WWW.SEGALLLP.COM NOVEMBER 2016 YEAR-END TAX PLANNER Our latest ideas and tips in reducing your 2016 tax burden INSIDE THIS NEWSLETTER 1-4 WELCOME! D ear clients and friends, as we approach the end of another year, now would be a great time to consider some tax planning measures that could help reduce your 2016 tax burden. To assist you with this, the following are some ideas you may want to consider. Your Segal advisor can assist you in determining which of these ideas make sense for you. WHAT S NEW W ith the 2016 budget announcement, the proposed new measures are as follows: Personal Tax Changes Federal Personal Tax Rates T he federal government introduced certain tax measures that increased the top marginal tax brackets. Increased the tax rate on annual incomes over $200,000 from 29% to 33%. The combined Federal and Ontario marginal tax rates for the highest tax bracket is now as follows: WHAT S NEW 5-7 INDIVIDUALS 8 CORPORATIONS 9 PARTNERSHIPS / TRUSTS & ESTATES 11 APPENDIX I KEY TAX DATES 12 APPENDIX II 2016 PERSONAL TAX RATES 13 APPENDIX III 2016 CORPORATE TAX RATES Since the personal tax rates have increased to 53.53%, consider deferring tax by leaving income in your company. There is a signi icant deferral of tax of 38.33% for small business corporations or 27.03% for general corporations earning active business income. ORDINARY INCOME CAPITAL GAINS ELIGIBLE DIVIDENDS NON-ELIGIBLE DIVIDENDS 2016 2016 2016 2016 53.53% 26.76% 39.34% 45.30%
Principal residence On October 3, 2016, the Department of Finance announced proposed changes to the de inition of principal residence which will affect individuals and trusts as follows: Vendors will now be required to report the sale of their principal residence on their tax return and will be required to make the principal residence designation to claim the principal residence exemption. This is effective for 2016 and subsequent years. A personal trust s ability to designate the property as a principal residence is proposed to be eliminated for years after 2016 unless the trust is one of the exempted trusts. Tax-Free Savings Account (TFSA) Contribution Limit Under the new legislation, the TFSA contribution limit for 2016 decreased from $10,000 to $5,500. Income Splitting Credit The income splitting credit previously allowed an eligible higher-income spouse or common-law partner with children under the age of 18 to transfer a notional income of up to $50,000 to a lower-income earning spouse or common-law partner to reduce the couple s income tax liability by up to $2,000. The 2016 budget eliminated such income splitting credits for 2016 and subsequent years. Children s Fitness Credit The Children s Fitness Tax Credit provides a 15% refundable tax credit on up to $1,000 of eligible itness expenses for children under 16 years of age. For 2016 the budget reduces the 2016 maximum eligible amounts to $500 and eliminates the credit for 2017 and subsequent years. Children s Arts Tax Credit The Children s Arts Tax Credit provides a 15% nonrefundable tax credit on up to $500 of eligible fees for cultural, recreational, artistic and developmental activities for children under 16 years of age. For 2016 the budget reduces the 2016 maximum eligible amounts to $250 and eliminates the credit for 2017 and subsequent years. Education and Textbook Tax Credits The 2016 federal budget eliminates the Education and Textbooks Tax Credits for 2017 and subsequent years. Individuals will still be able to claim tax credits for amounts carried forward from years prior to 2017. This measure only eliminates the Education and Textbook Tax Credits and not the tuition tax credit. The 2016 Ontario budget proposed to discontinue the Ontario tuition and education tax credits beginning in September 2017. Unused credits will still be available for carry forward for 2017 and subsequent years. Teacher and Early Childhood Educator School Supply Tax Credit The 2016 budget introduced a 15% refundable Teacher and Early Childhood Educator School Supply Tax Credit for 2016 and subsequent years. The refundable tax credit will apply on up to $1,000 of eligible supplies. To qualify, teachers and early childhood educators must hold a certi icate that is valid in the province or territory in which they are employed. Canada Child Bene it The 2016 budget introduced a