Tax facts and figures Canada 2014

Transcription

1 Includes Ontario s July 14, 2014 budget and Quebec s June 4, 2014 budget Tax facts and figures Canada 2014 Canadian individual and corporate tax changes, tax rates, tax deadlines and a wide range of other valuable tax information.

2 Key 2014 income tax rates individuals and corporations Applies to taxable income above $136,270 ($150,000 in British Columbia and Nova Scotia; $220,000 in Ontario). For December 31 year end (12-month taxation year). Individuals (page 4) Corporations (page 17) Top combined marginal rates Combined rates Canadian-Controlled Ordinary Canadian dividends Capital General Private Corporations (CCPCs) income and gains and M&P interest Active business Investment Eligible Non-eligible income to $500,000 income Federal 29.00% 14.50% 19.29% 21.22% 15% 11% 34.67% Alberta 39.00% 19.50% 19.29% 29.36% 25% 14% 44.67% British Columbia 45.80% 22.90% 28.68% 37.99% 26% 13.5% 45.67% Manitoba 46.40% 23.20% 32.26% 40.77% 27% 11% or 23% 46.67% New Brunswick 46.84% 23.42% 27.35% 36.02% 27% 15.5% 46.67% Newfoundland 22.47% or 31.01% or General 29% 48.67% 42.30% 21.15% 14.5% and Labrador 30.19% 32.08% M&P 20% n/a Northwest Territories 43.05% 21.53% 22.81% 30.72% 26.5% 15% 46.17% Nova Scotia 50.00% 25.00% 36.06% 39.07% 31% 14% or 27% 50.67% Nunavut 40.50% 20.25% 27.56% 31.19% 27% 15% 46.67% Ontario 49.53% 24.76% 33.82% 40.13% General 26.5% 46.17% 15.5% M&P 25% n/a Prince Edward Island 47.37% 23.69% 28.70% 38.74% 31% 15.5% 50.67% Quebec 49.97% 24.98% 35.22% 39.78% General 19% 46.57% 26.9% M&P 17.85% n/a Saskatchewan 44.00% 22.00% 24.81% 34.91% General 27% 46.67% 13% M&P 25% n/a Yukon 42.40% 21.20% 15.93% to 19.29% 32.04% General 30% 14.5% 49.67% M&P 17.5% 13% n/a Tax facts and figures is on our website: No part of this booklet may be produced without permission from PricewaterhouseCoopers LLP (PwC). Cette brochure est également disponible en français:

3 Tax facts and figures Canada 2014

4 A message from our tax leader Welcome to the 37th edition of PricewaterhouseCooper s (PwC s) Tax facts and figures. This convenient reference tool will bring you up-to-date on the tax rates, tax deadlines and tax changes that apply to you and your company. To stay current on a wide range of tax developments, visit and subscribe to our tax publications or update your contact information. Download PwC s Tax rate app* to get corporate, personal and sales tax rates. And check out our income tax calculator at it will help you estimate your personal tax bill and marginal tax rates. We would be happy to help you plan for and respond to the myriad tax issues you or your business face. Please contact us. Let s talk For a deeper discussion of how the tax issues in Tax facts and figures might affect you or your business, please contact: your PwC tax advisor any of the individuals listed at Office addresses and telephone numbers are available at Tax News Network (TNN) provides subscribers with Canadian and international information, insight and analysis to support well-informed tax and business decisions. Try it today at Christopher Kong National Managing Partner, Tax PwC Canada *Scan the code for your device iphone and ipad BlackBerry and Playbook

5 Contents Click on a heading to go to that page Highlights for individuals and corporations: 2014 and beyond... 2 Individuals... 4 Individual marginal rates...4 How much tax? Individual tax table...5 Income tax filing and payment deadlines individuals and trusts...6 Probate fees (for estates over $50,000)...7 Key tax changes...8 Federal...8 Alberta, British Columbia Manitoba, New Brunswick Newfoundland and Labrador, Northwest Territories...12 Nova Scotia, Nunavut...13 Ontario, Prince Edward Island Quebec...15 Saskatchewan, Yukon Corporations...17 Corporate income tax rates Other federal tax rates and income tax deadlines Provincial income tax holidays and M&P investment tax credits Financial institutions capital tax rates and deadlines...20 Key tax changes...21 Federal...21 Alberta...22 British Columbia, Manitoba...23 New Brunswick...24 Newfoundland and Labrador, Northwest Territories...25 Nova Scotia, Nunavut...26 Ontario...27 Prince Edward Island, Quebec...28 Saskatchewan, Yukon...30 Individuals and corporations CPP/QPP, EI and QPIP premiums...31 Health care premiums and sales tax rates...32 Payroll tax rates...33 Retirement savings and profit sharing plans...34 R&D tax credits...35 Land transfer tax and registration fees...36 Filing deadlines...37 Prescribed interest rates income, capital and payroll taxes...38 International US top individual income tax rates federal and state combined...39 US estate, gift and generation-skipping transfer tax rates...40 US corporate income tax rates federal and state...41 Canada s treaty withholding tax rates...42 This booklet is published with the understanding that PwC is not thereby engaged in rendering accounting, legal or other professional service or advice. The comments included in this booklet are not intended to constitute professional advice, nor should they be relied upon to replace professional advice. Rates and other information are current to July 14, 2014, but may change as a result of legislation or regulations issued after that date.

6 Highlights for individuals and corporations: 2014 and beyond Federal Personal income tax rates: increased for non-eligible dividends in 2014 (p. 8) Corporate income tax rates: unchanged (p. 21) Trusts and estates: generally, graduated tax rates eliminated and testamentary trusts must have calendar taxation years, starting 2016 taxation years (p. 9) Immigration trusts: tax benefits eliminated for taxation years ending after February 10, 2014 (p. 9) Eligible capital property regime: consultation to replace regime with new capital cost allowance class (p. 21) Treaty shopping: anti-treaty shopping rule proposed (p. 21) Back-to-back loans: arrangements using interposed third parties to avoid withholding tax and thin capitalization rules targeted after 2014 (p. 22) Insurance swaps: subject to an anti-avoidance rule that prevents shifting income from the insurance of Canadian risks offshore, for taxation years beginning after February 10, 2014 (p. 22) Alberta Personal and corporate income tax rates: unchanged 1 (pp. 10, 22) British Columbia Personal income tax rates: rate on taxable incomes over $150,000 increasing from 14.7% to 16.8% for 2014 and (p. 10) Corporate income tax rates: unchanged (p. 23) Manitoba Personal and corporate income tax rates: unchanged 1 (pp. 11, 23) CCPC threshold: increased from $400,000 to $425,000 on January 1, 2014 (p. 23) New Brunswick Personal income tax rates: increased in (p. 11) Corporate income tax rates: unchanged (p. 24) Newfoundland and Labrador Personal income tax rates: increasing for dividends paid after June 30, (p. 12) Corporate income tax rates: general and M&P rates unchanged; CCPC rate decreased from 4% to 3% on July 1, 2014 (p. 25) Northwest Territories Personal and corporate income tax rates: unchanged 1 (pp. 12, 25) Nova Scotia Personal income tax rates: unchanged 1 (p. 13) Corporate income tax rates: general and M&P rate unchanged; CCPC rate decreased from 3.5% to 3% on January 1, 2014 (p. 26) CCPC threshold: decreased from $400,000 to $350,000 on January 1, 2014 (p. 26) Harmonized Sales Tax: planned decreases to the 15% HST rate will not occur (pp. 13, 26) personal tax rates on non-eligible dividends in the province or territory increased due to federal changes. 2

7 Highlights for individuals and corporations: 2014 and beyond Nunavut Personal and corporate income tax rates: unchanged 1 (pp. 13, 26) Ontario Personal income tax rates: personal taxes increasing for taxable incomes exceeding $150,000, starting (p. 14) Corporate income tax rates: unchanged, except federal small business deduction clawback extended to Ontario, for taxation years ending after May 1, 2014 (p. 27) Ontario retirement pension plan (ORPP): to be introduced in 2017 (pp. 14, 27) Prince Edward Island Personal and corporate income tax rates: unchanged 1 (pp. 14, 28) Quebec Personal income tax rates: unchanged 1 (p. 15) Corporate income tax rates: general, M&P and CCPC non-m&p rates unchanged; new CCPC M&P rate of 6% on June 5, 2014, decreasing to 4% on April 1, 2015 (p. 28) Business tax credit rates: over 30 business tax credits reduced by 20%, generally on or after June 4, 2014 (p. 29) Saskatchewan Personal and corporate income tax rates: unchanged 1 (pp. 16, 30) Yukon Personal income tax rates: unchanged 1 (p. 16) Corporate income tax rates: general and M&P rates unchanged; CCPC non-m&p rate decreased from 4% to 3% and CCPC M&P rate decreased from 2.5% to 1.5% on July 1, 2014 (p. 30) personal tax rates on non-eligible dividends in the province or territory increased due to federal changes. 3

8 Individuals Individual marginal rates This table shows 2014 combined federal and provincial (or territorial) marginal tax rates the percentage of tax paid on the last dollar of income, or on additional income. Provincial Taxable income $11,138 to $43,953 Taxable income $43,953 to $87,907 Taxable income $87,907 to $136,270 Taxable income > $136,270 brackets below Brackets Ordinary Capital Canadian dividends 1 Brackets Ordinary Capital Canadian dividends 1 Brackets Ordinary Capital Canadian dividends 1 Brackets Ordinary Capital Canadian dividends 1 $11,138 are $ income & gains Eligible Non-eligible $ income & gains Eligible Non-eligible $ income & gains Eligible Non-eligible $ income & gains Eligible Non-eligible not shown. interest % % % % interest % % % % interest % % % % interest % % % % Federal 11, (0.03) to , , , , (0.03) to Alberta 43, , , , (0.03) to British Columbia 37,606 11, (3.20) (6.84) to 0 to ,354 75,213 43, to 9.63 Manitoba 31, to , , to , , , New Brunswick 39, to , , , (3.23) to , , , Newfoundland 34, to , and Labrador 11, to , , , , (4.03) to Northwest 79, , , (7.76) to to 4.70 Territories 43, to , , (0.03) to , Nova Scotia 29, to , , , , (0.11) to , , , Nunavut 41, to , , (2.11) to , , (0.03) to , , Ontario 83, , , (1.20) to , , , , (6.86) to , , , to Prince Edward 31, to , , Island 11, (0.99) to , , , Quebec 41, to , , , to , , , (0.02) to , Saskatchewan 43, to , , (0.03) to , , , (0.03) to , Yukon 11, (11.12) to , to to 87, , , to to Non-resident 3 11, (0.04) to , , , ,858 87, , , Eligible dividends are designated as such by the payor. Most dividends paid by public corporations are eligible dividends. When two dividend rates are indicated, the rate that applies depends on the level of the taxpayer s other income, with the higher rate applying if the taxpayer has no other income. 2. For Newfoundland and Labrador, the dividend rates shown are for dividends paid after June 30, The rates before July 1, 2014 are: Bracket $ 11,138 34,254 43,953 68,508 87, ,270 Eligible (4.58) to to Rate % Non-eligible A non-resident will pay tax on taxable income below $11,138 if the non-resident does not qualify for the federal personal basic tax credit (see page 5). Non-resident rates for interest and dividends apply only in limited cases; generally, interest (other than most interest paid to arm s-length non-residents) and dividends are subject to Part XIII non-resident withholding tax. 4

9 Individuals How much tax? Individual tax table This table shows 2014 combined federal and provincial (or territorial) income taxes payable, assuming all income is interest or ordinary income (such as salary) and only the basic personal tax credit is claimed (except for non-residents). Certain types of income and deductions may trigger alternative minimum tax (AMT), affecting the results. For Quebec, the federal income tax amounts shown should be reduced by the 16.5% Quebec abatement. See page 15. This table assumes the non-resident will not qualify for the basic personal tax credit. A non-resident can claim this credit only if all or substantially all (i.e. 90% or more) of his or her worldwide income is included in taxable income earned in Canada for the year. Instead of provincial or territorial tax, non-residents pay an additional 48% of basic federal tax on income taxable in Canada that is not earned in a province or territory. Non-residents are subject to provincial or territorial rates on employment income earned, and business income connected with a permanent establishment, in the respective province or territory. Different rates may apply to non-residents in other circumstances. For the taxation of interest and dividends paid to non-residents, see footnote 3 on page 4. Taxable income Federal income tax Alberta B.C. Manitoba N.B. Nfld. & Lab. Combined 2014 federal and provincial/territorial income tax N.W.T. N.S. Nunavut Ontario P.E.I. Quebec Sask. Yukon Nonresident $1,000,000 $277,648 $375,870 $434,827 $446,942 $450,088 $407,795 $411,006 $478,040 $385,805 $468,467 $455,819 $480,329 $422,617 $405,773 $413,392 $1,000, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,000 74, , , , , , , , , , , , , , , , ,000 60,148 83,370 91,327 98,942 98,788 90,545 88, ,040 82,055 96, , ,592 92,617 87,788 91, , ,000 45,648 63,870 68,427 75,742 75,368 69,395 66,606 78,040 61,805 72,542 76,859 80,609 70,617 66,589 70, , ,000 31,148 44,370 45,527 52,542 51,948 48,245 45,081 53,040 41,555 48,557 53,174 55,627 48,617 45,390 48, , ,000 17,736 25,958 24,882 30,430 29,983 28,184 25,189 30,878 23,300 26,440 30,577 31,570 28,179 25,782 28, ,000 90,000 15,136 22,358 21,053 26,090 25,731 24,254 21,369 26,553 19,800 22,099 26,276 26,999 24,279 21,981 24,874 90,000 80,000 12,853 19,074 17,654 22,066 21,795 20,640 17,865 22,602 16,693 18,210 22,323 22,811 20,695 18,652 21,494 80,000 70,000 10,653 15,874 14,550 18,126 18,089 17,110 14,791 18,735 13,793 14,924 18,453 18,974 17,195 15,484 18,238 70,000 60,000 8,453 12,674 11,580 14,512 14,407 13,648 11,731 14,868 10,893 11,809 14,698 15,137 13,695 12,316 14,982 60,000 50,000 6,253 9,474 8,610 11,037 10,725 10,198 8,671 11,159 7,993 8,694 11,118 11,300 10,195 9,148 11,726 50,000 40,000 4,329 6,551 5,917 7,838 7,320 7,025 5,888 7,741 5,427 5,861 7,815 7,754 7,038 6,361 8,880 40,000 30,000 2,829 4,051 3,848 5,083 4,816 4,479 3,793 4,746 3,527 3,856 5,014 4,901 4,438 4,157 6,660 30,000 20,000 1,329 1,551 1,842 2,503 2,348 2,209 1,703 2,342 1,627 1,851 2,534 2,049 1,838 1,953 4,440 20,000 Taxable income 5

