The Handbook

Canadian Accounting Handbook

A working reference for Canadian corporate bookkeeping and tax. Entries cite the Income Tax Act, the Excise Tax Act, CRA guides, and CPA Canada standards. Current as of the 2026 tax year.

Showing 154 entries across 15 categories.

Foundations

Federal · 12 entries

Double-entry principles, debits and credits, the accounting cycle.

Cash vs. Accrual Basis

Cash basis records transactions when money moves. Accrual basis records them when they are earned or incurred. Canadian corporations must use the accrual basis.

Conservatism Principle

When facing uncertainty, accountants choose the estimate or treatment that is least likely to overstate income, assets, or equity.

Debits and Credits

Debits and credits are the two sides of every accounting entry. Whether each one increases or decreases an account depends on the account type.

General Ledger

The general ledger is the complete collection of accounts used by a corporation. Every journal entry is posted to it and every financial statement is derived from it.

Going Concern Assumption

Financial statements are prepared on the assumption that the corporation will continue to operate for the foreseeable future, usually at least twelve months from the reporting date.

Journal Entries

A journal entry is the original, dated record of a business transaction, showing the accounts affected and the equal debits and credits that document it.

Matching Principle

Expenses are recognized in the same period as the revenue they helped generate, not in the period they are paid.

Materiality

Information is material if omitting or misstating it could reasonably influence the decisions of users of the financial statements.

Normal Balances

The normal balance of an account is the side (debit or credit) on which that account ordinarily carries its balance.

The Accounting Cycle

The accounting cycle is the sequence of steps from capturing a source document through to issuing financial statements and closing the books for the period.

The Accounting Equation

Assets equal liabilities plus equity. Every transaction a corporation records must keep this identity in balance.

Trial Balance

A trial balance lists every general ledger account with its balance, grouped into debits and credits, to prove that total debits equal total credits at a point in time.

Financial Statements

Federal · 8 entries

Balance sheet, income statement, cash flows, retained earnings.

Balance Sheet

The Balance Sheet (Statement of Financial Position) reports a corporation's assets, liabilities, and equity at a single point in time.

Cash Flow Statement

The Cash Flow Statement reconciles the change in cash across operating, investing, and financing activities over the period.

Comparative Financial Statements

Canadian GAAP requires prior-period comparatives for every primary statement and related note so that readers can evaluate trends.

Compilation, Review, and Audit Engagements

Canadian public accountants offer three levels of assurance on financial statements: compilation (no assurance), review (limited assurance), and audit (reasonable assurance).

Income Statement

The Income Statement (Statement of Operations) reports revenue, expenses, and net income for a reporting period.

Notes to the Financial Statements

The notes disclose accounting policies, supporting schedules, commitments, and other information needed to understand the primary financial statements.

Notice to Reader (Compilation Engagement)

Under CSRS 4200, the old Notice to Reader is replaced by the Compilation Engagement Report, with a mandatory description of the basis of accounting.

Statement of Retained Earnings

The Statement of Retained Earnings reconciles opening and closing retained earnings, showing net income and dividends declared during the period.

Accounting Standards

Federal · 6 entries

ASPE, IFRS, and when to apply each framework.

Accounting Policy Changes

ASPE 1506 governs voluntary and required changes in accounting policy, which are generally applied retrospectively with restated comparatives.

ASPE Overview

ASPE (Accounting Standards for Private Enterprises) is Part II of the CPA Canada Handbook and is the default Canadian GAAP framework for private companies.

ASPE vs. IFRS Selection

A private Canadian corporation can choose ASPE or IFRS. For most owner-managed CCPCs, ASPE is lower cost, lower complexity, and fully accepted by the CRA and Canadian lenders.

Changes in Accounting Estimates

A change in accounting estimate is applied prospectively under ASPE 1506 and does not require restatement of prior-period comparatives.

