Corporate Income Tax

The federal government introduced a measure which phases out access to the federal small business Corporate Income Tax rate based on the amount of passive investment income earned by a corporation. Ontario is proposing to not parallel this federal measure. Learn more.

Generally, corporations carrying on business through a permanent establishment in Ontario are subject to both federal and Ontario corporate income taxes. The tax rates apply to taxable income allocated to Ontario.

General rate

The Ontario General corporate income tax rate is:

• 14 per cent before July 1, 2010
• 12 per cent after June 30, 2010 and before July 1, 2011
• 11.5 per cent after June 30, 2011.

Lower rates

Small Business Deduction

The Ontario small business deduction (SBD) reduces the corporate income tax rate on the first $500,000 of active business income of Canadian‑controlled private corporations (CCPCs), to 4.5 per cent. Effective January 1, 2018, the lower rate of Ontario corporate income tax decreased from 4.5 per cent to 3.5 per cent.

Effective for taxation years ending after May 1, 2014, Ontario parallels the federal SBD phase‑out where a CCPC's (and associated groups of CCPCs) taxable capital is between $10 million and $15 million. CCPCs (and associated groups of CCPCs) with taxable capital of $15 million or more are no longer eligible for the preferential corporate income tax rate of 4.5 per cent on the first $500,000 of active business income.

As announced in the 2017 Ontario Budget, the Ontario SBD rules are amended to parallel changes made to the federal SBD under subsection 125 (3.2) of the Federal Income Tax Act. If a corporation assigns any portion of its federal business limit to another corporation, the corporation's Ontario business limit is reduced by the same amount by which the federal business limit is reduced.

More about the Ontario small business deduction

Manufacturing and Processing Tax Credit

Corporations involved in manufacturing and processing, fishing, farming, mining and logging may qualify for a tax credit that reduces the corporate income tax rate to 10 per cent.

More about the Ontario tax credit for manufacturing and processing

Contact the Canada Revenue Agency

The Canada Revenue Agency administers Ontario's corporate income tax, corporate minimum tax, and the special additional tax on life insurers. Contact the agency with your questions at 1‑800‑959‑5525 or 1‑800‑665‑0354 for teletypewriter (TTY).

Canada Revenue Agency - Ontario - Provincial corporation tax