10 Individuals Income tax filing and payment deadlines individuals and trusts Deadlines falling on holidays or weekends may be extended to the next business day. See page 37 for other filing deadlines. Individuals Trusts Inter vivos Testamentary Instalments for 2014 Required If tax payable in 2014 and either 2013 or 2012 exceeds tax withheld by more than $3,000 ($1,800 for Quebec residents) None Deadline 15th of March, June, September, December Commencing 2016 taxation years, testamentary trusts (other than estates for their first 36 months) will be required to remit instalments. Trusts However, the Canada Revenue Agency s policy is to not charge instalment interest to an inter vivos trust. Inter vivos Testamentary Applies to unit trusts, including mutual fund trusts. Mutual fund trusts can elect to have a taxation year that ends on December 15. Trust created Year end Tax rate During lifetime On death December 31 Any (year must be < 12 months) Year end may be changed with the Minister s approval. Filing deadline and balance due April 30 (extensions may be available) 90 days after trust year end Top personal tax rate Personal marginal tax rates Tax forms T1 (and TP-1-V for Quebec filers) T3 (and TP-646-V for Quebec filers) For the 2014 taxation year of an inter vivos trust, the filing deadline is March 31, See page 4 for tax rates, and page 9 for changes that apply starting 2016 taxation years. Exceptions apply, for example, in Ontario, Prince Edward Island and Yukon, which impose surtaxes. This trust must maintain its status as a testamentary trust for tax purposes. Non-residents are not subject to instalment or filing requirements on these (and certain other) receipts. Instead, 25% Part XIII withholding tax applies (may be reduced by treaty). If a taxpayer (or his/ her spouse) carried on a business and died: January 1 to December 15, filing deadline 1 is June 15 of the following year December 16 to December 31, filing deadline 1 is 6 months after date of death Special cases Filing Taxpayer (or spouse) carried June 15 1 on a business If a non-resident receives: rental income on Canadian real property and elects to file under section 216, filing deadline is two years after end of year the income was paid or Non-resident credited (June 30 if NR6 was filed) certain Canadian pension, retirement and social assistance benefits and elects to file under section 217, filing deadline is June 30 Taxpayer died Return for year of death If a taxpayer died: January to October, filing deadline 1 is April 30 November to December, filing deadline 1 is 6 months after date of death Return for year before death If a taxpayer died: after year-end, but before filing deadline for previous year s return, filing deadline 1 is 6 months after date of death. 1. Applies to taxpayer and his or her spouse. Balance due April 30 (no extension) For deceased, if died: January to October, April 30 November to December, 6 months after date of death For spouse, April 30. For deceased, 6 months after date of death. For spouse, April 30. 6

11 Individuals Probate fees (for estates over $50,000) Probate is an administrative procedure under which a court validates a deceased s will and confirms the appointment of the executor. This table shows probate fees or administrative charges for probating a will. Other fees may also apply. For some provinces and territories, different rates may apply to smaller estates (less than $50,000). Example fees Fee schedule (value over $50,000) $500,000 $2,000,000 $5,000,000 value value value Alberta $200 to $400 $400 British Columbia $ % of portion > $50,000 $6,650 $27,650 $69,650 Manitoba $ % of portion > $10,000 $3,500 $14,000 $35,000 New Brunswick 0.5% of estate $2,500 $10,000 $25,000 Newfoundland and Labrador $ % of portion > $1,000 $2,585 $10,085 $25,085 Northwest Territories $200 to $400 $400 Nova Scotia $ % of portion > $100,000 $7,553 $32,228 $81,578 Nunavut $200 to $400 $400 Ontario $ % of portion > $50,000 $7,000 $29,500 $74,500 Prince Edward Island $ % of portion > $100,000 $2,000 $8,000 $20,000 Quebec Nominal fee Saskatchewan 0.7% of estate $3,500 $14,000 $35,000 Yukon $140 $140 Although Quebec does not levy probate fees, wills (other than notarial wills) must be authenticated by the Superior Court of Quebec. A nominal fee applies. 7

12 Individuals Key tax changes Federal Dividends: Non-eligible dividends Dividend gross-up 25% 18% Dividend tax credit (on grossed-up dividend) % % Top federal rate 19.58% 21.22% Tax on split income: Commencing 2014 taxation years, the definition split income will include income that is, directly or indirectly, paid or allocated to a minor from a trust or partnership, if: the income is derived from a business or a rental property, and a person related to the minor: is actively engaged on a regular basis in the activities of the trust or partnership to earn income from any business or rental property, or has a direct or indirect interest in the partnership Automobile deductions and benefits: The 2014 prescribed rates will remain at their 2013 levels for purposes of determining automobile deduction limits and taxable benefits. See Car expenses and benefits A tax guide at Retirement savings plans and deferred profit sharing plans: Contribution limits will increase. See page 34. Defined benefit registered pension plans (RPPs): The maximum pension benefit that can be paid from these plans is increasing as shown: Pension benefit (per year of service) 2013 $2, $2, Indexed A special rule that ensures that the maximum amount that may be transferred tax-free to the registered retirement saving plan (RRSP) or other registered plans of a departing member of an underfunded defined benefit RPP is the same as if the RPP were fully funded in certain limited cases, is extended to commutation payments made after 2012, in additional situations. 8 Ordinary income Top federal rates Capital Dividends gains Eligible Non-eligible 19.58% % 14.50% 19.29% % 2014 Federal Basic personal amount $11,138 Indexing factor 0.9% Bracket $0 $43,953 $87,907 $136,270 Rate 15% 22% 26% 29% Adoption expense tax credit: The maximum eligible adoption expenses that qualify for this credit will increase from $11,669 for 2013 to $15,000 for 2014 (indexed after 2014) per child. Medical expense tax credit: The credit is expanded to include eligible expenses incurred after 2013 for: the design of a therapy plan for individuals who qualify for the disability tax credit service animals trained to assist individuals with severe diabetes Search and rescue volunteer tax credit: Commencing 2014, certain search and rescue volunteers who provide at least 200 hours of services annually can claim a $450 non-refundable tax credit. Mineral exploration tax credit for flow-through shares: This credit is extended by one year to flow-through share agreements entered into before April 1, Life insurers and policyholders: Draft legislative proposals, effective upon royal assent, amend the taxation of life insurance policies, generally issued after Key changes amend the determination of: whether a life insurance policy is an exempt policy what types of transactions give rise to a disposition of an interest in a policy the tax treatment of a disposition of an interest in a policy (having regard to both the adjusted cost basis of the interest and the proceeds of disposition) The proposals also include consequential amendments to the life insurer s investment income tax. Farming and fishing businesses: Transfers of property For dispositions and transfers that occur after the 2013 taxation year, eligibility for the intergenerational rollover of farming and fishing property and the lifetime capital gains exemption is extended to individuals involved in a combination of farming and fishing. Tax deferral for farmers Starting 2014 taxation years, the tax deferral for farmers who dispose of breeding livestock due to drought, flood or excess moisture conditions existing in prescribed regions, is extended to disposals of bees, and of horses that are over 12 months of age, if kept for breeding. Amateur athlete trusts: Income contributed to an amateur athlete trust after 2013 will qualify as earned income for purposes of determining the RRSP contribution limit of the trust s beneficiary. An individual who contributed to the trust before 2014 can elect before March 3, 2015, to have contributions made in 2011, 2012 and 2013 also qualify as earned income. Any additional RRSP room will be added to the individual s 2014 RRSP contribution room.

13 Individuals Charities and non-profit organizations (NPOs): Donations For donations made after February 10, 2014, of: ecologically sensitive land, or easements, covenants and servitudes on that land, the carry-forward period will be extended from five years to ten certified cultural property, the value of the donated property will be limited to its cost amount to the donor if the property was acquired as part of a tax shelter gifting arrangement Charity tax compliance and electronic access Electronic filing of charity applications and annual information returns will be implemented. State-supported terrorism Charities and amateur athletic associations that accept donations after February 10, 2014, from a state (or a state agency) that is considered to be a supporter of terrorism may have their registration refused or revoked. Public consultation for NPOs The government plans to review if the income tax exemption and related reporting requirements for NPOs remain properly targeted and provide sufficient transparency and accountability. See our Tax Insights 2014 Federal budget: How it affects you and the charitable and not-for-profit sector at Trusts and estates: Taxation Commencing 2016 taxation years, a flat top-rate tax (instead of graduated tax rates) will apply to testamentary trusts, certain estates and grandfathered inter vivos trusts, and these trusts generally will be required to have taxation years ending on December 31 (starting with a deemed taxation year ending on December 31, 2015). Graduated tax rates will continue to apply for testamentary trusts: that arise as a consequence of an individual s death (the first 36 months of the estate only) that have beneficiaries who qualify for the disability tax credit Estate donations Starting with donations made related to a death occurring after 2015, donations made by a will, and those made by designation under a RRSP, registered retirement income fund, tax-free savings account or life insurance policy, will no longer be deemed to be made by the individual immediately before the individual s death. These donations will be deemed to have been made at the time the property is transferred to a qualified donee and, if the transfer occurs within 36 months after death, they may be allocated among: the taxation year of the estate in which the donation is made an earlier taxation year of the estate the last two taxation years of the individual Immigration trusts: The 60-month exemption from the non-resident trust rules for immigration trusts will be eliminated generally for taxation years ending after February 10, See our Tax Insights 2014 federal budget: The demise of immigration trusts at Foreign Income Verification Statement (Form T1135): Taxpayers required to file Form T1135 must include additional information on foreign property, starting taxation years ending after June 30, Streamlined reporting for certain foreign property will be permitted and the filing deadline for the 2013 taxation year is extended to July 31, See our Tax Insights More changes to Form T1135, Foreign Income Verification Statement at Cross-border tax compliance: Canada has ratified the Convention on Mutual Administrative Assistance in Tax Matters, which entered into force, in respect of Canada, on March 1, The member States of the Council of Europe and the member countries of the Organisation for Economic Co-operation and Development (OECD) are signatories. Under the convention, Canada will exchange tax information based on OECD standards, but is not required to collect taxes on behalf of another country, or provide assistance in the service of related documents. Automatic exchange of information: An Intergovernmental Agreement (IGA) between the United States and Canada to improve international tax compliance and to implement the US Foreign Account Tax Compliance Act (FATCA) entered into force on June 27, See our Global IRW Newsbrief Canada and the US sign FATCA Intergovernmental Agreement at Tax treaties: Recent developments are shown below. See page 42. Tax treaties Ratified and entered into force Austria 1 Barbados 1 France 1 Hong Kong Luxembourg 1 Poland Serbia Switzerland 2 Signed but awaiting ratification Belgium 1 Under negotiation (or declaration of intent to negotiate) Malaysia 1. These protocols ensure that Canada has an effective exchange of information, in accordance with the internationally agreed standard developed by the OECD. 2. An agreement to amend Article 25 (exchange of information) of the tax convention to be consistent with the standard developed by the OECD. 9