new Canada Child Bene it that provides monthly payments to eligible families. This credit replaces the Canada Child Tax Bene it and the Universal Child Care Bene it. The Credit provides a maximum annual bene it of $6,400 per child under the age of 6 and up to $5,400 per child ages 6 through 17. The budget provides that families with less than $30,000 in net income will receive the maximum bene it and will be phased out where adjusted family net income exceeds $65,000. Lifetime Capital Gains Exemption For 2016, the lifetime capital gains exemption is increased to $824,176 on the disposition of quali ied small business corporation shares by individuals. In addition, the exemption will be indexed for in lation for taxation years after 2016. 2
Labour-Sponsored Venture Capital Corporation (LSVCC s) tax credit Federally registered LSVCCs will decrease the tax credit from 5% in 2016 to nil for years after 2016. Starting in 2016, share purchases of provincially registered LSVCCs will be reinstated to 15%. CORPORATE TAX CHANGES Small business Tax Rate The Conservative government had proposed to reduce the small business tax rates from 11% to 9% to be phased in by 2019. The Liberal government has frozen the small business tax rate to 10.5%. As such the combined federal and Ontario small business tax rates for 2016 and subsequent years will be 15%. Multiplication of Small Business Deduction (SBD) The 2016 budget proposes a number of changes to preclude the multiplication of the SBD for structures using partnerships and corporations. The ability to multiply access to the SBD will be denied where: Members of partnerships who deal at non-arm s length with a CCPC or a shareholder of a CCPC, and where the CCPC is not a member of the partnership and the CCPC earns fees from the partnership for services rendered. A CCPC s active business income from providing services to another private corporation and the CCPC, one of its shareholders or a person who deals at nonarm s length with such a shareholder has a direct or indirect interest in the private corporation. In the above situations, the fees earned by the CCPC will not be eligible for the SBD unless the partnership or the other private corporation assigns a portion of its small business deduction limit to the CCPC. The above if legislated, will apply to taxation years that begin on or after March 21, 2016. This approach is separate and apart from the Association rules that govern the allocation of the SBD. Avoidance of the Business Limit and taxable capital limit Previously, two CCPC s that were considered to be associated because they were associated with the same third corporation will not have to share access to the small business deduction if the third corporation made an election under subsection 256(2) of the Income Tax Act. Where such a case arises the 2016 Budget proposes to amend the Act as follows: Investment income derived from the third corporation s active business income will no longer be eligible for the small business deduction and the income will be subject to tax at the general corporate income tax rate of 26.5%. The third corporation will continue to be associated with each of the other corporations for the purpose of applying the $15million taxable capital limit when calculating the small business deduction. The above, if legislated, will apply to taxation years that begin on or after March 21, 2016. Eligible Capital Property (ECP) Effective January 1, 2017 the ECP regime will be repealed and replaced with a new Capital Cost allowance pool Class 14.1 with a CCA rate of 5% declining balance. Transitional rules will apply for existing ECP balance transferred to the new CCA pool where a CCA rate of 7% will apply for the irst 10 years. If your company is planning to acquire ECP, consider acquiring ECP before January 1, 2017 to take advantage of the cumulative eligible deduction of 7% in the year of acquisition and the following 10 years. Sale proceeds of an ECP under the current regime are subject to a lower initial corporate tax on disposition than will apply under the new rules. Consider, if the company can trigger a gain on ECP before January 1, 2017 if it has goodwill or accrued gains on other intangibles and is contemplating sale of the business after December 31, 2016. 3
