Corporate Tax Freedom Day, or the day that corporations will have paid their taxes to all levels of government, is today, January 30th, 2013. But don’t feel left out, if you are not a corporation, because Personal Tax Freedom Day is also on its way – not as quickly mind you because Corporations have the ability to make much more money, much quicker than the average employee and the Corporate tax rates are considerably smaller than personal income tax rates.
- 15% on the first $43,561 of taxable income, +
- 22% on the next $43,562 of taxable income (on the portion of taxable income over $43,561 up to $87,123), +
- 26% on the next $47,931 of taxable income (on the portion of taxable income over $87,123 up to $135,054), +
- 29% of taxable income over $135,054.
Then there are the Provincial tax rates;
|Newfoundland and Labrador||7.7% on the first $33,748 of taxable income, + 12.5% on the next $33,748, + 13.3% on the amount over $67,496|
|Prince Edward Island||9.8% on the first $31,984 of taxable income, + 13.8% on the next $31,985, + 16.7% on the amount over $63,969|
|Nova Scotia||8.79% on the first $29,590 of taxable income, + 14.95% on the next $29,590, + 16.67% on the next $33,820, + 17.5% on the next $57,000, + 21% on the amount over $150,000|
|New Brunswick||9.1% on the first $38,954 of taxable income, + 12.1% on the next $38,954, + 12.4% on the next $48,754, + 14.3% on the amount over $126,662|
|Quebec||Go to Income tax rates (Revenu Québec Web site).|
|Ontario||5.05% on the first $39,723 of taxable income, + 9.15% on the next $39,725, + 11.16% on the next $429,552, + 13.16 % on the amount over $509,000|
|Manitoba||10.8% on the first $31,000 of taxable income, + 12.75% on the next $36,000, + 17.4% on the amount over $67,000|
|Saskatchewan||11% on the first $42,906 of taxable income, + 13% on the next $79,683, + 15% on the amount over $122,589|
|Alberta||10% of taxable income|
|British Columbia||5.06% on the first $37,568 of taxable income, + 7.7% on the next $37,570, + 10.5% on the next $11,130, + 12.29% on the next $18,486, + 14.7% on the amount over $104,754|
|Yukon||7.04% on the first $43,561 of taxable income, + 9.68% on the next $43,562, + 11.44% on the next $47,931, + 12.76% on the amount over $135,054|
|Northwest Territories||5.9% on the first $39,453 of taxable income, + 8.6% on the next $39,455, + 12.2% on the next $49,378, + 14.05% on the amount over $128,286|
|Nunavut||4% on the first $41,535 of taxable income, + 7% on the next $41,536, + 9% on the next $51,983, + 11.5% on the amount over $135,054|
For Canadian-controlled private corporations claiming the small business deduction, the net tax rate is 11%.
For the other corporations, the net tax rate is decreased as follows:
- 19% effective January 1, 2009
- 18% effective January 1, 2010
- 16.5% effective January 1, 2011
- 15% effective January 1, 2012
Provincial or territorial rates
Generally, provinces and territories have two rates of income tax – a lower rate and a higher rate.
The lower rate applies to the income eligible for the federal small business deduction. One component of the small business deduction is the business limit. Some provinces or territories choose to use the federal business limit. Others establish their own business limit.
The higher rate applies to all other income.
Provincial and territorial tax rates (except Quebec and Alberta)
These rates are in effect on January 1, 2012, and may change during 2012.
|Province or territory||Lower rate||Higher rate|
|Newfoundland and Labrador||4%||14%|
|Prince Edward Island||1%||16%|
For more information, go to Dual tax rates.
Corporations also have to pay the CRA employer share of payroll source deductions for the year for employee pay and bonuses as well as any GST/HST if they are selling more than they are purchasing and also don’t forget the dividends Corporations pay out of earning to you, your friends, neighbours, parents and grandparents.
If you read some of the mainstream, err, left-leaning media tales of Corporate Tax Freedom Day you would think that we should be taxing these evil Corporations at 50% or more because all they do is pay out insane salaries and bonuses to their CEO’s and Board or Directors while giving little back to the community or the country.
For all that, I call bullshit, and not because I agree with insane salaries, bonuses, buyouts and golden handshakes – I hate them in sports and entertainment as well – but Corporations are free to operate in whichever town, city, province or country they choose to and a raise in Corporate tax rates increases the risk that corporations will back up their belongings and flee where rates are more favourable.
So while it’s great to call out Corporations for all their flaws, it would be nice once in a while if mainstream media reported on those cities and towns left with high unemployment and no jobs because a Corporation propping up their area closed up or left for a different location.
Might there be other ways to increase government revenues so that the government will need to borrow less money to finance programs – driving up the debt and deficit - possibly. One suggestion by the head of the Canadian Labour Congress (CLC), Ken Georgetti, suggested that “the government should target tax credits to companies that invest in machinery and increase productivity.”
With Canadian Corporate taxes are already lower than (unconfirmed) elsewhere in the G7 nations, organizations like the CLC disregard the fact that business investment had increased by 6.2% since the official start of the recession, September 15th, 2008. If consumer confidence remains weak or if a Liberal government were to take power in Canada, look for the vultures to circle looking to pick through the remains of any and all Canadian Corporations which remain here after an increase in the Corporate Tax Rate.
- TurboTax – What are Income Tax Rates? (turbotax.intuit.com)
- Meet Five CEOs Who Prove That Lower Corporate Taxes Don’t Equal More Hiring (thenation.com)