14 Individuals Alberta British Columbia Ordinary income Top combined rates Capital Dividends gains Eligible Non-eligible 27.71% % 19.50% 19.29% % 2014 Alberta Basic personal amount $17,787 Indexing factor 1.1% Bracket $0 Rate 10% Alberta is the only province or territory with a single rate. Top combined rates Ordinary Capital Dividends income gains Eligible Non-eligible % 21.85% 25.78% 33.71% % 22.90% 28.68% 37.99% 2014 British Columbia Basic personal amount $9,869 Indexing factor 0.1% Bracket $0 $37,606 $75,213 $86,354 $104,858 $150,000 Rate 5.06% 7.7% 10.5% 12.29% 14.7% 16.8% Can be reduced for low incomes. Highlights of changes Dividends: Non-eligible dividends Dividend gross-up 25% 18% Dividend tax credit (on grossed-up dividend) 3.5% 3.1% Top combined rate 27.71% 29.36% Highlights of changes Personal tax system: For 2014 and 2015, the tax rate on taxable incomes over $150,000 will be 16.8% (up from 14.7%), increasing the top combined rate on ordinary income from 43.70% to 45.80%. Dividends: Eligible dividends Non-eligible dividends Dividend gross-up 38% 25% 18% Dividend tax credit (on grossed-up dividend) 10% 3.4% 2.59% Top combined rate 25.78% 28.68% 33.71% 37.99% BC Mining Flow-Through Share Tax Credit: The credit is extended by one year to December 31, Medical Services Plan: Monthly premiums are increasing as follows: Effective date Single Family (2 persons) (> 2 persons) Before January 1, 2014 $66.50 $ $ January 1, 2014 $69.25 $ $ January 1, 2015 $72.00 $ $

15 Individuals Manitoba New Brunswick Ordinary income Top combined rates Capital Dividends gains Eligible Non-eligible 39.15% % 23.20% 32.26% % 2014 Manitoba Basic personal amount $9,134 Indexing factor Bracket $0 $31,000 $67,000 Rate 10.8% 12.75% 17.4% Can be reduced for low incomes. n/a Top combined rates Ordinary Capital Dividends income gains Eligible Non-eligible % 22.54% 24.91% 33.05% % 23.42% 27.35% 36.02% 2014 New Brunswick Basic personal amount $9,472 Indexing factor 0.9% Bracket $0 $39,305 $78,609 $127,802 Rate 9.68% 14.82% 16.52% 17.84% Can be reduced for low incomes. Highlights of changes Personal tax system: Manitoba s basic personal and spouse/equivalent to spouse amounts increased from $8,884 to $9,134 for Dividends: Non-eligible dividends Dividend gross-up 25% 18% Dividend tax credit (on grossed-up dividend) 1.75% 0.83% Top combined rate 39.15% 40.77% Mineral Exploration Tax Credit: The credit is extended three years to flow-through share agreements entered into before April 1, Community Enterprise Development Tax Credit: The credit is extended six years to December 31, For eligible shares acquired after June 11, 2014, the credit is fully refundable and enhancements increase: the tax credit rate from 30% to 45%, and the maximum annual shares that can be acquired from $30,000 to $60,000 (maximum annual credit from $9,000 to $27,000) the investor s maximum equity percentage from 10% to 35% Small Business Venture Capital Tax Credit: For eligible shares issued after June 11, 2014, enhancements increase: the tax credit rate from 30% to 45% (maximum annual credit from $45,000 to $67,500; maximum total credit from $135,000 to $202,500) the investor s maximum equity percentage from 10% to 35% Employee Share Purchase Tax Credit: Effective June 12, 2014, changes: increase the tax credit rate from 30% to 45% of the cost of eligible shares establish a maximum annual credit of $202,500 for shares acquired under a registered employee share ownership plan designed to facilitate succession planning or an employee buyout or takeover (maximum annual credit of $27,000 for other plans), but the maximum that can be claimed per year is: $27,000 (refundable) $67,500 (non-refundable) less any refundable credit claimed Highlights of changes Personal tax system: Income tax rates Highest 16.07% 17.84% 14.46% 16.52% 13.46% 14.82% Lowest 9.39% 9.68% Dividends: Eligible dividends Non-eligible dividends Dividend gross-up 38% 25% 18% Dividend tax credit (on 12% 5.3% grossed-up dividend) Top combined rate 24.91% 27.35% 33.05% 36.02% For 2014, the rate is assumed to remain 5.3%. The government has not decided whether to change the rate after Small Business Investor Tax Credit: Starting 2014 taxation years, trusts can claim a 15% non-refundable income tax credit on eligible small business investments of up to $500,000, for a maximum annual credit of $75,000. Investments in registered community economic development funds will be eligible for this credit. Regulatory reform: A smart regulations system will be implemented to reduce red tape for individuals and businesses. 11

16 Individuals Newfoundland and Labrador Northwest Territories Top combined rates Ordinary income Capital Dividends gains Eligible Non-eligible % 29.96% 42.30% 21.15% % or 30.19% 31.01% or 32.08% See Dividends below Newfoundland and Labrador Basic personal amount $8,578 Indexing factor 1.5% Bracket $0 $34,254 $68,508 Rate 7.7% 12.5% 13.3% Can be reduced for low incomes. Ordinary income Top combined rates Capital Dividends gains Eligible Non-eligible 29.65% % 21.53% 22.81% % 2014 Northwest Territories Basic personal amount $ 13,668 Indexing factor 0.9% Bracket $0 $39,808 $79,618 $129,441 Rate 5.9% 8.6% 12.2% 14.05% Highlights of changes Dividends: Eligible dividends Non-eligible dividends before July 1 after June 30 before July 1 after June 30 Dividend gross-up 38% 25% 18% Dividend tax credit (on 11% 5.4% 5% 4.1% grossed-up dividend) Top combined rate 22.47% 30.19% 29.96% 31.01% 32.08% Highlights of changes Dividends: Non-eligible dividends Dividend gross-up 25% 18% Dividend tax credit (on grossed-up dividend) 6% Top combined rate 29.65% 30.72% Low-income tax reduction: Low-income tax reduction income thresholds will increase to $18,547 for individuals and to $31,362 for families in Venture Capital Tax Credit: This new credit will be available to investors in the proposed Venture Newfoundland and Labrador fund. No details have been announced. 12

17 Individuals Nova Scotia Ordinary income Top combined rates Capital Dividends gains Eligible Non-eligible 36.21% % 25.00% 36.06% % Nunavut 2014 Nova Scotia Top combined rates 2014 Nunavut Basic personal amount $8,481 Indexing factor n/a Ordinary Capital Dividends Basic personal amount $12,567 Indexing factor 0.9% Bracket $0 $29,590 $59,180 $93,000 $150,000 income gains Eligible Non-eligible Bracket $0 $41,909 $83,818 $136,270 Rate 8.79% 14.95% 16.67% 17.5% 21% % Rate 4% 7% 9% 11.5% 40.50% 20.25% 27.56% Can be reduced for low incomes % Highlights of changes Personal tax system: If Nova Scotia tables a budget surplus in its fiscal year, for 2015 the $150,000 bracket and 21% rate will be eliminated, but a 10% surtax on provincial income tax exceeding $10,000 will be reinstated. These changes would decrease the top combined rate on ordinary income from 50% to 48.25%. Dividends: Non-eligible dividends Dividend gross-up 25% 18% Dividend tax credit (on grossed-up dividend) 7.7% 5.87% Top combined rate 36.21% 39.07% If Nova Scotia tables a budget surplus in its fiscal year, the top 2015 combined rate will be 32.42% on eligible dividends and 36.32% on non-eligible dividends. Highlights of changes Dividends: Non-eligible dividends Dividend gross-up 25% 18% Dividend tax credit (on grossed-up dividend) 4% 3.05% Top combined rate 28.96% 31.19% Tax system review: Nunavut plans to conduct a comprehensive review of its tax system in the fiscal year. Graduate Retention Rebate Program: Effective January 1, 2014, the program is eliminated. Post-secondary graduates remain eligible to receive the rebate for the 2013 taxation year. Tax, regulatory and fee review: Nova Scotia will undertake a comprehensive review of its taxes, fees, and regulations based on the principles of fairness, sustainability, simplicity and competitiveness. Harmonized Sales Tax (HST): Nova Scotia will maintain the HST rate at 15% until sustainable fiscal balances are achieved. The rate was to decline to 14% by July 1, 2014, and to 13% by July 1,

18 Individuals Ontario Prince Edward Island Top combined rates Ordinary Capital Dividends income gains Eligible Non-eligible % 36.47% 49.53% 24.76% % 40.13% 2014 Ontario Basic personal amount $9,670 Indexing factor 1.0% Bracket $0 $40,120 $80,242 $150,000 $220,000 Rate 5.05% 9.15% 11.16% 12.16% 13.16% Can be reduced Surtax: 20% of basic provincial tax in excess of $4,331 for low incomes. + 36% of basic provincial tax in excess of $5,543. Ordinary income Top combined rates Capital Dividends gains Eligible Non-eligible 38.56% % 23.69% 28.70% % 2014 Prince Edward Island Basic personal amount $7,708 Indexing factor Bracket $0 $31,984 $63,969 Rate 9.8% 13.8% 16.7% Can be reduced Surtax: 10% of basic provincial for low incomes. tax in excess of $12,500. n/a Highlights of changes Personal tax system: Starting 2014, Ontario s: top rate of 13.16% will apply when taxable income exceeds $220,000 (down from $514,090) tax rate will be 12.16% (up from 11.16%) on taxable income between $150,000 and $220,000 The $150,000 and $220,000 brackets will not be indexed, and the top charitable donations tax credit rate for individuals remains 11.16%. Highlights of changes Dividends: Non-eligible dividends Dividend gross-up 25% 18% Dividend tax credit (on grossed-up dividend) 2.9% 3.2% Top combined rate 38.56% 38.74% Dividends: Eligible dividends Non-eligible dividends Dividend gross-up 38% 25% 18% Dividend tax credit (on 6.4% 10% 4.5% grossed-up dividend) Top combined rate 33.85% 33.82% 36.47% 40.13% Starting 2014, dividend tax rates are determined by calculating the Ontario surtax before deducting dividend tax credits from Ontario tax. See our Tax Insights Ontario increases personal taxes on some dividends and studies corporate tax incentives at Tax credit for farmers: A new 25% non-refundable tax credit can be claimed by farmers for donating agricultural goods to community food programs after Pension reform: Ontario retirement pension plan (ORPP) Employers and employees that do not already participate in a comparable pension plan will each be required to contribute up to about $1,700 annually to the ORPP, starting in Pooled registered pension plans (PRPPs) Ontario will introduce legislation to implement PRPPs that will generally mirror the federal model. Tax avoidance: Ontario will: target schemes and practices that avoid the payment of provincial taxes implement disclosure rules for aggressive tax avoidance transactions expand the use of its Flexible and Integrated Risk System program to identify high-risk audit cases Tax system review: Ontario is reviewing the efficiency of its personal tax system. 14

19 Individuals Quebec Ordinary income Top combined rates Capital Dividends gains Eligible Non-eligible 38.54% % 24.98% 35.22% % Quebec is the only jurisdiction that does not use the federal definition of taxable income. Highlights of changes Dividends: Non-eligible dividends Dividend gross-up 25% 18% Dividend tax credit (on grossed-up dividend) 8% 7.05% Top combined rate 38.54% 39.78% 2014 Quebec Basic personal amount $11,305 Indexing factor 0.97% Bracket $0 $41,495 $82,985 $100,970 Rate 16% 20% 24% 25.75% Federal rates that apply are reduced by the 16.5% Quebec abatement. Bracket $0 $43,953 $87,907 $136,270 Rate 12.53% 18.37% 21.71% 24.22% Quebec EcoRenov tax credit: Individuals can claim a new refundable tax credit for eco-friendly renovation work performed on their principal place of residence or cottage by a qualified contractor under a contract entered into after October 7, 2013, and before November 1, 2014 (maximum credit of $10,000 per eligible dwelling). LogiRenov tax credit: Individuals can claim a new refundable tax credit for home renovations performed on their principal place of residence by a qualified contractor under an agreement entered into after April 24, 2014, and before July 1, 2015 (maximum cumulative credit of $2,500 per dwelling). Tax credit for experienced workers: The amount of eligible work income over $5,000 that can be exempt from tax for individuals age 65 or over will increase from $3,000 to $4,000 in Seniors activities tax credit: Commencing 2014, seniors age 70 years or older with incomes of $40,000 or less (indexed after 2014) can claim this refundable tax credit (maximum $40), on fees paid after June 4, 2014, for enrolment in a physical, artistic, cultural or recreational activity. Retirement income: Starting 2014, an individual can split retirement income with a spouse for income tax purposes only: if the individual turned 65 before the year end, or on the date the individual died or ceased to be resident in Canada Flow-through shares: For flow-through shares issued after June 4, 2014, the additional deductions (on top of the base deduction of 100% of the cost of the shares) are reduced: for mining exploration expenses incurred in Quebec to 10% (from 25%) for: the first additional deduction the second additional deduction for surface expenses for oil or gas exploration expenses incurred in Quebec to 20% (from 50%) for certain issue expenses maximum of 12% (formerly 15%) of the issue proceeds of the shares Cultural donations: Incentives for cultural donations made after July 3, 2013, were enhanced: Large donations to cultural organizations An additional 25% non-refundable tax credit can be claimed for an initial cultural donation of at least $5,000 (up to $25,000) made before January 1, 2018 Cultural patronage A 30% non-refundable tax credit can be claimed on donations of at least $250,000 (or at least $25,000 annually over no more than 10 years) to a cultural organization Public artwork Donors of public artwork can claim: 125% of the fair market value (FMV) of the artwork, for artwork installed in certain places accessible to the public, or 150% of the FMV, for artwork installed in certain educational places accessible to students Studio space Donors of buildings that can house artists studios or cultural organizations can claim 125% of the FMV of the buildings Capital régional et coopératif Desjardins (CRCD): The CRCD tax credit rate will decline from 50% to 45% for shares acquired after February 28, Proposed measures are intended to increase investments in CRCDs in territories facing economic difficulties. Quebec Taxation Review Committee: To make the tax system more competitive, the committee will study Quebec s tax system, analyze its tax assistance measures and propose changes, before the budget. 15