Correcting Prior-Period Errors

A prior-period error is corrected under ASPE 1506 by retrospective restatement of the affected comparatives and opening retained earnings.

IFRS Overview

IFRS, adopted in Canada as Part I of the CPA Canada Handbook, is mandatory for publicly accountable enterprises and optional for private companies.

Chart of Accounts & GIFI

Federal · 6 entries

Account structures and CRA's General Index of Financial Information.

GIFI Asset Accounts

GIFI codes 1000 to 1999 cover every asset a corporation reports on Schedule 100, from cash and receivables through capital assets and intangibles.

GIFI Equity Accounts

GIFI codes 3000 to 3999 capture the residual interest in a corporation: share capital, contributed surplus, retained earnings, and dividends.

GIFI Income and Expense Accounts

GIFI codes 8000 to 8299 capture revenue and 8300 to 9999 capture every expense reported on Schedule 125, from salaries and rent through professional fees and interest.

GIFI Liability Accounts

GIFI codes 2000 to 2999 cover every current and long-term liability reported on Schedule 100, including payables, tax payable, and shareholder loans.

GIFI Overview

The General Index of Financial Information (GIFI) is CRA's standardized four-digit coding system that maps every balance sheet and income statement account to a T2 return line.

GIFI-Short (T1178)

GIFI-Short, filed on Form T1178, is an abbreviated GIFI package available to corporations whose revenue and assets are both under $1 million.

Corporate Tax (Federal)

Federal · 18 entries

T2 return, CCPC rules, SBD, dividend pools, and key schedules.

Associated Corporations Rule

Associated corporations under ITA s.256 must share a single $500,000 Small Business Deduction limit and combine their passive income and taxable capital for the SBD grind tests.

Capital Dividend Account (CDA)

The Capital Dividend Account is a notional tax pool of a private corporation that allows certain amounts, primarily the non-taxable half of capital gains and life insurance proceeds, to be paid to shareholders as tax-free capital dividends.

CCPC Status

A Canadian-Controlled Private Corporation is a private corporation resident in Canada that is not controlled by non-residents or public corporations, and CCPC status unlocks the small business deduction, refundable tax mechanics, and the capital gains exemption.

General Rate Income Pool (GRIP)

GRIP is a notional pool tracked by CCPCs that represents income taxed at the general corporate rate and supports the payment of eligible dividends to shareholders.

Low Rate Income Pool (LRIP)

LRIP is the notional pool tracked by non-CCPCs that restricts their ability to pay eligible dividends, forcing any LRIP balance to be distributed as non-eligible dividends first.

Refundable Dividend Tax On Hand (RDTOH)

RDTOH is a refundable tax pool tracked by private corporations that returns a portion of federal tax on investment income when taxable dividends are paid to shareholders, split since 2019 into ERDTOH and NERDTOH.

Schedule 1. Net Income for Tax

Schedule 1 (T2SCH1) reconciles a corporation's accounting net income to its net income for tax purposes by adding back non-deductible items and subtracting tax-only deductions.

Schedule 100. Balance Sheet Information

Schedule 100 (T2SCH100) reports balance sheet items using CRA's General Index of Financial Information (GIFI) codes, mapping the corporation's trial balance accounts to standardized CRA categories.

Schedule 125. Income Statement Information

Schedule 125 (T2SCH125) reports income statement items using CRA's General Index of Financial Information (GIFI) codes, producing the book net income that starts Schedule 1.

Schedule 3. Dividends Received and Part IV Tax

Schedule 3 (T2SCH3) reports dividends received and paid by a corporation and computes Part IV refundable tax on portfolio and connected-company dividends.

Schedule 4. Corporation Loss Continuity

Schedule 4 (T2SCH4) tracks the continuity and application of non-capital losses, net capital losses, farm losses, restricted farm losses, and limited partnership losses across tax years.