CAPITAL GAINS STRIPPING C apital gains stripping is a method of avoiding corporate taxes by converting capital gains into dividends. Intercorporate Canadian dividends are generally tax-free in the hands of Canadian corporations. To stop corporations from stripping capital gains tax-free, new legislation proposed changes that will re-characterize certain tax-free intercorporate dividends as capital gains subject to tax. Many standard corporate transactions that give rise to dividends may now be caught by the new rules. Please review these transactions with your Segal LLP tax advisor. Ontario Research and Development Tax Credits T he Ontario government has reduced the Ontario Research and Development Tax Credit from 4.5% to 3.5% and the Ontario Innovation Tax Credit from 10% to 8% effective for taxation years ending on or after June 1, 2016. ONTARIO RETIREMENT PENSION PLAN T he proposed Ontario Retirement Pension Plan scheduled to take effect in 2017 was shelved in favour of an enhanced Canada Pension Plan (CPP). If the enhanced CPP is approved by Parliament, it will be gradually phased in, beginning in 2019. TRUST CHANGES New rules for trusts effective January 1, 2016: Testamentary Trust Graduated tax rates continue to apply for testamentary trusts that arise as a consequence of an individual s death for the irst 36 months. A lat top rate tax will apply to all non-graduated rate estates testamentary trusts, estates and grandfathered inter-vivos trusts. An estate that is a testamentary trust will be required to have a taxation year end of December 31, after the 36 months anniversary date. Income arising in spousal and common-law partner trusts on the death of the trust bene iciary will now be taxable to the trust. Principal residence held in a trust New rules limit the type of trusts that can designate a property as a principal residence. Such rules will eliminate all personal trusts from being able to designate a property as a principal residence for years after 2016. If you are involved with a trust that owns a principal residence contact your Segal LLP tax advisor to discuss the tax implications and reporting requirements. 4
INDIVIDUALS REGISTERED RETIREMENT SAVINGS PLANS The maximum RRSP contribution room for 2016 is limited to the lesser of $25,370 or 18% of your 2015 earned income less your pension adjustment. Your available contribution room should also be printed on the 2015 Notice of Assessment from the CRA. The deadline for your 2016 contribution is February 28, 2017. If you have excess cash available, consider making your 2017 contribution early, any time after January 1, 2017. A salary of $144,500 is required in 2016 to earn the maximum RRSP contribution room of $26,010 for the 2017 taxation year. If you are turning 71 years old in 2016, you must terminate your RRSP this year. You can convert the RRSP into a Registered Retirement Income Fund (RRIF), into an annuity, or it can be withdrawn in a lump sum. You must make your 2016 RRSP contribution by December 30, 2016. If you are terminating your RRSP in 2016 and you have earned income, consider making an overcontribution to your RRSP. This will result in a tax deduction for 2017 even though you can no longer contribute to your RRSP in that year. Since the over-contribution will be subject to a 1% penalty per month, it is advisable that the contribution be made in December to minimize the penalty. Consider making a contribution to a spousal RRSP to achieve income splitting in the future. The contributions will grow tax-deferred until withdrawn, and will be taxed in the spouse s name at that time. The contributor is entitled to the deduction at the time the contribution is made. A spousal RRSP is particularly useful if you are over 71 but your spouse is younger than 71. Although you may not be permitted to contribute to your own plan, you are permitted to make contributions to a spousal plan until the end of the year in which the spouse turns 71 years of age. Even if your children have no tax to pay, you may wish to ile tax returns on their behalf. If they have earned income, they will generate RRSP contribution room which can be carried forward inde initely. REGISTERED DISABILITY SAVINGS PLANS The RDSP program is available to any Canadian Resident eligible for the Disability Tax Credit. The temporary measure to allow certain