20 Individuals Saskatchewan Yukon Ordinary income Top combined rates Capital Dividends gains Eligible Non-eligible 33.33% % 22% 24.81% % 2014 Saskatchewan Basic personal amount $15,378 Indexing factor 0.9% Bracket $0 $43,292 $123,692 Rate 11% 13% 15% Ordinary income Top combined rates Capital Dividends gains Eligible Non-eligible 15.93% to 30.41% 19.29% % 21.20% % 2014 Yukon Basic personal amount $11,138 Indexing factor 0.9% Bracket $0 $43,953 $87,907 $136,270 Rate 7.04% 9.68% 11.44% 12.76% Can be reduced Surtax: 5% of basic territorial for low incomes. tax in excess of $6,000. Highlights of changes Dividends: Non-eligible dividends Dividend gross-up 25% 18% Dividend tax credit (on grossed-up dividend) 4% 3.4% Top combined rate 33.33% 34.91% Highlights of changes Dividends: Non-eligible dividends Dividend gross-up 25% 18% Dividend tax credit (on grossed-up dividend) 4.51% 4.03% Top combined rate 30.41% 32.04% 16

21 Corporations Corporate income tax rates To compute rates for off-calendar year ends, refer to pages 23 to 30. For income not earned in a province or territory, see page 18. For non-resident corporations, the general and M&P rates in the table apply to business income attributable to a permanent establishment in Canada. Different rates may apply to non-residents in other circumstances. Non-resident corporations may also be subject to branch tax (see page 18). The general and M&P rate does not apply to certain types of income. See page 21. Corporations subject to Ontario income tax may also be liable for Ontario corporate minimum tax. See page 27. General and Manufacturing and Processing (M&P) (%) Twelve-month taxation year ended December 31, 2014 Canadian-Controlled Private Corporations (CCPCs) (%) Active business income earned in Canada to $500,000 Investment income Basic federal rate 38 Provincial abatement -10 Less: General rate reduction or M&P deduction -13 n/a Small business deduction -17 n/a Plus: Refundable investment tax n/a 6.67 Federal rate Provincial/ Territorial Combined Provincial/ Territorial Combined Provincial/ Territorial Combined Alberta British Columbia Manitoba or or New Brunswick Newfoundland General 14 H H H 14.5 and Labrador M&P 5 H 20 n/a Northwest Territories Nova Scotia H or or Nunavut Ontario General 11.5 H H H 15.5 M&P 10 H 25 n/a Prince Edward Island 16 H H H Quebec General 8 H H H 26.9 M&P 6.85 H n/a Saskatchewan General M&P n/a Yukon General M&P n/a $500,000 threshold ($425,000 in Manitoba and $350,000 in Nova Scotia): This threshold is shared by associated CCPCs. It is reduced on a straight-line basis for CCPCs that, in the preceding year, had taxable capital employed in Canada (on an associated basis) between $10 million and $15 million. This clawback also applies to all provincial and territorial small business deductions (Ontario has extended this clawback to its small business deduction, for taxation years ending after May 1, 2014). Income above $500,000 ($425,000 in Manitoba and $350,000 in Nova Scotia): A CCPC s active business income above this threshold is subject to the general and M&P rate. Investment income: See Refundable Investment Tax on page 18 for more details. Special rules apply to M&P income in Ontario (see page 27), Quebec (see page 28) and Saskatchewan (see page 30). H Tax holidays are available to certain corporations. See the table on page In Manitoba and Nova Scotia, the lower rate applies to active business income up to $425,000 in Manitoba and $350,000 in Nova Scotia and the higher rate to active business income from these thresholds to $500,

22 Corporations Other federal tax rates and income tax deadlines Other federal rates Therefore, the federal rate is 25%, instead of 15% (see page 17). Income not earned in a province or territory Rate Corporations affected Description Special rules Income tax is calculated as follows: Basic federal rate 38% Corporate income that is not earned in a province or territory is neither: 25% All corporations Less: General rate reduction - 13% eligible for the provincial abatement, nor Federal rate 25% subject to provincial or territorial tax (exceptions apply) Branch Tax 25% Part III.1 Tax on Excess Eligible Dividend Designations Refundable Part IV Tax Refundable Investment Tax 20% or 30% 33-1/3% Non-resident corporations, except: transportation, communications and iron-ore mining companies insurers (other than in special circumstances) Canadian-resident corporations Private corporations Certain public corporations 6-2/3% Canadian-controlled private corporations (CCPCs) Applies to after-tax profits that are not invested in qualifying property in Canada. Applies if: a CCPC has designated as eligible dividends during the year an amount that exceeds the corporation s general rate income pool (GRIP) at the end of the year a non-ccpc pays an eligible dividend when it has a positive balance in its low rate income pool (LRIP) Payable on taxable dividends received from certain taxable Canadian corporations. Increases the total federal rate that applies to investment income of a CCPC to 34.67% (see page 17). Generally, 26-2/3% of a CCPC s aggregate investment income is added to its RDTOH. The 25% rate may be reduced by the relevant tax treaty (generally to the withholding tax rate on dividends, which is usually 5%, 10% or 15%). Some treaties prohibit the imposition of branch tax or provide that the tax is payable only on earnings exceeding a threshold. A corporation subject to Part III.1 tax at the 20% rate (i.e. the excess designation was inadvertent) can elect, with shareholder concurrence, to treat all or part of the excess designation as a separate non-eligible dividend, in which case Part III.1 tax will not apply to the amount that is the subject of the election. Refundable to the corporation through the refundable dividend tax on hand (RDTOH) mechanism at a rate of $1 for every $3 of taxable dividends paid. Part VI Financial Institutions Capital Tax 1.25% Banks Trust and loan corporations Life insurance companies Applies if capital employed in Canada is over $1 billion. The threshold is shared by related corporations. Reduced by the corporation s federal income tax liability. Any unused federal income tax liability can be applied to reduce Financial Institutions Capital Tax for the previous three years and the next seven. Income tax deadlines CCPCs can pay federal and Quebec instalments on the last day of months 3, 6, 9 and 12 of the taxation year, if certain conditions are met. Two $3,000 thresholds apply; one for federal purposes and the other for all provinces and territories combined, except Alberta and Quebec. Federal balance due deadlines also apply to Part IV tax (see above). However, no Part IV tax instalments are required. Federal income tax payments include payments for: Financial Institutions Capital Tax (see above) Tax on Corporations Paying Dividends on Taxable Preferred Shares Additional Tax on Authorized Foreign Banks Instalment deadline Balance due deadline Filing deadline General rule Last day of each month 2 months after year end 6 months after year end Exceptions Federal All jurisdictions except Alberta and Quebec Waived if total tax 1 is < $3,000 Waived if Alberta income tax 1 $2,000 Alberta or CCPC qualifies for extended balance due deadline Quebec Waived if Quebec income tax 1 < $3,000 3 months after the year end, if the corporation: was a CCPC throughout the current year, claimed the small business deduction, 1 and had taxable income, on an associated basis, in taxation years ending in the previous calendar year < the total business limit for those taxation years 3 months for CCPCs that: 1 claimed Alberta s small business deduction, and had taxable income < $500,000 No exceptions 1. In current or previous year. 18

23 Corporations Provincial income tax holidays and M&P investment tax credits Income tax holidays Newfoundland and Labrador Companies meeting job creation and other conditions Eligible corporations Holiday Income not taxed each year Full holiday for 15 years, Outside Northeast Avalon region phased out over next 5 years: Additional 50% federal tax rebate Designated after December 31, 2001 Income attributable to new or expanded business In Northeast Avalon region Full holiday for 10 years, Designated before January 1, 2002 phased out over next 5 years Nova Scotia CCPCs incorporated after April 24, 1992 For 3 years $500,000 of active business income Ontario Companies incorporated in Canada after March 24, 2008, and before March 25, 2012, that commercialize intellectual property developed by Canadian universities, colleges or research institutions For 10 years No limit Prince Edward Island Quebec Other restrictions may apply. Aviation- and aerospace-related firms in Slemon Park Minimum employee and payroll To December 31, 2022 Bioscience companies requirements must be met. Businesses that carry out a large investment project of at least $200 million in Quebec Companies incorporated in Canada after March 19, 2009, and before April 1, 2014, that For 10 years commercialize intellectual property developed by Quebec universities or public research centres Income attributable to PEI operations 15% of eligible investment expenditures No limit This threshold is equal to the federal small business limit (see page 17). The initial application must be submitted after November 20, 2012, and before November 21, The minimum investment threshold was $300 million for projects that began before October 8, M&P investment tax credits For federal tax purposes, M&P investment tax credits are considered government assistance and reduce the capital cost of the M&P asset. Nova Scotia s 20% credit can be claimed by certain industries for the cost (up to $1 million annually) of technologically advanced machinery, clean technology, equipment, software and hardware. The property cost must exceed $25,000. Quebec offers a refundable tax credit of up to 50% for manufacturing small- and medium-sized enterprises that acquire a building or add to an existing building as part of an M&P equipment acquisition, for expenditures incurred after October 7, 2013, and generally before June 5, See page 29. An additional 25% credit may be claimed in PEI by exportfocused corporations. For M&P property acquired Carrybacforward Refundable Carry- Rate After Before Manitoba 10% March 11, 1992 January 1, years 10 years 80% Nova Scotia 20% December 19, 2010 n/a 100% No cut-off Prince Edward Island 10% December 31, years No 5% to 40% March 13, 2008 June 5, 2014 Quebec 3 years 20 years Sometimes 4% to 32% June 4, 2014 January 1, % March 26, 1999 April 1, years No Saskatchewan 7% March 31, 2004 October 28, % October 27, 2006 No cut-off n/a 100% In Quebec: a cumulative limit of $75 million of eligible investments qualifies for this credit at rates above 4% (5% before June 5, 2014) and/or refundability up to an additional 10% tax credit is available for M&P equipment acquired by qualifying small- and medium-sized enterprises after October 7, 2013, and before June 5, 2014 (see page 29) Manitoba s refundable portion of the credit increased from 70% to 80% for qualified property acquired after June 30, Saskatchewan s credit is refundable for purchases after April 6, Depends on level of consolidated paid-up capital. 19

24 Corporations Financial institutions capital tax rates and deadlines See Insurance industry: Key tax rates and updates at for rates that apply to insurance companies. Associated or related corporations may be required to share the exemption. See page 18 for more information. Twelve-month taxation year Balance due and ended December 31, 2014 Instalment deadlines filing deadlines Rate Exemption Federal (Part VI Financial Institutions Capital Tax) 1.25% $1 billion Same as federal income tax (page 18) If taxable paid-up capital < $4 billion Nil n/a 15th day of months 3, 6, 9 and 12 of the year Manitoba (If capital tax 1 $5,000, one instalment three 6 months after If taxable paid-up capital > $4 billion 5% months after year end) $10 million year end New Brunswick 20th day of each month Newfoundland If paid-up capital < $10 million $5 million Same as federal income tax (page 18) and Labrador If paid-up capital > $10 million Nil 4% Trust and loan Head office in N.S. $30 million Nova Scotia corporations Other 6 months after $500,000 20th day of each month Banks year end Prince Edward Island 5% $2 million Saskatchewan If paid-up capital < $1.5 billion 0.7% Up to If paid-up capital > $1.5 billion 3.25% $20 million Last day of each month (Waiver if capital tax for current year < $4,800) Last day of 6th month after year end If, in the taxation year ending after October 31, 2008, and before November 1, 2009, taxable paid-up capital < $1.5 billion, 0.7% applies to first $1.5 billion of taxable paid-up capital. For example, in Saskatchewan the balance payable would be June 30 for a December 15 year end. 1. In current or previous year. 20