Schedule 5. Provincial Tax Allocation

Schedule 5 (T2SCH5) allocates taxable income among provinces and territories where the corporation has a permanent establishment, determining provincial and territorial tax liability.

Schedule 50. Shareholder Information

Schedule 50 (T2SCH50) reports details of each shareholder owning 10% or more of any class of shares, including name, SIN or BN, share class, and percentage of ownership.

Schedule 6. Capital Gains and Losses

Schedule 6 (T2SCH6) summarizes dispositions of capital property during the tax year and computes taxable capital gains, allowable capital losses, and the capital dividend account credit.

Schedule 7. Aggregate Investment Income

Schedule 7 (T2SCH7) calculates aggregate investment income, adjusted aggregate investment income (AAII), and income eligible for the small business deduction, driving the $50K–$150K passive income grind.

Schedule 8. Capital Cost Allowance

Schedule 8 (T2SCH8) tracks capital cost allowance by CCA class, applying the half-year rule, AIIP, and immediate expensing to compute the maximum deduction.

Small Business Deduction

The Small Business Deduction reduces federal corporate tax on the first $500,000 of active business income earned by a CCPC, dropping the federal rate from 15% to 9%.

T2 Corporate Return Overview

Every Canadian resident corporation must file a T2 return within six months of year-end and pay any balance owing within two or three months.

Personal Tax (Federal)

Federal · 10 entries

T1 return, brackets, registered plans, credits vs. deductions.

Basic Personal Amount

Every Canadian resident can earn a base amount of income tax-free through a non-refundable federal credit that phases down for high-income filers.

Capital Gains Inclusion Rate

Only a portion of a realized capital gain is included in income; the inclusion rate has historically been 50% but is subject to legislative change.

Deductions vs. Tax Credits

Deductions reduce taxable income and save tax at your marginal rate; non-refundable credits cut tax directly at the 15% federal rate.

Eligible vs. Non-Eligible Dividends

Canadian dividends are grossed up and taxed with an offsetting dividend tax credit; eligible dividends come from high-rate corporate income and receive a larger credit.

Federal Tax Brackets

Canada's federal personal tax rates for 2026 are marginal: each bracket only taxes the income that falls inside it.

FHSA

The First Home Savings Account combines an RRSP-style deduction with TFSA-style tax-free withdrawal for a qualifying first home purchase.

Foreign Tax Credit

The federal Foreign Tax Credit prevents double taxation by crediting foreign income or profits tax paid against Canadian tax on the same income.

RRSP

A Registered Retirement Savings Plan lets Canadians deduct contributions from income and defer tax on investment growth until withdrawal.

T1 Personal Return Overview

The T1 General is the annual federal and provincial personal income tax return filed by every Canadian resident individual.

TFSA

A Tax-Free Savings Account lets residents aged 18+ contribute after-tax dollars and withdraw investment income and growth completely tax-free.

GST / HST

Federal · 12 entries

Registration, ITCs, filing, place of supply, special regimes.

GST on Real Property

GST/HST rules for real estate: new housing is fully taxable with a New Housing Rebate, commercial property is taxable, used residential resale is exempt, and builders self-assess under ETA s.191.

GST/HST Filing Frequency

Assigned annual, quarterly, or monthly reporting periods under ETA s.245 based on threshold amounts of $1.5M and $6M, plus quarterly installment obligations when net tax is $3,000 or more.

GST/HST Overview

Canada's federal value-added tax, applied at 5% GST alone in most western and northern provinces and at a blended HST rate of 13% to 15% in five harmonized provinces.

GST/HST Quick Method

A simplified regime under ETA s.227 where the registrant remits a fixed percentage of GST-included revenue instead of tracking ITCs, elected on Form GST74.

GST/HST Registration

How to open a GST/HST account with CRA, what triggers a registration requirement, and how the Business Number is structured.

Input Tax Credits (ITCs)

The mechanism under ETA s.169 that lets a GST/HST registrant recover the tax paid on inputs used in its commercial activity, so only the final consumer bears the tax.

