The province of Newfoundland and Labrador does not impose a general capital tax.
Effective January 1, 2016, the capital tax rate increased from 5% to 6% on the taxable capital of financial institutions. This tax applies to banks, loans and trust corporations with permanent establishments in the province of Newfoundland and Labrador.
Tax is payable on capital allocated to Newfoundland and Labrador including:
- Paid-up capital stock
- Contributed surplus
- Retained earnings
- Long-term debt
A capital deduction of $5 million is available to a corporation that has total capital of $10 million or less and is not a member of a related group. However, if the corporation is a member of a related group, then the capital deduction of $5 million should be allocated among all members of the related group as long as the combined capital of all group members is $10 million or less.
The Financial Corporation Capital Tax is imposed under Part II.1 of the Income Tax Act, 2000.
Effective October 31, 2008, the provincial Financial Corporations Capital Tax was harmonized with the federal (capital) tax base.
The Canada Revenue Agency (CRA) can answer your Financial Corporations Capital Tax questions. You can contact them at 1-800-959-5525. Additional information can also be obtained from the CRA website.