25 Corporations Key tax changes Federal The general and M&P rate does not apply to certain corporations (e.g. mutual fund corporations, mortgage investment corporations and investment corporations). Income tax rates Other 2014 rates (for December 31, 2014 year ends) CCPCs General Sales Payroll and M&P Active business income Investment tax tax to $500,000 income 15% 11% 34.67% 5% GST None The federal government s goal is to achieve combined 25% federal/provincial and federal/territorial rates. Capital cost allowance (CCA): For property acquired generally after February 10, 2014, the Class % declining balance CCA rate is extended to water-current energy equipment and equipment used to gasify eligible waste fuel for use in a broader range of applications. Remittance thresholds for employer source deductions: The frequency of employer remittances, which is based on average monthly withholdings from two calendar years ago, will change as follows: Remittances Frequency Thresholds for employer source deductions per month before 2015 after 2014 Up to 2 $15,000 to < $50,000 $25,000 to < $100,000 Up to 4 $50,000 $100,000 For CPP and EI premiums, see page 31. Most of the key tax changes related to individuals also affect corporations. See pages 8 and 9. See our Tax Insights 2014 Federal budget: More tightening, few tax breaks at for more information on many of the changes discussed below. Eligible capital property (ECP) regime: A public consultation will consider replacing the ECP regime with a new CCA class for businesses and transferring taxpayers existing cumulative eligible capital (CEC) pools to the new CCA class. Draft legislative proposals will be released for comment. The timing of implementation will be determined after the consultation. Tax compliance: A three-point plan will be introduced to help small- and medium-sized businesses comply with tax rules: The Liaison Officer Initiative In-person information will be provided at key points in the business cycle. The Registration of Tax Preparers Program Tax preparers will be required to register so that the Canada Revenue Agency (CRA) can identify and address common and recurring errors with them before tax returns are filed. An enhanced focus on high-risk files The CRA will use advanced business intelligence and other approaches to identify and focus on high-risk sectors. Foreign affiliates: Newly enacted legislation and draft legislative proposals relating to the taxation of Canadian corporations with foreign affiliates is the culmination of legislative developments that started over a decade ago. See our Tax Insights at Bill C-48 gets royal assent: Implications for Canadian companies with foreign affiliates July 12, 2013 draft legislative proposals: Implications for foreign affiliates Treaty shopping: Consultation paper On August 12, 2013, the Department of Finance released a consultation paper Treaty Shopping The Problem and Possible Solutions to aid in examining the range of possible approaches to address the practice of treaty shopping in Canada. See our Tax Insights Preventing treaty shopping: Finance seeks input on possible measures at Anti-treaty shopping proposal On February 11, 2014, the government proposed a domestic anti-treaty shopping rule that uses a general approach to identify arrangements representing an improper use of Canada s tax treaties, along with guidance regarding its application. Base erosion and profit shifting On July 19, 2013, the Organisation for Economic Co-operation and Development (OECD) released an action plan on base erosion and profit shifting (BEPS). The BEPS initiative contemplates changes to the OECD s model tax convention and recommendations regarding the design of domestic rules to address tax treaty abuse, including treaty shopping. See our: Tax Insights BEPS Where are we? at PKN Alerts OECD reveals highly anticipated action plan on Base Erosion and Profit Shifting (BEPS) and The OECD releases calendar for planned stakeholder input into the BEPS project at 21

26 Corporations Tax planning by multinational enterprises: The government is seeking input on issues related to international tax planning by multinational enterprises. Insurance swaps: For taxation years beginning after February 10, 2014, an anti-avoidance rule in the foreign accrual property income (FAPI) regime intended to prevent Canadian taxpayers from shifting income from the insurance of Canadian risks offshore, is clarified to ensure that it applies to certain tax planning arrangements sometimes referred to as insurance swaps. Offshore regulated banks: For taxation years of taxpayers beginning after 2014, the exception for regulated foreign financial institutions from the FAPI regime will be amended. The aim is to ensure the exception no longer applies to certain Canadian taxpayers that are not financial institutions, but establish foreign affiliates and elect to subject those affiliates to regulation under foreign banking and financial laws, if the affiliate s main purpose is to invest or trade in securities on its own account, rather than to facilitate financial transactions for customers. Thin capitalization rules and back-to-back loan arrangements: To target certain back-to-back loan arrangements that have been undertaken by taxpayers using an interposed third party to avoid the application of Part XIII withholding tax and/or the thin capitalization rules: a specific anti-avoidance rule relating to withholding tax on interest payments will be introduced, for amounts paid or credited after 2014 an existing anti-avoidance provision in the thin capitalization rules will be amended, for taxation years that begin after Alberta Income tax rates (for December 31, 2014 year ends) CCPCs General and M&P Active business income Investment to $500,000 income 10% 3% 10% 25% 14% 44.67% Other 2014 rates Sales tax Payroll tax 5% GST None For CPP and EI premiums, see page 31. Figures in bold are combined federal/provincial rates. Additional highlights Qualifying Environmental Trusts (QETs): A new tax regime for QETs that parallels the federal QET tax regime was introduced to help accumulate funds for future site reclamation. Starting taxation years ending after December 31, 2013: QETs in Alberta will be required, for each calendar year, to pay tax at the 10% corporate rate on their trust income corporate beneficiaries of QETs will be eligible to receive refundable tax credits equal to the amount of the tax their QETs paid to Alberta (because corporate beneficiaries must also pay tax on their share of the QETs income for the year) Tax Information Exchange Agreements (TIEAs): Canada is negotiating eight TIEAs and has signed one that is not in force. Twenty-one have entered into force (one on behalf of five jurisdictions). 22

27 Corporations British Columbia General and M&P Income tax rates (for December 31, 2014 year ends) CCPCs Other 2014 rates Sales tax Active business income to $500,000 Investment income 11% 2.5% 11% 7% PST 26% 13.5% 45.67% 12% Corporate income tax rate changes Effective date General and M&P rates Before April 1, % April 1, % Payroll tax None For CPP and EI premiums, see page 31. Figures in bold are combined federal/provincial rates. Additional highlights Scientific Research and Experimental Development Tax Credit: This credit is extended three years to September 1, Film Incentive BC Tax Credit and Production Services Tax Credit: For productions with principal photography starting after February 18, 2014, the Distant Location Tax Credit will apply in the Capital Regional District for purposes of these credits. Credit unions: The preferential income tax treatment for credit unions will be phased out over five years, beginning taxation years that include January 1, This parallels the 2013 federal budget measure that phases out by 2017, the additional deduction from tax, which effectively provides credit unions access to the CCPC small business income tax rate for certain income not otherwise eligible, beginning March 21, Liquefied natural gas (LNG) tax: British Columbia will introduce a LNG tax regime. See our Tax Insights British Columbia unveils its liquefied natural gas (LNG) tax at Manitoba Income tax rates (for December 31, 2014 year ends) Other 2014 rates CCPCs General Active business income Sales Payroll and M&P Investment to $425,000 to tax tax income $425,000 $500,000 12% 0% 12% 12% 8% PST Nil to 4.3% 27% 11% 23% 46.67% 13% (see page 33) Corporate income tax rate changes Effective date Threshold up to which CCPC rate applies Before January 1, 2014 $400,000 January 1, 2014 $425,000 For CPP and EI premiums, see page 31. Figures in bold are combined federal/provincial rates. Additional highlights Co-op Education and Apprenticeship Tax Credit: Enhancements: extend the credit indefinitely (it was to expire on December 31, 2014) eliminate the pre-approval process for apprentices and journeypersons increase the credit rate and/or maximum credit as follows: Employer taxation year end Credit rate (applies to wages and salaries) Maximum credit (per year or level) Apprentice Hiring Incentive Entry-level (1 and 2) Advanced-level (3,4 and 5) Journeypersons Hiring Incentive before 2015 after 2014 before 2015 after 2014 before 2015 after 2014 $3,000 or $4,000 15% or 20% 10% 15% 10% 15% $5,000 The 20% rate ($4,000 maximum credit before 2015) applies if the apprentice normally resides outside Winnipeg and reports to an employer s office in rural and northern Manitoba. Manufacturing Investment Tax Credit: The credit is extended three years to December 31, Cultural Industries Printing Tax Credit: Effective March 6, 2014, the credit is capped at $30,000 of printing revenue (maximum annual credit of $4,500) and the book must be: at least 90% new material that was not previously published at least 65% text, if it is a non-children s book sold through an established distributor 23

28 Corporations Book Publishing Tax Credit: The credit is extended three years to December 31, Small Business Venture Capital Tax Credit: The lifetime limit in tax creditable shares a corporation can issue will increase from $5 million to $10 million. See page 11 for other enhancements to this credit. Community Enterprise Development Tax Credit: Effective June 12, 2014, corporations with a permanent establishment in Manitoba that pay at least 25% of their payroll to Manitoba residents will be eligible for this program. The maximum eligible shares a corporation can issue will increase from $1 million to $3 million. See page 11 for other enhancements to this credit. Rental Housing Construction Tax Credit: Amendments will clarify the affordable unit requirements and the certification process for projects and tenants. Odour Control Tax Credit: The credit is extended three years to December 31, New Brunswick Income tax rates (for December 31, 2014 year ends) CCPCs General and M&P Active business income Investment to $500,000 income 12% 4.5% 12% 27% 15.5% 46.67% Corporate income tax rate changes Effective date General and M&P rates Before July 1, % July 1, % Other 2014 rates Sales tax Payroll tax 13% HST None For CPP and EI premiums, see page 31. Figures in bold are combined federal/provincial rates. Additional highlights Small Business Investor Tax Credit: Starting 2014 taxation years, corporations are eligible for the credit and can claim a 15% non-refundable income tax credit on eligible small business investments of up to $500,000, for a maximum annual credit of $75,000. Investments in registered community economic development funds will be eligible for this credit. Regulatory reform: A smart regulations system will be implemented to reduce red tape for individuals and businesses. 24

29 Corporations Newfoundland and Labrador Northwest Territories Income tax rates (for December 31, 2014 year ends) CCPCs General M&P (non-m&p) Active business income Investment to $500,000 income 14% H 5% H 3.5% H 14% H 29% 20% 14.5% 48.67% Other 2014 rates Sales tax 13% HST Payroll tax Nil or 2% (see page 33) For CPP and EI premiums, see page 31. Figures in bold are combined federal/provincial rates. H = Tax holiday (see page 19). Income tax rates (for December 31, 2014 year ends) CCPCs General and M&P Active business income Investment to $500,000 income 11.5% 4% 11.5% 26.5% 15% 46.17% Other 2014 rates Sales tax 5% GST Payroll tax 2% (see page 33) For CPP and EI premiums, see page 31. Figures in bold are combined federal/territorial rates. The M&P rate applies only to companies that manufacture or process at a permanent establishment in the province. Corporate income tax rate changes Paid by employees. Additional highlights No significant corporate tax changes were announced. CCPC rate Effective date Before July 1, % July 1, % Additional highlights No significant corporate tax changes were announced. 25

30 Corporations Nova Scotia Income tax rates (for December 31, 2014 year ends) CCPCs General Active business income and M&P Investment to $350,000 to income $350,000 $500,000 16% 3% H 16% 16% 31% 14% 27% 50.67% Corporate income tax rate changes Effective date Other 2014 rates Sales tax Payroll tax 15% HST None CCPC rate Threshold up to which CCPC rate applies Before January 1, % $400,000 January 1, % $350,000 For CPP and EI premiums, see page 31. Figures in bold are combined federal/provincial rates. H = Tax holiday (see page 19). Nunavut Income tax rates (for December 31, 2014 year ends) CCPCs General and M&P Active business income Investment to $500,000 income 12% 4% 12% 27% 15% 46.67% Other 2014 rates Sales tax 5% GST Payroll tax 2% (see page 33) Paid by employees. For CPP and EI premiums, see page 31. Figures in bold are combined federal/territorial rates. Additional highlights Tax system review: Nunavut plans to conduct a comprehensive review of its tax system in the fiscal year. Additional highlights Tax, regulatory and fee review: Nova Scotia will undertake a comprehensive review of its taxes, fees, and regulations based on the principles of fairness, sustainability, simplicity and competitiveness. Harmonized Sales Tax (HST): Nova Scotia will maintain the HST rate at 15% until sustainable fiscal balances are achieved. The rate was to decline to 14% by July 1, 2014, and to 13% by July 1,

31 Corporations Ontario Income tax rates (for December 31, 2014 year ends) CCPCs General M&P (non-m&p) Active business income Investment to $500,000 income 11.5% H 10% H 4.5% H 11.5% H 26.5% 25% 15.5% 46.17% Other 2014 rates General corporate rate: This rate is frozen at 11.5% until the province returns to a balanced budget (scheduled for ). The rate was to drop to 11% on July 1, 2012, and to 10% on July 1, Additional highlights Large Canadian-controlled private corporations (CCPCs): The federal small business deduction clawback (see page 17) is extended to Ontario, for taxation years ending after May 1, 2014 (pro-rated for taxation years straddling this date). Business support programs review: Ontario is studying new tax measures to encourage business investment. Research and development (R&D) Ontario is reviewing options to restructure R&D tax support, including an enhanced tax credit on incremental investment and reduced tax credit rates if R&D investment is significantly decreased. Apprenticeship Training Tax Credit and Co-operative Education Tax Credit Ontario is considering making the credit non-refundable for large businesses and more effective. Pay or play tax incentives Ontario is considering these incentives, such as: a special corporate tax that could be eliminated or reduced by investing in new equipment or other eligible investment expenses a payroll tax that could be eliminated or reduced by employer investments in employee training and/or by funding training programs Sales tax 13% HST Payroll tax Nil or 1.95% (see page 33) The M&P rate applies to profits from M&P, as well as from processing, farming, mining, logging and fishing operations carried on in Canada and allocated to Ontario. Ontario corporations that, on an associated basis, have annual gross revenues of $100 million or more and total assets of $50 million or more may have a corporate minimum tax (CMT) liability based on adjusted book income. CMT is payable only to the extent that it exceeds the regular Ontario income tax liability. For CPP and EI premiums, see page 31. Figures in bold are combined federal/provincial rates. H = Tax holiday (see page 19). Ontario retirement pension plan (ORPP): Employers and employees that do not already participate in a comparable pension plan will each be required to contribute up to about $1,700 annually to the ORPP, starting in See our Tax Insights 2014 Ontario budget: Higher taxes for higher earners and some corporations at Tax avoidance: Closing loopholes: Ontario: will target schemes and practices that avoid the payment of provincial taxes will implement disclosure rules for aggressive tax avoidance transactions, similar to the federal rules supports federal government initiatives that address aggressive international tax planning urges the federal government to address interprovincial profit and loss shifting Underground economy: Ontario: is working on an action plan focused on illegal activities in high-risk sectors is working with the Canada Revenue Agency to enhance compliance activities that address the underground economy calls on the federal government to release its national strategy to combat the underground economy and coordinate efforts with the provinces Enhancing audit Ontario will expand the use of its Flexible and Integrated Risk System program to identify high-risk audit cases Technical amendments: Numerous provincial statutes will be amended to improve effectiveness and enforcement. 27

