Public Accounts for each fiscal year shall include information about the use of the revenue from the Ontario Health Premium. 2007, c. 11, Sched. A, s. 25.

PART III Corporate Tax

Division A — General Interpretation

26 (1) In this Part, “adjusted taxable income” means, in respect of a corporation, (a) for a taxation year that ended before January 1, 2009, the corporation’s taxable income or taxable income earned in Canada for the year, as the case may be, determined under the Corporations Tax Act, or (b) for a taxation year ending after December 31, 2008, the amount that would be the corporation’s taxable income or taxable income earned in Canada for the year if, (i) the amount of the corporation’s adjusted Crown royalties for the year, as determined under subsection 36 (2), were added in determining the corporation’s income for the purposes of the Federal Act for the year, and (ii) the amount of the corporation’s notional resource allowance for the year under subsection 36 (3) were deducted in determining the corporation’s income for the purposes of the Federal Act for the year; (“revenu imposable …

27 (1) Every corporation that has a permanent establishment in Ontario at any time in a taxation year shall, at the time and in the manner required by this Act, pay to the Crown in right of Ontario the taxes for the taxation year imposed by this Part. 2007, c. 11, Sched. A, s. 27 (1). Exception (2) Despite subsection (1), if a corporation is exempt from tax by reason of section 149 of the Federal Act, the following rules apply: 1. The corporation is exempt from tax determined under Division B for the same period of time and to the same extent that it is exempt from tax imposed under Part I of the Federal Act by reason of that section. 2. The corporation is exempt from taxes determined under Divisions C, D and E for the same period of time it is totally exempt from tax imposed under Part I of the Federal Act by reason of that section. 2007, c. 11, Sched. A, s. 27 (2).

28 Subsection 128 (1) of the Federal Act applies for the purposes of this Act. 2007, c. 11, Sched. A, s. 28.

Division B — Corporate Income Tax

Subdivision a — General Corporate Income Tax, Tax Credits and Surtax

29 (1) Every corporation that has a permanent establishment in Ontario at any time in a taxation year shall, in determining the amount of its tax payable under this Division for the taxation year, add the amount of its basic income tax for the year, calculated by multiplying its Ontario taxable income for the year by its basic rate of tax. 2007, c. 11, Sched. A, s. 29 (1). Basic rate of tax (2) A corporation’s basic rate of tax for a taxation year is the sum of, (a) 14 per cent multiplied by the ratio of the number of days in the taxation year that are before July 1, 2010 to the total number of days in the taxation year; (b) 12 per cent multiplied by the ratio of the number of days in the taxation year that are after June 30, 2010 and before July 1, 2011 to the total number of days in the taxation year; (c) 11.5 per cent multiplied by the ratio of the number of days in the taxation year …

30 If at any time a corporation becomes or ceases to be exempt from tax under Part I of the Federal Act on its taxable income otherwise than by reason of paragraph 149 (1) (t) of the Federal Act, the corporation is deemed to be a new corporation whose first taxation year begins at that time for the purposes of applying this Division to the corporation to determine the amount, if any, deductible in computing the amount of the corporation’s tax payable under this Division. 2007, c. 11, Sched. A, s. 30.

31 (1) A corporation may, in computing the amount of its tax payable under this Division for a taxation year, deduct an Ontario small business deduction if, (a) the corporation has made a deduction under section 125 of the Federal Act for the year; or (b) the corporation would have been entitled to a deduction under section 125 of the Federal Act if its business limit for the year under paragraph 125 (1) (c) of that Act had been determined without reference to subsection 125 (5.1) of that Act. 2018, c. 17, Sched. 42, s. 7. Calculation of Ontario small business deduction (2) A corporation’s Ontario small business deduction for a taxation year is the amount determined by multiplying its Ontario small business income for the year by its small business deduction rate for the year. 2007, c. 11, Sched. A, s. 31 (2). Ontario small business income (3) A corporation’s Ontario small business incom…

