Financial Corporation Capital Tax

All resident and non-resident financial corporations operating a permanent establishment within the province are required to pay Financial Corporation Capital Tax on its taxable capital. The Financial Corporation Capital Tax Act defines a financial corporation as a bank, trust company or loan company and includes an agent, assignee, trustee, liquidator, receiver or official having possession or control of any part of the property of the bank, trust company or loan company but does not include a trust company or loan company incorporated without share capital.

What is the rate of Financial Corporation Capital Tax?

Pursuant to section 2 (1) (b) of the Financial Corporation Capital Tax Act the rate of tax is 5% of paid up capital in excess of $2,000,000.

The historical summary of Financial Corporations Capital Tax since introduction in 1988 is as follows:

April 1, 2004 - 5.0% of paid up capital in excess of $2,000,000
April 10, 1991 - 3.0% of paid up capital in excess of $2,000,000
March 14, 1990 - 2.5% of paid up capital in excess of $2,000,000
July 1, 1988 - 1.5% of paid up capital in excess of $2,000,000

How is Financial Corporation Capital Tax collected?

Financial corporations that are liable to pay the Financial Corporation Capital tax must file and remit tax instalments on a monthly and annual basis.

• Monthly Returns: Instalments are equal to one-twelfth of the tax payable for the fiscal year, as estimated by the financial corporation. Payments are to be made to the Minister of Finance on or before the 20th day of each month of the fiscal year. Financial Corporation Capital Tax Monthly Return (505 Kb) 
• Annual Returns: The financial corporation must file the annual return within six months of the close of its fiscal year, and at that time, any unpaid tax for the fiscal year must be remitted to the Minister of Finance. Financial Corporation Capital Tax Annual Return.