32 Corporations Prince Edward Island Quebec Income tax rates (for December 31, 2014 year ends) CCPCs General and M&P Active business income Investment to $500,000 income 16% H 4.5% H 16% H 31% 15.5% 50.67% Other 2014 rates Sales tax Payroll tax 14% HST None For CPP and EI premiums, see page 31. Figures in bold are combined federal/provincial rates. H = Tax holiday (see page 19). Income tax rates (for December 31, 2014 year ends) Other 2014 rates CCPCs General Active business income Sales Payroll and M&P Investment to $500,000 tax tax income Non-M&P M&P 11.9% H 8% H 6.85% H 11.9% H 9.975% QST 2.7% to 4.26% 26.9% 19% 17.85% 46.57% % (see page 33) For QPP, Quebec EI and QPIP premiums, see page 31. Figures in bold are combined federal/provincial rates. H = Tax holiday (see page 19). Corporate income tax rate changes Corporate income tax rate changes Effective date CCPC rate Before April 1, % April 1, % Additional highlights Credit unions: Prince Edward Island will mirror the 2013 federal budget measure that phases out by 2017, the additional deduction from tax, which effectively provides credit unions access to the CCPC small business income tax rate for certain income not otherwise eligible, beginning March 21, Regulatory burden: Prince Edward Island will address red tape and regulatory burden for businesses. Effective date CCPC rate M&P Before June 5, % June 5, % April 1, % Additional highlights Compensation tax for financial institutions: Effective June 4, 2014, base wages include any amount paid, allocated, granted or awarded to an employee because of his or her office or employment by a person not at arm s length with the employer (exceptions apply). Effective date Insurance premiums The rates apply to all active business income up to $500,000 if 50% or more of the CCPC s activities are attributable to M&P (based on M&P assets and labour). If this percentage is: more than 25% and under 50%, the rates are increased on a straight-line basis 25% or less, the rate will be 8% Banks and loan, trust and security trading companies Payroll Savings and credit unions Other (excluding insurance companies) Before April 1, % 2.8% 2.2% 0.9% April 1, 2019 Nil Retroactive to January 1, 2013, the compensation tax on payroll is nil for Other financial institutions, unless the financial institution made a joint election under section 150 of the Excise Tax Act, with a bank, a loan, trust or security trading company, a savings and credit union or an insurance company (or with any person that made this election). Additional deduction for manufacturing small- and medium-sized enterprises (SMEs): After June 4, 2014, manufacturing SMEs located in remote areas can deduct from income up to 6% of gross income, depending on the location of the SME and the level of its manufacturing activities, among other things. Health Services Fund (HSF): SMEs with annual payrolls of $5 million or less can reduce or eliminate the HSF contribution attributable to hiring specialized employees from the natural and applied sciences sector, after June 4,

33 Corporations Business tax credits: Over 30 business tax credit rates have been reduced by 20%, generally effective (except as noted) on or after June 4, These include: Rate Tax credit Before 20% reduction After 20% reduction R&D wage 17.5% to 37.5% 14% to 30% Research and University, public research development centre, research consortium 35% 28% and private partnership M&P investments 5% to 40% 4% to 32% Film and television production 35% to 65% 28% to 52% Film and Film production services 25% or 45% 20% or 36% digital media Film dubbing 35% 28% Production of multimedia titles 26.25% to 37.5% 21% to 30% Design 15% to 30% 12% to 24% Development of e-business 30% 24% Major employment-generating projects 25% 20% Modernization of the tourism accommodation offering 25% 20% Resources 15% to 38.75% 12% to 31% International financial centres 30% 24% New financial services corporations 40% 32% Also, see our Tax Insights June 2014 Quebec budget at The rate reductions apply to productions for which an application is filed after August 31, 2014 (after June 4, 2014, if the work production was not sufficiently advanced on June 4, 2014). The rate reduction applies to productions for which dubbing is completed after August 31, The credit is extended 10 years to December 31, For taxation years ending after December 31, 2013, the credit can be claimed on expenditures exceeding a single threshold of $50,000, instead of an annual threshold of $50,000. Refundable tax credit for the integration of information technologies in M&P: As of June 4, 2014, this credit is under review and no certificates will be issued. Manufacturing SMEs that previously received a certificate can continue to claim the credit of up to 25% of eligible expenditures incurred after October 7, 2013, and before 2018, to lease or acquire the rights to use a management software package (maximum cumulative credit of $62,500). See our Tax Insights Introduction of a refundable tax credit for the integration of Information Technologies in manufacturing SMEs at R&D wage tax credit for biopharmaceutical corporations: The 10% increase in the R&D wage tax credit base rate for biopharmaceutical corporations is eliminated on June 4, However, corporations that previously qualified for this increase will continue to benefit for taxation years that include June 4, 2014, but the 10% rate will decrease to 8%, generally for expenditures incurred after June 4, Tax credits for manufacturing SMEs: The following tax credits, which were available to manufacturing SMEs for expenses incurred after October 7, 2013, and before 2018, are eliminated generally for expenses incurred after June 4, 2014: the additional 10% tax credit for investments in M&P equipment the refundable credit for up to 50% of expenditures to acquire a building or add to an existing building as part of the acquisition of M&P equipment Refundable tax credit for resources: For taxation years beginning after December 20, 2013, to benefit from higher credit rates, the corporation must not be associated with another corporation that operates a mineral resource or an oil or gas well. Flow-through shares: For flow-through shares issued after December 31, 2013, for shareholders to benefit from additional deductions, the corporation must not be associated with another corporation that operates a mineral resource or an oil or gas well. Tax holiday for large investment projects: For investment projects starting after October 7, 2013, the minimum expenditure threshold for a project to qualify for this 10-year income tax holiday decreased from $300 million to $200 million. Cultural donations: Enhanced incentives for certain cultural donations made after July 3, 2013: Public artwork Donors of public artwork can claim: 125% of the fair market value (FMV) of the artwork, for artwork installed in certain places accessible to the public, or 150% of the FMV, for artwork installed in certain educational places accessible to students Studio space Donors of buildings that can house artists studios or cultural organizations can claim 125% of the FMV of the buildings Quebec Taxation Review Committee: To make the tax system more competitive, the committee will study Quebec s tax system, analyze its tax assistance measures and propose changes, before the budget. 29

34 Corporations Saskatchewan Yukon Income tax rates Other 2014 rates (for December 31, 2014 year ends) CCPCs General Sales Payroll M&P (non-m&p) Active business income Investment tax tax to $500,000 income 12% 10% 2% 12% 5% PST None 27% 25% 13% 46.67% 10% A rebate of up to 2% of M&P profits allocated to Saskatchewan can reduce the rate from 12% to as low as 10%. Corporate income tax rate changes Effective date General rate July 1, % To be determined 10% For CPP and EI premiums, see page 31. Figures in bold are combined federal/provincial rates. General Income tax rates (for December 31, 2014 year ends) CCPCs M&P Active business income to $500,000 Non-M&P M&P Investment income 15% 2.5% 3.5% 2% 15% 30% 17.5% 14.5% 13% 49.67% Corporate income tax rate changes Effective date CCPC rate Non-M&P M&P Before July 1, % 2.5% July 1, % 1.5% Other 2014 rates Sales tax Payroll tax 5% GST None For CPP and EI premiums, see page 31. Figures in bold are combined federal/territorial rates. Additional highlights Credit unions: Saskatchewan will not harmonize with the 2013 federal budget measure that phases out by 2017, the additional deduction from tax, which effectively provides credit unions access to the CCPC small business income tax rate for certain income not otherwise eligible, beginning March 21, Additional highlights Regulatory burden: Yukon will review the red tape regulatory burden facing businesses. 30

35 Individuals and corporations CPP/QPP, EI and QPIP premiums Employees with insurable earnings for the year below $2,000 can claim a refund of premiums. All contributors (other than those in Quebec) Quebec contributors Maximum pensionable earnings $51,100 $52,500 - Basic exemption $3,500 = Maximum contributory earnings $47,600 $49,000 CPP Employer/employee rate 4.95% Maximum employer/employee contribution $2,356 $2,426 Self-employed contribution rate 9.9% Maximum self-employed contribution $4,712 $4,851 Maximum annual insurable earnings $47,400 $48,600 Employee $1.88 Premium per $100 insurable earnings EI premiums Employer $2.632 Annual maximum contribution Employee $891 $914 Employer $1,248 $1,279 Maximum annual insurable earnings $51,100 $52,500 - Basic exemption $3,500 = Maximum contributory earnings $47,600 $49,000 QPP (higher Employer/employee rate 5.10% 5.175% than CPP) Maximum employer/employee contribution $2,428 $2,536 Self-employed contribution rate 10.20% 10.35% Maximum self-employed contribution $4,855 $5,072 Maximum annual insurable earnings $47,400 $48,600 EI (lower than Employee $1.52 $1.53 federal EI Premium per $100 insurable earnings Employer $2.128 $2.142 premiums due to the QPIP) Employee $720 $744 Annual maximum contribution Employer $1,009 $1,041 Maximum annual insurable earnings $67,500 $69,000 Premium per $100 insurable earnings Employee $0.559 Employer $0.782 QPIP premiums Employee $377 $386 Annual maximum contribution Employer $528 $540 Premium per $100 insurable earnings Self- $0.993 Annual maximum contribution employed $670 $685 Self-employed individuals are permitted to deduct half of CPP/QPP premiums paid for their own coverage. The non-deductible half qualifies for a tax credit. As well, a portion of the QPIP premiums paid by self-employed individuals is deductible. Self-employed individuals do not pay EI premiums. 31

36 Individuals and corporations Health care premiums and sales tax rates Health care premiums The health care premiums shown are payable by individuals, but may be remitted through payroll withholdings. Premiums will increase on January 1, 2015, by $2.75 for single individuals, $5.00 for two-person families and $5.50 for families of three or more persons. British Columbia Quebec Quebec Health contribution Medical Services Plan Prescription Drug Insurance Plan Health Services Fund Applies only if income from certain sources, excluding remuneration, exceeds $14,135. Premiums Frequency Relief Single $69.25 of two $ Monthly Family of > two $ Individuals up to $611 up to $1,000 Annual Net income Annual premiums per individual < $20,175 5% of income > $18,175 $20,175 to $42,390 $ % of income > $40,390 $42,390 to $151,260 $ % of income > $131,260 $151,260 $1,000 Low-income earners can get assistance Exemptions apply (e.g. certain seniors, students) None The premium was up to $607 before July 1, Thresholds are indexed. Sales tax rates for 2014 Federal GST only HST PST (or QST) and GST Rate Total rate 5% GST Alberta Northwest Territories Nunavut 5% federal GST only Yukon New Brunswick Newfoundland 13% and Labrador Nova Scotia 15% Ontario 13% Prince Edward Island 14% British Columbia 7% 12% Manitoba 8% 13% Quebec 9.975% % Saskatchewan 5% 10% Manitoba s 8% rate will decline to 7% on July 1, 2023 A 5% First Nation GST applies instead in certain First Nations. Nova Scotia s HST rate will remain 15%. Planned decreases will not occur. See pages 13 and 26. Ontario Health Premium Taxable income Annual premiums per individual < $25,000 6% of income > $20,000 $25,000 to $38,500 $ % of income > $36,000 $38,500 to $48,600 $ % of income > $48,000 $48,600 to $72,600 $ % of income > $72,000 $72,600 to $200,600 $ % of income > $200,000 $200,600 $900 32