ITC Documentation Requirements

The tiered documentary evidence a registrant must obtain to support Input Tax Credits, set out in ETA Regulation 3501 with thresholds at $100 and $500.

Place of Supply Rules

The rules in ETA s.142 and Schedule IX that determine in which province a supply is deemed made, which in turn selects the GST or HST rate to charge.

Simplified ITC Method

An optional calculation that lets eligible small registrants compute ITCs by multiplying total tax-included purchases by 5/105, 13/113, 14/114, or 15/115, without separating tax on every receipt.

Small Supplier $30K Threshold

The $30,000 in four consecutive calendar quarters rule under ETA s.148 that determines when a person stops being a small supplier and must register for GST/HST.

Taxable, Zero-Rated, and Exempt Supplies

Every supply in Canada is either taxable at the full rate, zero-rated (taxable at 0% with ITCs), or exempt (no tax and no ITCs). The classification drives both invoicing and recovery.

Voluntary GST Registration

Small suppliers can register voluntarily under ETA s.240(3) to claim ITCs, but must then charge tax on every taxable sale and stay registered for at least one year.

Payroll (Federal)

Federal · 10 entries

CPP, EI, source deductions, T4s, and remittance rules.

CPP Contributions

Canada Pension Plan contributions are mandatory deductions split equally between employee and employer, with an enhanced CPP2 tier above the first earnings ceiling.

EI Premiums

Employment Insurance premiums are deducted from insurable earnings up to an annual maximum, with the employer paying 1.4 times the employee rate.

Income Tax Withholding

Employers must withhold federal and provincial income tax from each pay cheque using CRA's T4032 tables or T4127 formulas, based on the employee's TD1 claims.

Payroll Account (RP)

The RP program account is the CRA identifier a corporation must open before it can remit source deductions for employees.

Payroll Remittance Frequency

CRA assigns each employer a remitter type (regular, quarterly, or one of two accelerated thresholds) based on the average monthly withholding amount, with graduated late penalties.

PD7A Remittance Voucher

The PD7A is the statement of account CRA issues to report payroll source deductions already remitted and the balance due for the current period.

Record of Employment (ROE)

The ROE is the Service Canada form that documents an interruption of earnings and is used to determine EI benefit eligibility; it must be issued within five calendar days.

T4 Slips

T4 Statement of Remuneration Paid reports each employee's annual wages, benefits, and source deductions; slips and a T4 Summary are due to CRA and employees by the last day of February.

Taxable Employee Benefits

Most non-cash benefits an employer provides to an employee are taxable under ITA s.6 and must be grossed into payroll for CPP, EI, and income-tax purposes.

TD1 Form

The TD1 is the personal tax credits return that every employee files with a new employer so the correct amount of federal and provincial tax is withheld from each pay cheque.

Capital Assets & CCA

Federal · 10 entries

CCA classes, half-year rule, AIIP, immediate expensing, recapture.

Accelerated Investment Incentive Property (AIIP)

AIIP replaced the half-year rule with a 1.5× first-year CCA for most depreciable property, and is being phased out between 2024 and 2027.

Capital Cost Allowance Overview

Capital Cost Allowance (CCA) is the tax version of depreciation: a declining-balance (or occasionally straight-line) deduction that spreads the cost of a capital asset across multiple tax years.

CCA Class 10. Passenger Vehicles

Class 10 is the 30% declining-balance pool for motor vehicles, including most business passenger vehicles costing at or below the annual threshold (confirm 2026 limit in Regulation 7307).

CCA Class 12. Small Tools and Software

Class 12 is a 100% CCA class for non-systems software, small tools under $500, medical and dental instruments, utensils, and similar short-lived items.

CCA Class 50. Computer Hardware

Class 50 is the 55% declining-balance pool for general-purpose electronic data processing equipment and systems software acquired after March 18, 2007.