32 (1) Every corporation that has claimed an Ontario small business deduction for a taxation year shall, in computing the amount of its tax payable under this Division for the year, add the amount, if any, of the corporation’s surtax for the year equal to the lesser of, (a) the amount claimed as a deduction by the corporation under subsection 31 (1) for the year; and (b) the amount calculated using the formula, A × (B + C – $500,000) × D/$500,000 in which, “A” is the corporation’s small business surtax rate for the year as set out in subsection (3), “B” is the amount of the corporation’s adjusted taxable income for the year, “C” is the sum of all amounts each of which is the adjusted taxable income of another corporation with which the corporation was associated at any time during the year, for the last taxation year of that associated corporation that ended at or before the end of the c…

33 (1) A corporation may, in computing the amount of its tax payable under this Division for a taxation year, deduct a tax credit calculated using the formula, A × B × X

in which, “A” is the amount of the corporation’s tax credit base for the year, “B” is the corporation’s Ontario domestic factor for the year, and “X” is the sum of, (a) 0.02 multiplied by the ratio of the number of days in the taxation year that are before July 1, 2011 to the total number of days in the taxation year, (b) 0.015 multiplied by the ratio of the number of days in the taxation year that are after June 30, 2011 to the total number of days in the taxation year. (c) Repealed: 2012, c. 9, s. 8 (2). 2009, c. 34, Sched. U, s. 9; 2012, c. 9, s. 8. Tax credit base (2) For the purposes of this section, a corporation’s tax credit base for a taxation year is the sum of “C” and “D” where, “C” is the least of, (a) the amount of the corporation’s adjusted business income for the year, (b) the amount of the corporation’s eligible Canadian profits for the year, if the corporation is not a Ca…

34 (1) A corporation that is resident in Canada throughout a taxation year and has foreign investment income for the year may, in computing its tax payable under this Division for the year, deduct a foreign tax credit equal to the lesser of, (a) the amount calculated under subsection (2) for the year; and (b) the amount calculated under subsection (3) for the year. 2007, c. 11, Sched. A, s. 34 (1). Same (2) For the purposes of clause (1) (a), the amount is determined by multiplying the corporation’s Ontario domestic factor for the taxation year by the amount, if any, by which “A” exceeds “B” where, “A” is the portion of the non-business-income tax paid for the year by the corporation to the government of a country other than Canada that relates to foreign investment income of the corporation for the year that is not from a share of the capital stock of a foreign affiliate of the corporat…

35 (1) A corporation that was a credit union throughout a taxation year may, in computing its tax payable under this Division for the year, deduct the amount, if any, calculated using the formula, A × (B – C) × D

in which, “A” is the small business deduction rate for the corporation for the year, “B” is the lesser of, (a) the corporation’s taxable income or taxable income earned in Canada, as the case may be, for the year, and (b) the amount, if any, by which 4/3 of its maximum cumulative reserve at the end of the year, as determined under section 137 of the Federal Act, exceeds the amount described in subsection (2), “C” is, (a) the corporation’s Ontario adjusted small business income for the year, as determined under subsection 33 (6), if the corporation is a Canadian-controlled private corporation throughout the year, or (b) nil, in any other case, and “D” is the corporation’s Ontario domestic factor for the year. 2007, c. 11, Sched. A, s. 35; 2017, c. 34, Sched. 40, s. 7 (1). Same (2) For the purposes of clause (b) of the definition of “B” in subsection (1), the amount is the amount that woul…

Subdivision b — Crown Royalties and Resource Tax Credit

36 (1) Every corporation that has a permanent establishment in Ontario at any time in a taxation year ending before April 23, 2015 shall, in computing the amount of its tax payable under this Division for the year, add the amount calculated using the formula, (A – B) × C × D

in which, “A” is the amount of the corporation’s adjusted Crown royalties for the year, “B” is the corporation’s notional resource allowance for the year, “C” is the corporation’s basic rate of tax for the year, and “D” is the corporation’s Ontario allocation factor for the year. 2007, c. 11, Sched. A, s. 36 (1); 2015, c. 20, Sched. 40, s. 9 (1). Transition, April 23, 2015 (1.1) Every corporation that has a permanent establishment in Ontario at any time in a taxation year that includes April 23, 2015 shall, in computing the amount of its tax payable under this Division for the year, add the amount calculated using the formula, H × J/K in which, “H” is the amount that would be calculated under subsection (1) in respect of the corporation if that subsection applied in the taxation year, “J” is the number of days in the taxation year that are before April 24, 2015, and “K” is the total numb…