37 Individuals and corporations Payroll tax rates Associated employers must aggregate their payroll costs to apply the thresholds. In the Northwest Territories and Nunavut, payroll tax is paid by employees through payroll withholdings. The $450,000 exemption will be indexed every five years. It is not available to private-sector employers with annual Ontario payrolls over $5 million. Small- and medium-sized enterprises can reduce or eliminate their Health Services Fund contributions on certain payroll after June 4, See page 28. Manitoba Newfoundland and Labrador Northwest Territories Nunavut Ontario Quebec Health and Post-Secondary Education Tax Rate Total payroll Payroll tax 2.15% Over $2,500,000 Payroll x 2.15% 4.3% $1,250,000 to $2,500,000 (Payroll $1,250,000) x 4.3% 0% $0 to $1,250,000 $0 2% Over $1,200,000 (Payroll $1,200,000) x 2% 0% $0 to $1,200,000 $0 Payroll tax 2% Over $0 Payroll x 2% Employer Health Tax Health Services Fund 1.95% Over $5,000,000 Payroll x 1.95% $450,000 to $5,000,000 (Payroll $450,000) x 1.95% 0% $0 to $450,000 $0 4.26% Over $5,000,000 Reduced rates $1,000,000 to $5,000,000 Payroll x rate 2.7% $0 to $1,000,000 Reduced rates for employers with annual payrolls between $1 million and $5 million depend on both the calendar year and the employer s total payroll. Every Quebec employer with a payroll of $1 million or more must allot at least 1% of payroll to training, or contribute the shortfall to a provincial fund. In limited cases, corporations may be exempt from contributing to the Health Services Fund, and refunds may be made. Financial institutions (excluding insurers) may also be subject to a compensation tax on payroll. See page 28. Employees, employers and the self-employed must contribute to the Quebec Parental Insurance Plan (QPIP) and individuals may be required to contribute to the Quebec Health contribution and the Health Services Fund. See pages 31 and

38 Individuals and corporations Retirement savings and profit sharing plans For registered retirement savings plans (RRSPs), defined contribution registered pension plans (RPPs) and deferred profit sharing plans (DPSPs), the amount that can be contributed in a year is the lesser of: 18% of earned income for the previous year (for RRSPs) or of pensionable earnings for the current year (for RPPs and DPSPs) fixed-dollar limits The table below outlines these limits. For example, for RRSPs, the $24,930 fixed dollar limit applies in 2015 if earned income in 2014 (i.e. the previous year) exceeds $138,500 (because 18% of $138,500 is $24,930). Different rules apply for defined benefit plans. Other factors, such as past service pension adjustments, may affect these limits and are not shown, nor are special rules that may apply to transfers and deceased taxpayers. The PA reflects the value of benefits accruing to the individual for the year in a DPSP and/or an RPP, whether defined benefit or defined contribution. A PAR may restore RRSP contribution room when a member withdraws from a defined benefit RPP and the amount received is less than the total PAs. Contribution limits Deadlines % of earnings Dollar limits Limits apply to: Reduced by: Registered retirement savings plan (RRSP) 18% of earned income for the previous year Maximum contribution Earned income (previous year) Defined contribution registered pension plan (RPP) Maximum contribution Deferred profit sharing plan (DPSP) 18% of pensionable earnings for the year Pensionable earnings (current year) Maximum contribution Pensionable earnings (current year) 2013 $23,820 > $132,333 $24,270 > $134,833 $12,135 > $67, $24,270 > $134,833 $24,930 > $138,500 $12,465 > $69, $24,930 > $138, Indexed All contributions Combined employer/employee contributions Employer contributions Pension Adjustment (PA) for the previous year DPSP contributions for the year (Terms of plan may impose lower limits) Defined contribution RPP contributions for the year (Terms of plan and employer s profits may impose lower limits) Increased by: Unused contribution limits of previous years and pension n/a adjustment reversals (PARs) Stated in: Previous year s Notice of Assessment Documents provided by the employer or plan administrator Employer s contribution n/a 120 days after employer s year end Individual s contributions 60 days after the calendar year end (i.e. March 1, but February 29 for leap years; adjusted for deadlines that fall on weekends) December 31 n/a Employee contributions to DPSPs are not permitted. 34

39 Individuals and corporations R&D tax credits Federal SR&ED investment tax credit rates The federal investment tax credit (ITC) and refund rates shown apply to expenditures incurred in Unused federal ITCs may reduce federal taxes payable for the previous three years and the next twenty. Before 2014: the 15% ITC rate was 20% and capital property was eligible for ITCs the refund rate was 100% of ITCs on current expenditures computed at the 35% rate plus 40% of ITCs on capital expenditures computed at the 35% rate and 40% of ITCs computed at the 20% rate Generally, a CCPC s $3 million expenditure limit in respect of the 35% credit is reduced by: $10 for every $1 by which its previous year s taxable income exceeded $500,000, up to $800,000 $0.075 for every $1 of its previous year s taxable capital employed in Canada above $10 million, up to $50 million Thresholds are on an associated basis. Qualified SR&ED in Canada Qualifying Canadian-Controlled Private Corporations (CCPCs) Other corporations Individuals Investment tax credit (ITC) rate 35% of annual qualified expenditures up to threshold ($3 million or less) + 15% of qualified expenditures not eligible for the 35% rate 15% Applies to current expenditures. Refund rate 100% of ITCs computed at the 35% rate + 40% of ITCs computed at the 15% rate n/a 40% of ITCs The SR&ED ITC is also available for certain salaries or wages incurred in respect of SR&ED carried on outside Canada (limited to 10% of salaries and wages directly attributable to SR&ED carried on in Canada). Provincial and territorial R&D tax credits Only corporations are eligible for R&D tax credits, except in Newfoundland and Labrador, Quebec and Yukon, where individuals can also claim the credits. In Ontario, corporations that have taxable income under $500,000 and taxable capital under $25 million can claim the innovation tax credit on up to $3 million of expenditures. Those with taxable income between $500,000 and $800,000 or taxable capital between $25 million and $50 million are eligible for a partial credit % of current expenditures and 40% of capital expenditures are eligible. 20% of qualifying payments (up to $20 million annually on an associated basis) to an Ontario eligible research institute. For R&D expenditures incurred generally before June 5, 2014, the R&D wage tax credit rate was 17.5% to 37.5%. See page 29. Quebec Canadian-controlled corporations with less than $50 million in assets can claim the 30% (previously 37.5%) rate on up to $3 million of R&D wages. For those with assets between $50 million and $75 million, the rate is gradually reduced to 14% (previously 17.5%). The rate is 14% (previously 17.5%) for all other taxpayers (higher in certain cases). See page % of payments to unrelated subcontractors are eligible for the credit. 1 For R&D expenditures incurred generally before June 5, 2014, the tax credit rate was 35%. In some cases, Quebec s 28% (previously 35%) credit is available on 80% of payments to certain eligible entities (e.g. universities and public research centres). 1. Ontario and Quebec thresholds are in respect of the previous year, on a worldwide associated basis. Alberta s maximum annual credit is $400,000. Rate Refundable? Alberta Yes Qualifying CCPCs 10% British Columbia Other corporations No Manitoba 20% Yes/No New Brunswick Newfoundland and Labrador 15% Nova Scotia Yes Ontario Innovation tax credit 10% Business research institute tax credit 20% n/a Carryback Carryforward 3 years 10 years R&D tax credit 4.5% No 3 years 20 years R&D wage tax credit 14% to 30% Quebec University, public research centre, research consortium and private 28% partnership tax credits Yes n/a Saskatchewan Qualifying CCPCs Other corporations 15% No 3 years 10 years Yukon Yes n/a Yukon s rate is 20% on R&D expenditures made to the Yukon College. British Columbia s refundable tax credit is 10% of the lesser of eligible BC R&D expenditures and the federal expenditure limit (i.e. $3 million or less). n/a Manitoba s credit is: fully refundable for certain eligible expenditures incurred after 2009 partially refundable for in-house R&D expenditures incurred after 2010 Applies to R&D expenditures incurred before March 19, 2009, and certain R&D expenditures incurred after March 31, Saskatchewan s refundable tax credit is 15% of the lesser of eligible Saskatchewan R&D expenditures and the federal expenditure limit (i.e. $3 million or less). 35

40 Individuals and corporations Land transfer tax and registration fees The provinces and territories charge land transfer taxes and registration fees on the purchase of real property within their boundaries. Some exemptions or refunds are available. Higher rates may apply to non-residents. Additional fees may be imposed (e.g. on the registration of the deed or mortgage). Calculation Value used 36 Minimum of $60 in Nunavut and $100 in Northwest Territories. In Ontario and Toronto, land transfer tax applies to registered and unregistered transfers, including dispositions of a beneficial interest in land. Alberta $ % of value Value of property 1% of portion < $200,000 British Columbia + 2% of portion > $200,000 $ % of portion between $30,000 and $90,000 Fair market value + 1% of portion between $90,000 and $150,000 of property Manitoba + 1.5% of portion between $150,000 and $200, % of portion > $200,000 Greater of assessed value and New Brunswick $ % of value consideration for the transfer Newfoundland and Labrador $ % of portion > $500 Value of property Nova Scotia $100 + Up to 1.5% (determined by municipality) 0.5% of portion < $55,000 General + 1% of portion between $55,000 and $250,000 Ontario + 1.5% of portion > $250,000 Family dwelling As above + 0.5% of portion > $400,000 (one or two units) 0.5% of portion < $55,000 Value of consideration + 1% of portion between $55,000 and $400,000 General Addition for + 1.5% of portion between $400,000 and $40 million Toronto + 1% of portion > $40 million Family dwelling As above + 0.5% of portion between $400,000 and $40 million (one or two units) + 1% of portion > $40 million Northwest Territories 0.15% of portion < $1,000,000 Nunavut + 0.1% of portion > $1,000,000 Prince Edward Island Non-residents and corporations General 1% of value, if value > $30,000 As above + 1% of value ($550 minimum) (Depends on land size and corporate ownership) 0.5% of portion < $50,000 Quebec + 1% of portion between $50,000 and $250, % of portion > $250, % of portion between $500,000 and $1 million Addition for Montreal + 1% of portion > $1 million Saskatchewan 0.3% ($25 minimum) 0.2% of portion < $5, % of portion between $5,000 and $10,000 Yukon % of portion between $10,000 and $25, % of portion > $25,000 Greater of assessed value and consideration for the transfer Purchase price Greatest of: consideration furnished; consideration stipulated; and fair market value of property. Value of property

41 Individuals and corporations Filing deadlines Deadlines falling on holidays or weekends may be extended to the next business day. In addition to income tax returns, individuals, trusts, corporations and partnerships may be subject to other filing requirements. Several are noted below. See page 6 for individual and trust income tax deadlines. For corporate income tax and financial institution capital tax deadlines, see pages 18 and 20, respectively. Earlier deadlines apply to publicly traded trusts and publicly traded partnerships for posting information relating to T3s and T5013s to the CDS Innovations Inc. website. Income reporting Information returns Notice of objection Trusts Other Tax shelter Partnership Transactions with nonresidents Foreign property/trust Jurisdiction or form Federal, Quebec (T3 slip/relevé 16) Federal, Quebec (T4/relevé 1, T5/ 90 days after trust year end Filing deadline Details and exceptions If filer s business activity is relevé 3, etc.) Last day of February discontinued, March 31 deadline for partnership information returns applies to partnerships with only deadline is individual members. Otherwise: Federal, Quebec 30 days after for partnerships with only corporate members: five months after end of fiscal period Federal, Quebec discontinuance. for partnerships with both individual and corporate members: earlier of last day of March (T5013/relevé 15) Last day of March and five months after end of fiscal period in all cases, if partnership discontinues, earlier of normal filing deadline and 90 days after discontinuance Federal: NR4 Federal: T106 (transactions with non-arm s length parties) Federal: T1135 T1141 T1142 Federal: T1134 Federal, all provinces Individuals: April 30 Corporations: 6 months after year end Trusts: 90 days after year end Partnerships (T106, T1135 and T1142 only): same as for partnership information return Individuals, corporations, trusts and partnerships:15 months after year end 90 days after mailing date of assessment or reassessment n/a For trusts, form NR4 is due 90 days after the trust s year end. For individuals, forms T106, T1135, T1141 and T1142 are due June 15 if the taxpayer or the taxpayer s spouse carried on a business in the year. In all jurisdictions, for an individual or a testamentary trust: the later of one year after the filing due date and 90 days after mailing date of the assessment or reassessment. n/a For the 2013 taxation year, Form T1135 filers may benefit from transitional rules and the filing deadline is extended to July 31, See page 9 for more details. 37

42 Individuals and corporations Prescribed interest rates income, capital and payroll taxes New Brunswick s rate for underpayments is 13.5% (1.06% per month) before March 1, Rates left blank were not available when Tax facts and figures was published. Federal prescribed rates also apply to provincial/ territorial personal and corporate income tax collected by the Canada Revenue Agency. Compounding schedule Daily Monthly Daily Monthly Daily Monthly Daily Federal: Income tax, financial institutions capital tax, source deductions, CPP and EI Alberta: Corporate income tax Manitoba: Financial institutions capital tax and Health and Post-Secondary Education Tax New Brunswick: Financial institutions capital tax Newfoundland and Labrador: Financial institutions capital tax Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Jan. - Mar. Apr. - Jun. Jul. - Sep. Oct. - Dec. Jan. - Mar. Apr. - Jun. Jul. - Sep. Oct. - Dec. Underpayments 5% 6% 5% Overpayments Corporations 1% 2% 1% Other 3% 4% 3% Taxable benefits 1% 2% 1% Underpayments 4.5% 5.5% 4.5% Overpayments 0.5% 1% 0.5% Underpayments Some overpayments 9% Underpayments 13.5% 9.5% (0.7591% per month) Overpayments New Brunswick does not pay interest on overpayments Underpayments 5% 6% 5% Overpayments 1% 2% 1% Health and Post-Secondary Underpayments 7% Education Tax Overpayments 3% Nova Scotia: Financial institutions capital tax Underpayments 5% 6% 5% Overpayments Nova Scotia does not pay interest on overpayments Underpayments 6% Ontario: Employer Health Tax Overpayments 0% Refunds from objection or appeal 3% Underpayments 19.56% (1.5% per month) Prince Edward Island: Overpayments Prince Edward Island does not pay interest on overpayments Financial institutions capital tax Refunds from objection or appeal 19.56% (1.5% per month) Underpayments 6% Quebec: Corporate and personal income tax Overpayments 1.3% 1.25% and Health Services Fund contributions Taxable benefits 1% 2% 1% 1.4% Not compounded Saskatchewan: Financial institutions capital tax Underpayments 6% Overpayments 3% Quebec charges an additional 10% per year on underpaid instalments if less than 75% for individuals, or 90% for corporations, of the required amount is paid. 38