family members such as a spouse, common law partner, or parent of a disabled individual to become the plan holder of a RDSP as agent for an adult individual who might not be able to enter into a contract has been extended from the end of 2016 until the end of 2018. The RDSP or RRIF of a deceased individual can be rolled over to a RDSP of a inancially dependent in irm child or grandchild, subject to certain conditions. The RDSP bene iciaries with shortened life expectancies can withdraw more of their RDSP savings without triggering the 10 year repayment rules, subject to certain conditions. REGISTERED EDUCATION SAVINGS PLANS T ransfers between individual RESPs for siblings are allowed, subject to certain restrictions. This is intended to permit the same lexibility regarding the allocation of RESP assets among siblings as exists for RESP family plans. 5
TAX FREE SAVINGS ACCOUNTS Effective January 1, 2016, the Tax Free Savings Account program permits Canadian residents 18 years of age or older to contribute $5,500 to their TFSA. If you have not contributed towards your TFSA since 2009, you will be eligible to contribute up to $46,500 by the end of 2016. A TFSA is similar to an RRSP as income and capital gains earned within the TFSA will not be taxable. However, unlike an RRSP, the contributions will not be deductible and withdrawals will not be taxable. FUNDS CAN BE GIVEN TO A SPOUSE TO ESTABLISH THEIR OWN TFSA AND THE NORMAL ATTRIBUTION RULES WILL NOT APPLY ONTARIO TRILLIUM BENEFIT R ecipients of the Ontario Trillium Bene it can choose to receive the bene it monthly or as a single payment at the end of the bene it year. The Ontario Trillium Bene it includes the Ontario Sales Tax Credit, the Ontario Energy and Property Tax Credit, and the Northern Ontario Energy Credit. MAKE A CHARITABLE DONATION I f your contributions are in excess of $200, you will bene it from a greater level of tax savings. Since the CRA permits either spouse to claim the donations, you should have one spouse claim all donations made by both spouses. If you have little or no tax owing this year, you may choose not to claim the charitable donation. One advantage of having the lower-income spouse claim all of the donations is that the lower-income spouse may receive a tax refund that can be reinvested without the attribution rules applying that would tax the investment income in the hands of the higher income spouse. Donations to US charities can only be claimed on your Canadian tax return if they were made to a prescribed university or to the extent that you have US source income. UNCLAIMED CHARITABLE DONATIONS CAN BE CARRIED FORWARD 5 YEARS. CONSIDER SAVING YOUR UNCLAIMED DONATIONS FOR A FUTURE YEAR Instead of cash, donate stocks or mutual fund units that have unrealized capital gains. Capital gains taxes are eliminated on gains that are generated when publicly traded securities are donated directly to a charity, or to a private foundation. INCOME-SPLITTING C onsider making an investment loan to your lowerincome spouse to split income earned on non-registered assets and reduce taxes on the income. The CRA allows these loans as long as you charge at least the CRA prescribed interest rate on the loan and document the interest payments. Currently the prescribed rate is 1%. The set interest rate will apply for the duration of the loan. Payment of the interest is due at the end of the calendar year and must be paid no later than January 30th of the following year. TAX LOSS SELLING Consider triggering capital losses before the end of the year to offset any capital gains realized in 2016 or in one or more of the last three years. Beware that speci ic rules prohibit you or an af iliated person from buying an identical asset within 30 days of the sale. Normally, stock transactions are settled within three business days. Due to weekends and holidays, consider completing all trades by December 23, 2016. 6