37 (1) A corporation may, in computing its tax payable under this Division for a taxation year ending before April 23, 2015, deduct a resource tax credit equal to the lesser of the corporation’s tax payable under this Division for the year, determined without reference to this section, sections 33, 34, 35 and 39, subsection 47 (3) and section 53, and the amount calculated using the formula, E + [(B – A) × C × D]

in which, “A” is the amount of the corporation’s adjusted Crown royalties for the year as determined under subsection 36 (2), “B” is the corporation’s notional resource allowance for the year under subsection 36 (3), “C” is the corporation’s basic rate of tax for the year, “D” is the corporation’s Ontario allocation factor for the year, and “E” is the corporation’s resource credit balance at the beginning of the year. 2007, c. 11, Sched. A, s. 37 (1); 2015, c. 20, Sched. 40, s. 10 (1). Transition, April 23, 2015 (1.1) A corporation may, in computing its tax payable under this Division for a taxation year that includes April 23, 2015, deduct a resource tax credit equal to the lesser of the corporation’s tax payable under this Division for the year, determined without reference to this section, sections 33, 34, 35 and 39, subsection 47 (3) and section 53, and the amount calculated using th…

Subdivision c — Ontario Research and Development Tax Credit

38 (1) In this subdivision, “contract payment” means a payment that is a contract payment for the purposes of section 127 of the Federal Act; (“paiement contractuel”) “current portion” means, in respect of a corporation’s Ontario research and development tax credit at the end of a taxation year, the sum of, (a) all amounts each of which is added under clause (a), (a.1), (a.2) or (b) of the definition of “A” in subsection (2) in computing the corporation’s Ontario research and development tax credit at the end of the year, and (b) all amounts each of which is added under clause (d) or (e) of the definition of “A” in subsection (2) in computing the corporation’s Ontario research and development tax credit at the end of the year by reason of a repayment made by the corporation in the year; (“portion de l’année”) “eligible expenditure” means, in respect of a corporation, an expenditure attri…

39 (1) A corporation may, in computing the amount of its tax payable under this Division for a taxation year, deduct an amount in respect of its Ontario research and development tax credit at the end of the year not exceeding the sum of, (a) the lesser of, (i) the amount that would be the corporation’s Ontario research and development tax credit at the end of the year if, (A) clauses (c), (d) and (e) of the definition of “A” in subsection 38 (2) were read without reference to the expression “or the three taxation years following”, (B) clause (a) of the definition of “B” in subsection 38 (2) were read without reference to the expression “or the two taxation years following”, and (C) the definition of “B” in subsection 38 (2) were read without clause (c), and (ii) the corporation’s tax payable under this Division for the year, determined without reference to this section and section 53; an…

40 (1) Subject to subsections 38 (3) and 45 (3), if a corporation is a member of a partnership, other than a specified member, in a particular taxation year and an amount is determined in respect of the partnership for its fiscal period that ends in the particular year under clause (a), (a.1), (a.2) or (d) of the definition of “A” in subsection 38 (2), the portion of that amount that can reasonably be considered to be the corporation’s share shall be added in computing the amount of the corporation’s Ontario research and development tax credit at the end of the particular year. 2007, c. 11, Sched. A, s. 40 (1); 2016, c. 5, Sched. 28, s. 15 (1). Rules re partnerships (2) The following rules apply in respect of partnerships for the purposes of this subdivision: 1. In determining an amount in respect of a partnership under clause (a), (a.1), (a.2) or (d) of the definition of “A” in subsecti…

41 (1) If, on or before the filing-due date for a taxation year of a corporation, the corporation has received, is entitled to receive or can reasonably be expected to receive a particular amount that is government assistance, non-government assistance or a contract payment that can reasonably be considered to be in respect of scientific research and experimental development, the amount by which the particular amount exceeds all amounts applied for preceding taxation years under this subsection or subsection (2) or (3) in respect of the particular amount shall be applied to reduce the corporation’s eligible expenditures otherwise incurred in the year that can reasonably be considered to be in respect of the scientific research and experimental development. 2007, c. 11, Sched. A, s. 41 (1). Same (2) If, on or before the filing-due date for a taxation year of a corporation, the corporation…