43 International US top individual income tax rates federal and state combined (2014) Combined state and federal rates generally apply to employment income, interest and non-qualified dividends, among other things. These rates are shown on the right for the top four federal brackets, which are set out below. Top four federal taxable income ranges ($US) Fourth Third Second Top Single $89,350 to $186,350 to $405,100 to Above $186,350 $405,100 $406,750 $406,750 Married filing jointly $148,850 to $226,850 to $405,100 to Above $226,850 $405,100 $457,600 $457,600 Federal marginal rate 28% 33% 35% 39.6% The tables do not take into account: deductibility of state taxes for federal tax purposes, which will reduce the tax rates shown full or partial deductibility of federal taxes for state tax purposes, which may reduce the tax rates shown for Alabama, Iowa, Louisiana, Missouri, Montana and Oregon other taxes that may apply (e.g. alternative minimum taxes) special rates for certain types of income (e.g. long-term capital gains, qualified dividends) or in certain circumstances (e.g. to non-residents of a state who have income from that state) city or county income taxes marginal rates that apply under the status married filing separately or head of household In Arizona, 32.54% applies to single filers, 32.24% to married joint filers. In California: 44.3%, 46.3% and 51.9% apply to single filers, 42.3%, 44.3% and 50.9% to married joint filers the rate is: 51.9% on incomes over $1 million up to $1,017,000 for married joint filers 52.9% on incomes over $1 million for single filers and over $1,017,000 for married joint filers In Connecticut, 39.7% and 41.7% apply to single filers, 39.5% and 41.5% to married joint filers. In Hawaii, 38% applies to single filers, 36.25% to married joint filers. In Massachusetts, the rates are 6.8% higher on short-term capital gains. In Minnesota, 37.85% applies to single filers, 35.85% to married joint filers. In New Hampshire, the rates are 5% higher on interest and dividends. In New York, the rate is 48.42% on incomes over $1,046,350 for single filers and over $2,092,800 for married joint filers. In Ohio, 32.96% applies to single filers, 33.39% to married joint filers. In Oregon, 37.9% applies to single filers, 37% to married joint filers. In Tennessee, the rates are 6% higher on interest and dividends. Combined federal and state rates (%) Fourth Third Second Top Federal Alabama Alaska Arizona or Arkansas California or or or 50.9 Colorado Connecticut or or Delaware Florida Georgia Hawaii 38 or Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota or Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio or Oklahoma Oregon 37.9 or Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington Washington D.C West Virginia Wisconsin Wyoming

44 International US estate, gift and generation-skipping transfer tax rates A US estate tax, gift tax or generation-skipping transfer tax liability may arise for US citizens and Canadian residents, as follows: US citizens (residing in Canada or elsewhere) Canadian residents (who are not US citizens) Circumstances Estate tax imposed on Gift tax imposed on Transfers: on death of property during lifetime Individual: dies owning US-situs assets (e.g. shares of US corporations, US real estate, US business assets), or transfers real or tangible US-situs assets during lifetime Various deductions and adjustments are allowed in calculating the tax base for estate tax purposes. Fair market value (FMV) of taxpayer s worldwide assets at death. Taxpayer s US-situs assets at death. If FMV of worldwide assets < US$5.34 million (based on 2014 rates), there is no US estate tax on US assets due to the unified credit. FMV of gifts of all property regardless of where the property is located. FMV of gifts of US real property and US-situs tangible personal property. Generation-skipping transfer tax may apply in addition to estate or gift tax. A transfer is generation-skipping and subject to the US generation-skipping transfer tax if it is: subject to either gift or estate tax, and made to a person who is two or more generations younger than the donor (e.g. a grandchild) Rates are additive. For example, tax on $14,000 would be $2,600 (i.e. [18% x $10,000] + [$4,000 x 20%]). For gift tax, apply the rates to the cumulative taxable lifetime transfers made (generally, based on the fair market value of the transferred property) and subtract the gift tax previously payable. Canadian residents (who are not US citizens) can reduce their estate tax liability by claiming a unified credit equal to the greater of: US$13,000 the amount of the unified credit (i.e. US$2,081,800 in 2014) given to a US citizen, pro-rated by the value of the individual s US assets divided by his or her worldwide assets The unified credit is equal to the amount of tax that applies at the exemption level. Threshold Exemption (US$) Unified credit ($US) $0 18% $10,000 20% $20,000 22% $40,000 24% $60,000 26% $80,000 28% $100,000 30% $150,000 32% $250,000 34% $500,000 37% $750,000 39% $1,000,000 40% Estate tax Generation-skipping transfer tax $5,250,000 $5,340,000 Gift tax Estate tax Generation-skipping transfer tax $2,045,800 $2,081,800 Gift tax The gift tax unified credit is a lifetime exclusion. An annual exclusion of US$14,000 or US$145,000 to a non-us citizen spouse (US$143,000 in 2013) per donee also applies. For 2013 and 2014, the total of the estate tax and gift tax exemption cannot exceed US$5,250,000 and US$5,340,000, respectively. Generation-skipping transfer tax has a separate US$5,340,000 (US$5,250,000 in 2013) exemption. 40

45 International US corporate income tax rates federal and state (2014) Rates apply to income from the thresholds shown to the next threshold (or to all higher income if there is no higher threshold). The threshold refers to taxable income for federal purposes, and to taxable or net income, depending on the state. Federal rates and brackets ($US) Threshold Rate (%) $100, $335, General $10,000, $15,000, $18,333, Personal service 35 $0 Personal holding 20 Accumulated Personal service $150,000 earnings Other $250, A deduction for domestic production activities reduces the effective tax rate on this income to 31.85%. Additional tax applies to undistributed income. May apply in addition to regular tax. The tables do not take into account: lower rates (federally and in some states) that apply only to income below $100,000 other taxes that may be imposed (e.g. minimum taxes, franchise taxes, capital taxes) special rates that may apply to certain types of corporations (e.g. S-Corporations, banks, insurance corporations) or on certain types of income (e.g. capital gains, income from domestic production activities; see above) city or county income taxes the deductibility of state taxes for federal tax purposes the deductibility of federal taxes for state tax purposes in Alabama, Iowa, Louisiana and Missouri State rates and brackets ($US) In Connecticut, if annual gross revenues are at least $100 million, a 20% surcharge applies. Threshold Rate (%) Alabama $0 6.5 $99,000 5 $124,000 6 Alaska $148,000 7 $173,000 8 $198,000 9 $222, Arizona $0 6.5 Arkansas $100, California $ Colorado $ Connecticut $0 7.5 Delaware $0 8.7 Florida $50, Georgia $0 6 Hawaii $100, Idaho $0 7.4 Personal property $0 2.5 Illinois General $0 7 Indiana $ Iowa $100, $250, Kansas $50,000 7 Kentucky $100,000 6 Louisiana $100,000 7 $200,000 8 Maine $75, $250, Maryland $ Massachusetts $0 8 Michigan $0 6 Minnesota $0 9.8 Mississippi $10,000 5 Missouri $ Montana $ Nebraska $100, In Michigan, a 6% corporate income tax replaced the Michigan Business Tax (MBT) on January 1, However, taxpayers with certificated or awarded credits can elect to continue to pay MBT until all credits are used or expired. For Indiana, the rate is 7.5% before July 1, 2014, and 7% after June 30, Threshold Rate (%) Nevada No income tax New Hampshire $0 8.5 New Jersey $0 9 $0 4.8 New Mexico $500, $1,000, Qualified manufacturers No income tax Small business $0 6.5 New (Net income $290, York < $390,000) $350, Other $0 7.1 North Carolina $0 6 North Dakota $50, Ohio No income tax Oklahoma $0 6 Oregon $0 6.6 $1,000, Pennsylvania $ Rhode Island $0 9 South Carolina $0 5 South Dakota No income tax Tennessee $0 6.5 Texas No income tax Utah $0 5 Vermont $25, Virginia $0 6 Washington No income tax Washington D.C. $ West Virginia $0 6.5 Wisconsin $0 7.9 Wyoming No income tax In Wisconsin, businesses with at least $4 million in annual gross receipts pay a 3% surcharge on their tax (maximum surcharge is $9,800). In lieu of income tax, Ohio, Texas and Washington impose a gross receipts tax that applies on a business s gross income, regardless of whether the business has made a profit. 41

46 International Canada s treaty withholding tax rates This table summarizes treaty withholding tax rates (%) on payments arising in Canada. Rates in square brackets after an arrow are set out in a protocol, replacement treaty or new treaty that is signed, but not in force. To the left of the arrow are the rates that are being replaced, i.e. the rate or rates in the existing treaty or protocol or, if no treaty is in force, the 25% rate imposed by Canada. If two or more dividend rates are provided, the lower (lowest two for Vietnam) applies if the recipient is a company that owns or controls a specified interest of the payor. Dividends Related-party interest 3 Royalties 4 Algeria or 15 Argentina 10 or , 5, 10 or 15 Armenia 5 or Australia N 5 or Austria 5 or or 10 Azerbaijan 10 or or 10 Bangladesh Barbados or 10 Belgium 5 or or 10 Brazil 15 or or 25 Bulgaria 10 or or 10 1 Cameroon Chile 1 10 or China P.R. (not Hong Kong) N 10 or Colombia, Rep. of 5 or Croatia 5 or Cyprus or 10 Czech Rep. 5 or Denmark 5 or or 10 Dominican Rep or 18 Ecuador 5 or or 15 1 Egypt Estonia 5 or Finland 5 or or 10 France 5 or or 10 Gabon Germany 5 or or 10 Greece 5 or or 10 Guyana Hong Kong 5 or Hungary 5 or or 10 Dividends Related-party interest 3 Royalties 4 Iceland 5 or or 10 India 15 or , 15 or 20 Indonesia 10 or Ireland 5 or or 10 Israel N or 15 Italy 5 or , 5 or 10 Ivory Coast Jamaica Japan 5 or Jordan 10 or Kazakhstan 5 or Kenya 15 or Korea (South) 5 or Kuwait 5 or Kyrgyzstan or 10 Latvia 5 or Lebanon 25 [5 or 15] 25 [10] 25 [5 or 10] Lithuania 5 or Luxembourg 5 or or 10 Madagascar N 25% imposed by Canada Malaysia N Malta or 10 Mexico 5 or or 10 Moldova 5 or Mongolia 5 or or 10 Morocco or 10 Namibia 25 [5 or 15] 25 [10] 25 [0 or 10] Netherlands N 5 or or 10 New Zealand 15 [5 or 15] 15 [10] 15 [5 or 10] Nigeria 12.5 or Norway 5 or or 10 Oman 5 or or 10 Dividends Related-party interest 3 Royalties 4 Pakistan or 15 Papua New Guinea Peru 1 10 or Philippines Poland 5 or or 10 Portugal 10 or Romania 5 or or 10 Russia 10 or or 10 Senegal Serbia 5 or Singapore Slovak Republic 5 or or 10 Slovenia 5 or South Africa 5 or or 10 Spain N or 10 Sri Lanka or 10 Sweden 5 or or 10 Switzerland 5 or or 10 Tanzania 20 or Thailand or 15 Trinidad and Tobago 5 or or 10 Tunisia , 15 or 20 Turkey 15 or Ukraine 5 or or 10 United Arab Emirates 5 or or 10 United Kingdom N 5 or or 10 United States 5 or or 10 Uzbekistan 5 or or 10 Venezuela 10 or or 10 Vietnam 5, 10 or or 10 Zambia Zimbabwe 10 or N Negotiation or renegotiation of tax treaty or protocol underway, or concluded (but not signed). 1. If the other state (Canada for treaty with Oman) concludes a treaty with another country providing for a lower rate (higher for Kenya), the lower rate (higher for Kenya) will apply in respect of specific payments or with limits, in some cases. 2. For the United States, the nil rate applies subject to the Limitation on Benefits article. 3. Canadian withholding tax does not apply to interest (except for participating debt interest ) paid or credited to arm s length non-residents. 4. A nil royalty rate generally applies to: copyright royalties and payments for a literary, dramatic, musical or other artistic work (but not royalties for motion picture films or works on film or videotape or other means of reproduction for use in television) royalties for computer software or a patent, or for information concerning industrial, commercial or scientific experience (but not royalties for a rental or franchise agreement) or for broadcasting 42

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