ADJUST YOUR DECEMBER INSTALMENTS I f your income has decreased since last year, you may be able to decrease your December instalment payment. Use caution since any under-payment will result in penalties and non-deductible interest charges. ADOPTION EXPENSE TAX CREDIT T he maximum amount of eligible expenses for the Adoption Expense Tax Credit is increased to $15,453 per child for the 2016 taxation year. CHILD CARE EXPENSE DEDUCTION C urrently, the maximum annual amount that can be claimed under the Child Care Expense Deduction is limited to the least of: The total amount spent on child care expenses; Two-thirds of the lower income spouse s earned income; and The total of the maximum dollar limits for all children, or $8,000 per child under the age of seven, $5,000 per child aged 7 to 16, and $11,000 for children that are eligible for the Disability Tax Credit regardless of age. MEDICAL EXPENSES M edical expenses can only be claimed in excess of a minimum threshold. For 2016, the threshold is the lesser of 3% of your net income, or $2,237. Therefore, if your 2016 income exceeds $74,567, you can only claim medical expenses in excess of $2,237 paid in the year. You are permitted to select any 12 month period ending in 2016 when claiming medical expenses. You can plan for the timing of certain medical expenses since they are claimable based on when they are paid. For example, you may wish to pay for orthodontic treatment in full before the end of the year, even if the treatment will span the next year. A caregiver can claim eligible expenses under the medical expense tax credit (METC) for a dependent relative. There is no restriction on the amount paid. PUBLIC TRANSIT TAX CREDIT Remember to keep each transit pass and related receipt to claim the credit. The public transit tax credit includes weekly passes and cost-per-trip electronic payment cards along with monthly passes. CHILDREN S ARTS TAX CREDIT T he Children s Arts Tax Credit is available for fees paid for the enrolment of a child under 16 years of age. The fees paid should be to an eligible program of artistic, cultural, recreational, or developmental activities. You can claim a 15% non-refundable tax credit based on a maximum of $250 of the fees paid for the program per year per child. A 15% non-refundable tax credit may be claimed on an additional $250 for a child who is eligible for the Disability Tax Credit and is under 18 years of age. TUITION TAX CREDITS Fees paid for an examination to obtain professional status recognized by federal and provincial statutes can be claimed as a tuition tax credit. Examination fees paid to an educational institution, professional association, or provincial ministry will qualify. MEDICAL EXPENSES ARE CLAIMABLE BASED ON WHEN THEY ARE PAID 7
OTHER SUGGESTIONS If income in an inter-vivos trust is to be taxed in a bene iciary s return, the income must be paid or payable to the bene iciary by December 30, 2016. Consider purchasing assets eligible for capital cost allowance before year-end. Up to $32,847 of non-eligible dividends can be received by an Ontario resident who has no other income, without any income tax liability resulting. The Ontario Health Premium of $300 will still be payable. Up to approximately $51,474 of eligible dividends can be received by an Ontario resident who has no other income, without any income tax liability. The Ontario Health Premium of $600 will still be payable. CORPORATE CORPORATE TAX RATES T here have been changes made to the corporate tax rate for 2016. The combined federal and Ontario tax rate on active business income for a Canadian Controlled Private Corporation ( CCPC ) is reduced to 15% (26.5% if active business income exceeds $500,000). For investment corporations, the tax rate increased to 50.17%. CAPITAL GAINS If you do not receive all of the proceeds of sale upon closing, you may be able to defer some of the tax for up to ive years. This can be extended to 10 years for farm property. Capital gains on the sale of shares of a qualifying corporation may be sheltered by the capital gains exemption ( CGE ), with a lifetime limit of $824,176 for 2016 and indexed for subsequent years. If you have previously claimed an allowable business investment loss (ABIL) or if you have a cumulative net investment loss (CNIL), your ability to claim the capital gains exemption in 2016 may be restricted. Steps should be taken to rectify this issue in order to claim the capital gains exemption. THE NEW CGE LIMIT WILL APPLY TO ALL INDIVIDUALS, EVEN THOSE THAT PREVIOUSLY USED THEIR CAPITAL GAINS EXEMPTION SHAREHOLDER LOANS SHOULD BE REPAID I f you or your family members have borrowed money from a corporation in iscal 2016, the loan must be repaid by