Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.))

Act current to 2014-10-27 and last amended on 2014-06-27. Previous Versions

Calculation of Capital Tax

Marginal note:Tax payable
  •  (1) Every corporation that is a financial institution at any time during a taxation year shall pay a tax under this Part for the year equal to 1.25% of the amount, if any, by which its taxable capital employed in Canada for the year exceeds its capital deduction for the year.

  • (1.1) and (1.2) [Repealed, 2007, c. 2, s. 40]

  • Marginal note:Short taxation years

    (2) Where a taxation year of a corporation is less than 51 weeks, the amount determined under subsection 190.1(1) for the year in respect of the corporation shall be reduced to that proportion of that amount that the number of days in the year is of 365.

  • Marginal note:Deduction

    (3) There may be deducted in computing a corporation’s tax payable under this Part for a taxation year an amount equal to the total of

    • (a) the corporation’s tax payable under Part I for the year; and

    • (b) such part as the corporation claims of its unused Part I tax credits and unused surtax credits for its 7 taxation years immediately before and its 3 taxation years immediately after the year.

    • (c) and (d) [Repealed, 2007, c. 2, s. 40]

  • Marginal note:Idem

    (4) For the purposes of this subsection and subsections 190.1(3), 190.1(5) and 190.1(6),

    • (a) an amount may not be claimed under subsection 190.1(3) in computing a corporation’s tax payable under this Part for a particular taxation year

      • (i) in respect of its unused Part I tax credit for another taxation year, until its unused Part I tax credits for taxation years preceding the other year that may be claimed under this Part for the particular year have been claimed, and

      • (ii) in respect of its unused surtax credit for another taxation year, until its unused surtax credits for taxation years preceding the other year that may be claimed under Part I.3 or this Part for the particular year have been claimed;

    • (b) an amount may be claimed under subsection 190.1(3) in computing a corporation’s tax payable under this Part for a particular taxation year

      • (i) in respect of its unused Part I tax credit for another taxation year, only to the extent that it exceeds the total of all amounts each of which is the amount claimed in respect of that unused Part I tax credit in computing its tax payable under this Part for a taxation year preceding the particular year, and

      • (ii) in respect of its unused surtax credit for another taxation year, only to the extent that it exceeds the total of all amounts each of which is the amount claimed in respect of the unused surtax credit

        • (A) in computing its tax payable under this Part for a taxation year preceding the particular year, or

        • (B) in computing its tax payable under Part I.3 for the particular year or a taxation year preceding the particular year; and

    • (c) an amount may be claimed under paragraph (3)(b) in computing a corporation’s tax payable under this Part for a taxation year that ends before July 1, 2006 in respect of its unused Part I tax credit for a taxation year that ends after July 1, 2006 (referred to in this paragraph as the “credit taxation year”) only to the extent that the unused Part I tax credit exceeds the amount, if any, by which

      • (i) the amount that would, if this Part were read as it applied to the 2005 taxation year, be the corporation’s tax payable under this Part for the credit taxation year

      exceeds

      • (ii) the corporation’s tax payable under this Part for the credit taxation year.

  • Marginal note:Definitions

    (5) For the purposes of subsections 190.1(3), 190.1(4) and 190.1(6),

    “unused Part I tax credit”

    « crédit d’impôt de la partie I inutilisé »

    “unused Part I tax credit”, of a corporation for a taxation year, means the amount, if any, by which

    • (a) the corporation’s tax payable under Part I for the year

    exceeds

    • (b) the amount that would, but for subsection (3), be its tax payable under this Part for the year;

    “unused surtax credit”

    « crédit de surtaxe inutilisé »

    “unused surtax credit” of a corporation for a taxation year has the meaning assigned by subsection 181.1(6).

  • Marginal note:Acquisition of control

    (6) Where at any time control of a corporation was acquired by a person or group of persons, no amount in respect of its unused Part I tax credit or unused surtax credit for a taxation year ending before that time is deductible by the corporation for a taxation year ending after the time and no amount in respect of its unused Part I tax credit or unused surtax credit for a taxation year ending after that time is deductible by the corporation for a taxation year ending before that time, except that

    • (a) the corporation’s unused Part I tax credit and unused surtax credit for a particular taxation year that ended before that time is deductible by the corporation for a taxation year that ends after that time (in this paragraph referred to as the “subsequent year”) to the extent of that proportion of the corporation’s tax payable under Part I for the particular year that

      • (i) the amount, if any, by which

        • (A) the total of all amounts each of which is

          • (I) its income under Part I for the particular year from a business that was carried on by the corporation for profit or with a reasonable expectation of profit throughout the subsequent year, or

          • (II) where properties were sold, leased, rented or developed or services were rendered in the course of carrying on that business before that time, its income under Part I for the particular year from any other business all or substantially all of the income of which was derived from the sale, leasing, rental or development, as the case may be, of similar properties or the rendering of similar services

        exceeds

        • (B) the total of all amounts each of which is an amount deducted under paragraph 111(1)(a) or 111(1)(d) in computing its taxable income for the particular year in respect of a non-capital loss or a farm loss, as the case may be, for a taxation year in respect of any business referred to in clause 190.1(6)(a)(i)(A)

      is of the greater of

      • (ii) the amount determined under subparagraph 190.1(6)(a)(i), and

      • (iii) the corporation’s taxable income for the particular year; and

    • (b) the corporation’s unused Part I tax credit and unused surtax credit for a particular taxation year that ends after that time is deductible by the corporation for a taxation year (in this paragraph referred to as the“preceding year”) that ended before that time to the extent of that proportion of the corporation’s tax payable under Part I for the particular year that

      • (i) the amount, if any, by which

        • (A) the total of all amounts each of which is

          • (I) its income under Part I for the particular year from a business that was carried on by the corporation in the preceding year and throughout the particular year for profit or with a reasonable expectation of profit, or

          • (II) where properties were sold, leased, rented or developed or services were rendered in the course of carrying on that business before that time, its income under Part I for the particular year from any other business all or substantially all of the income of which was derived from the sale, leasing, rental or development, as the case may be, of similar properties or the rendering of similar services

        exceeds

        • (B) the total of all amounts each of which is an amount deducted under paragraph 111(1)(a) or 111(1)(d) in computing its taxable income for the particular year in respect of a non-capital loss or a farm loss, as the case may be, for a taxation year in respect of any business referred to in clause 190.1(6)(b)(i)(A)

      is of the greater of

      • (ii) the amount determined under subparagraph 190.1(6)(b)(i), and

      • (iii) the corporation’s taxable income for the particular year.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. R.S., 1985, c. 1 (5th Supp.), s. 190.1;
  • 1994, c. 7, Sch. VIII, s. 111, c. 21, s. 87;
  • 1996, c. 21, s. 49;
  • 1997, c. 25, s. 53;
  • 1998, c. 19, ss. 48, 202;
  • 1999, c. 22, s. 68;
  • 2000, c. 19, s. 53;
  • 2001, c. 17, s. 165;
  • 2007, c. 2, s. 40;
  • 2013, c. 34, s. 329.