42 If a particular amount is deemed under subsection 127 (13) of the Federal Act to be an amount determined in respect of a corporation (in this section called the “transferor”) for a taxation year under paragraph 127 (13) (d) of that Act as a consequence of an agreement or amended agreement referred to in subsection 127 (13) of that Act between the transferor and another corporation (in this section called the “transferee”) and subsection 127 (15) of that Act does not apply to the agreement, the following rules apply: 1. There shall be included in the value of “E” in the calculation of the transferor’s Ontario SR & ED expenditure pool under subsection 38 (4) the portion, if any, of the particular amount that may reasonably be considered to be in respect of the amount that, but for the agreement, would be the transferor’s Ontario SR& ED pool at the end of the year. 2. If subsection 127 (…

43 (1) A corporation may waive its eligibility for all or a portion of the current portion of its Ontario research and development tax credit at the end of a taxation year by delivering a written waiver identifying the amounts referred to in clause (a) or (b) of the definition of “current portion” in subsection 38 (1) with its return required to be delivered under this Act for the year or in an amended return for that year. 2007, c. 11, Sched. A, s. 43 (1). Same (2) If a corporation files a waiver under subsection (1) in respect of a taxation year, each amount that is relevant to the calculation of an amount identified in the waiver is deemed never to have been paid or incurred for the purposes of the application of this subdivision to the corporation. 2007, c. 11, Sched. A, s. 43 (2).

44 (1) If control of a corporation has been acquired by a person or group of persons at any time (in this subsection referred to as “that time”) before the end of a taxation year of the corporation, the amount determined for the purposes of clause (b) of the definition of “B” in subsection 38 (2) is the amount, if any, by which “A” exceeds “B” where, “A” is the amount, if any, by which “C” exceeds “D” where, “C” is the sum of all amounts added in computing the corporation’s Ontario research and development tax credit at the end of the year in respect of the current portion of its Ontario research and development tax credit at the end of a taxation year ending before that time, and “D” is the sum of all amounts each of which is an amount included by the corporation under clause (a) of the definition of “B” in subsection 38 (2) in computing its Ontario research and development tax credit a…

45 (1) In this section, “eligible property” means, (a) in respect of a corporation, property, (i) the cost of which was incurred by the corporation in a taxation year ending after December 31, 2008, and (ii) all or part of the cost of which is an eligible expenditure of the corporation, or (b) in respect of a partnership, property, (i) the cost of which was incurred by the partnership in a fiscal period ending in a taxation year of a corporate member of the partnership that ends after December 31, 2008, and (ii) all or part of the cost of which would be an eligible expenditure of the partnership if the partnership were a corporation. 2007, c. 11, Sched. A, s. 45 (1). Amount of recapture (2) Subject to the regulations, there shall be added in computing a corporation’s tax payable under this Division for a taxation year 23.56 per cent of the sum of all amounts each of which is an amount th…

Subdivision d — Transitional Tax Debits and Credits

46 (1) In this subdivision, “adjusted basic rate” means, in respect of a specified corporation for a taxation year, the product determined by multiplying the corporation’s basic rate of tax for the year by the corporation’s Ontario allocation factor for the year; (“taux de base rajusté”) “completion time” means, in respect of a winding-up of a subsidiary corporation, the end of the subsidiary corporation’s taxation year during which, for the purposes of paragraph 88 (1) (e.2) of the Federal Act, its assets were distributed to its parent corporation on the winding-up; (“date de réalisation”) “eligible amalgamation” means, in respect of a particular corporation, an amalgamation or merger of the particular corporation and one or more other corporations to form a new corporation where, (a) the amalgamation or merger occurs after December 31, 2008 and does not occur at the new corporation’s t…

47 (1) There shall be added in computing a specified corporation’s tax under this Division for a taxation year the amount of additional tax determined as follows: 1. If a regulation is in force limiting the amount of additional tax to be added under this subdivision in computing a specified corporation’s tax under this Division for the taxation year, the amount of the additional tax for the year is the sum of the amount determined under subsection 48 (3) in respect of the corporation for the year if the corporation made an election referred to in clause (b) of the definition of “I” in paragraph 1 of subsection 48 (4) and the lesser of, i. the maximum amount of additional tax determined in respect of the corporation under that regulation for the year, and ii. the amount determined under subsection 48 (1) in respect of the corporation for the year. 2. If no regulation described in paragrap…