the end of iscal 2017. If the loan is not repaid at that time, it will be treated as income for 2016. Also, remember to pay any interest owing to the corporation by January 30, 2017 in order to avoid receiving a taxable bene it on unpaid interest. DECLARE A BONUS A CCPC can take advantage of lower corporate tax rates if their taxable income is below $500,000. If a bonus is declared and accrued in order to bring taxable income down to this level, the bonus must be paid within 179 days after the iscal period. If individual cash requirements are low, consider keeping income in the corporation to defer personal tax to later years as corporate rates are likely less than personal rates. The combined federal and provincial tax rates on active business income for a CCPC is 15% (26.5% if active business income exceeds $500,000) compared to the personal tax rate of 53.53% (if taxable income exceeds $220,000). INTEREST EXPENSE I nterest may be deductible if it is incurred for the purpose of earning income from a business or from property; interest on money borrowed for personal purposes is not deductible. Any excess cash should be applied irst against paying off your non-deductible loans. CONSIDER RESTRUCTURING YOUR BORROWINGS SUCH THAT THE INTEREST INCURRED IS TAX DEDUCTIBLE 8
GST/HST ELECTION FOR CLOSELY RELATED PERSONS S upplies of most property and services made between closely related parties (e.g. where 90% or more of the ownership is held by one corporation of another corporation) that are resident in Canada and exclusively engaged in commercial activities are not subject to GST/ HST if an election is completed and iled with the CRA. Previously, the election form was simply completed and retained with each member. A prescribed election form is required to be iled with the CRA by the irst date on which any of the parties to the election is required to ile a return. Parties to this election will be jointly and severally liable for any GST/HST owing on supplies. TRUSTS & ESTATES N ow is the time to review your trust arrangement and to make sure all documentation is up-to-date and to ensure that all transactions are completed and recorded on a timely basis. Effective January 1, 2016 preferential tax treatment available to testamentary trusts is eliminated. A testamentary trust which is considered a graduated rate estate, will only be entitled to use the graduated rates for the irst 36 months after the death of the testator. After that period, a testamentary trust will be subject to tax at the highest marginal tax rate and will be required to adopt a December 31 year-end. PARTNERSHIPS D eferral opportunities for corporations with a signi icant interest in a partnership that have a different iscal period than the partnership are limited. Corporations are required to accrue income for the portion of the partnership s next iscal period that falls within the corporation s taxation year. Starting in 2016 and subsequent years, the donations made by the Will, will be treated as having been made by the estate at the time the property is transferred to a quali ied donee. Where the transfer is made within 36 months following an individual s death, the estate may claim the donation tax credit either in the year the donation is made or in an earlier year of the estate. Alternatively, the estate may deem the deceased individual to have made the donation in the year of death or the previous year. With various court decisions on the trust s residency, it is important that you review the arrangement for family trusts set up abroad or in another province in determining where a trust is resident for Canadian tax purposes. THE INFORMATION PROVIDED IN THIS PUBLICATION IS INTENDED FOR GENERAL PURPOSES ONLY. CARE HAS BEEN TAKEN TO ENSURE THE INFORMATION HEREIN IS ACCURATE; HOWEVER, NO REPRESENTATION IS MADE AS TO THE ACCURACY THEREOF. THIS INFORMATION SHOULD NOT BE RELIED UPON TO REPLACE SPECIFIC PROFESSIONAL ADVICE. 9
