CORPORATE TAXES SIGNIFICANT DEVELOPMENTS
There have been no significant tax or regulatory developments in the past year.
GENERAL NOTE
The following information is based on actual and proposed legislation as of January 1,1999. It is assumed that the proposed legislation will become law.
TAXES ON CORPORATE INCOME
Federal income tax/The following rates apply for December 31,1998 year-ends. No federal rate changes came into effect during the 1998 calendar year.
MANUEACTURING
AND PROCESSING OTHER
% %
Basic rate 38.0 38.0
Less-Provincial abatement (Note 1) 10.0 10.0
Federal rate before surtax 28.0 28.0
Federal surtax of 4% (Note 2) 1.1 1.1
29.1 29.1
Less-Manufacturing and processing
profits deduction 7.0 --
Net federal tax rate 22.1 29.1
"Typical provincial rate " (Note 3) 13.5 15.5
Total rate (Note 4) 35.6 44.6
Notes:
1. The basic rate of federal tax is reduced by a 10% abatement to allow the provinces and territories room to impose corporate income taxes. The abatement is available in respect of taxable income allocated to Canadian provinces and territories. Income allocable to a foreign jurisdiction is subject to the full rate of federal tax and is normally not subject to provincial or territorial taxes.
2. All corporations, except nonresident-owned investment corporations, are subject to a 4% surtax that is calculated on the basic rate less the provincial abatement.
3. Provincial taxes apply in addition to federal taxes. Provincial tax rates are noted below.
4. A federal rate of 13.1% applies to the first Can$200,000 of active business income of small Canadian-controlled private corporations. After taking into account the "typical" provincial rate (of 9.5%) , the total rate on such income is 22.6%. Investment income (other than most dividends) of Canadian-controlled private corporations is subject to tax
at the rate calculated for other income, in addition to a refundable federal tax of 6 2/3%.
Provincial income tax/All provinces and territories impose income tax on income allocable to a permanent establishment in the province or territory. Income is generally allocated to a province or territory by using a two-factor formula based on gross revenue and on salaries and wages . Provincial and territorial income taxes are not deductible for federal income tax purposes. The rates given apply for December 31,1998
year-ends. No rate changes came into effect during
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