Corporate minimum tax in Ontario
Purpose
The Ontario corporate minimum tax (CMT) ensures that large corporations pay a minimum amount of tax even when they use deductions and credits that reduce their regular taxable income. It is provided for in the Ontario Taxation Act, 2007.
Who is subject
A corporation with a permanent establishment in Ontario is subject to CMT for a year when, together with associated corporations, its total assets exceed $50 million and its total revenue exceeds $100 million.
Calculation
- CMT is calculated at a rate of 2.7% on adjusted net income based on financial statements (book income), allocated to Ontario;
- the corporation pays the greater of regular Ontario income tax and CMT;
- CMT paid in excess of regular tax creates a credit that may be carried forward for up to 20 years and applied when regular tax exceeds CMT;
- book losses may be carried forward to reduce future CMT.
Quebec
Quebec has no equivalent provincial corporate minimum tax; corporations with activities in both provinces must allocate their income between them. At the federal level, the alternative minimum tax applies to individuals and trusts, not corporations, while the global minimum tax (Pillar Two) targets multinational groups with revenues of €750 million or more.