ABOUT SEGAL LLP E stablished in 1976, Segal LLP is a leading Canadian accounting irm and one of the largest independent irms in the Greater Toronto Area. Offering integrated solutions in business advisory, assurance, and taxation, Segal delivers a comprehensive approach in developing solutions and providing reliable advice. Adding to your success isn t just our motto, it s our mission. O ur results oriented team takes a hands-on approach to developing personalized solutions for you and your business. Drawing on our experience and ability to create opportunities through insight, we will assist you in every step of the way in executing your short and long-term goals. You and your business aren t limited by a border and neither are we. Our membership in Moore Stephens International Limited gives us the ability to serve you in over 105 countries. O ur services are continuously monitored and adjusted to meet our clients changing needs. We keep ourselves adaptable and up-to-the minute so you can stay one step ahead. Our talented team is able to provide services in the following areas: AUDIT AND ASSURANCE SERVICES TAXATION ESTATE AND PERSONAL FINANCIAL PLANNING MERGERS & ACQUISITIONS BUSINESS ADVISORY FINANCIAL REPORTING SEGAL LLP 2005 SHEPPARD AVE E. SUITE 500 TORONTO, ONTARIO M2J 5B4 (416) 391-4499 WWW.SEGALLLP.COM 10
APPENDIX I KEY DEADLINES Due Dates Items To Be Filed/Payments to be Made December 15, 2016 Final quarterly tax installment due for individuals for 2016 December 23, 2016 Final trading day on which to settle a trade in 2016 for Canadian stock exchanges December 30, 2016 Last day to make certain payments in order to claim tax credits or deductions on your 2016 individual tax return. For example: RRSP contributions if you turn 71 by December 31, 2016 Charitable and Political donations Child-care and child itness/art expenses Investment counsel fees Medical expenses Moving expenses Tuition fees and interest on student loans Alimony and maintenance payments January 30, 2017 Interest due on family loans (to avoid attribution of income) February 28, 2017 Last day to ile: T4, T4A, and T5 Summary and Supplementary forms February 28, 2017 Deductible contributions to your own RRSP or spousal RRSP (for 2016 deductions) RRSP Home Buyer s Plan repayment due (to avoid 2016 inclusion) March 15, 2017 First quarter tax installment due for individuals for 2017 income tax March 31, 2017 March 31, 2017 Last day to ile income tax returns for inter vivos trusts without penalty Last day to ile NR4 Summary and Supplementary forms regarding amounts paid or credited to non-residents of Canada May 1, 2017 Last day to ile personal tax returns Last day to pay 2016 personal income tax Note: Self-employed individuals or spouses of self-employed individuals - the deadline to ile your personal tax return is June 15, 2017. Any tax owing must still be paid no later than May 1, 2017. The iling deadline for personal returns may be later if individual or spouse died during the year (terminal return). 11
APPENDIX II PERSONAL TAX RATES 2016 Ordinary Income & Interest Income Capital Gains Canadian Dividends (Eligible) Canadian Dividends (Non-Eligible) Federal Only 33% 16.50% 24.81% 26.30% Alberta 48% 24% 31.71% 40.25% British Columbia 47.70% 23.85% 31.30% 40.61% Manitoba 50.40% 25.20% 37.78% 45.74% New Brunswick 53.30% 26.65% 34.20% 45.81% Newfoundland and Labrador Northwest Territories 49.80% 24.90% 40.54% 41.86% 47.05% 23.53% 28.33% 35.72% Nova Scotia 54% 27% 41.58% 46.57% Nunavut 44.50% 22.25% 33.08% 36.35% Ontario 53.53% 26.76% 39.34% 45.30% Prince Edward Island 51.37% 25.69% 34.22% 43.87% Quebec 53.31% 26.65% 39.83% 43.84% Saskatchewan 48% 24% 30.33% 39.91% Yukon 48% 24% 24.81% 40.17% 12
APPENDIX III CORPORATE TAX RATES 2016 Canadian-Controlled Private Corporations (CCPCs) General Manufacturing & Processing (M&P) < $450,000 Active Business $450,000- $500,000 Investment Income Federal 15.00% 10.50% 38.67% Alberta 27% 13.50% 50.67% British Columbia 26.00% 13% 49.67% Manitoba 27.00% 10.50% 22.50% 50.67% New Brunswick 29.00% 14.50% 52.67% Newfoundland and Labrador 30.00% 20.00% 13.50% 53.67% Northwest 26.50% 14.50% 50.17% Nova Scotia 31.00% 13.50% (up to $350K) 26.50% ($350K- $500K) 54.67% Nunavut 27.00% 14.50% 50.67% Ontario 26.50% 25.00% 15% 50.17% Prince Edward 31.00% 15% 54.67% Quebec 26.90% 18.50% (Non- M&P) 14.50% (M&P) 50.57% Saskatchewan 27.00% 25.00% 12.50% 50.67% Yukon 30.00% 17.50% 13.50% (non-m&p) 12% (M&P) 53.67% If you wish to obtain more information on any of the above, please contact your advisor at Segal LLP to review your situation and determine what steps might be taken before the year-end and in the new year to minimize your taxes. 13