CCA Class 8. Furniture and Equipment

Class 8 is a 20% declining-balance pool for furniture, fixtures, general equipment, and photocopiers that do not belong in another specific class.

Half-Year Rule

In the year an asset is acquired, Regulation 1100(2) reduces the CCA base for net additions by 50% so the first-year deduction is halved.

Immediate Expensing ($1.5M)

Immediate expensing lets a CCPC write off up to $1.5M per year of eligible depreciable property in the year it becomes available for use, instead of claiming standard CCA.

Recapture of CCA

When disposals drive a class's UCC below zero, Income Tax Act s.13(1) recaptures the excess CCA into ordinary income in the year of disposition.

Terminal Loss

When the last asset in a CCA class is disposed of and a positive UCC remains, Income Tax Act s.20(16) allows the remaining balance to be deducted as a terminal loss.

Expenses

Federal · 14 entries

Deductibility rules, home office, vehicle, meals, and more.

Advertising and Promotion

Advertising is generally fully deductible, but ITA s.19 and s.19.01 deny deductions for ads placed in non-Canadian newspapers and periodicals directed at the Canadian market.

Business Expense Principle (ITA 18)

An outlay is deductible only if it is incurred for the purpose of gaining or producing income from a business or property and is not a personal or capital expense.

Business Gifts

Gifts to clients are deductible when reasonable, while non-cash gifts to employees up to $500 per year are not a taxable benefit under CRA's administrative policy.

Club Memberships and Dues

ITA s.18(1)(l) denies deductions for membership fees at any club whose main purpose is dining, recreation, or sporting activities, even when the use is entirely business.

Home Office Expense

Corporations access home office costs through rent paid to the owner or tax-free expense reimbursement; employees use Form T2200 and individuals may use the detailed or simplified method.

Insurance Expense

Business insurance premiums (liability, property, E&O) are deductible, but life insurance premiums on a key person are generally non-deductible even when the corporation is the beneficiary.

Leasing Cost Limits

ITA s.67.3 caps the monthly deduction for leasing a passenger vehicle through two formulas that reference the prescribed monthly cap and the manufacturer's list price ceiling.

Meals and Entertainment (50% Rule)

Business meals and entertainment are generally limited to a 50% deduction under ITA s.67.1, with documented business purpose and a short list of 100% exceptions.

Non-Deductible Expenses

A consolidated list of outlays that ITA s.18 and related sections prohibit from current deduction: personal, capital, fines, club dues, life insurance, and the 50% meals portion.

Professional Fees

Legal, accounting, and consulting fees are deductible when incurred for income-earning purposes, but fees tied to acquisitions, financings, or reorganizations are often capital.

Rent Expense

Rent paid for business premises is deductible under s.18(1)(a), with matching applied to prepaid rent and a reasonableness test applied to related-party rent.

Repairs vs. Capital Expenditures

An outlay that merely restores an asset to its original condition is a current repair; one that creates a lasting improvement or betterment is capital and recovered through CCA.

Travel Expense

Business travel costs (transportation, lodging, incidentals) are fully deductible, while meals on travel remain subject to the 50% limit and conventions are capped at two per year.

Vehicle Expense

Motor vehicle costs are deductible on the business-use share established by a logbook, with passenger vehicle ceilings on capital cost, interest, and lease payments.

Owner Compensation

Federal · 8 entries

Salary vs. dividends, shareholder loans, TOSI, income splitting.

Bonus Accruals

A year-end bonus accrual is deductible in the fiscal year it is declared only if it is paid (with payroll withholding) within 179 days after year-end under ITA s.78(4).

Income Splitting

Legitimate income splitting shifts income to a lower-bracket family member through real work, real ownership, or statutory pension-splitting rules, staying clear of TOSI and s.67.

Management Fees

Fees paid by an operating corporation to a shareholder, related corporation, or family service provider must reflect real services at reasonable rates, with proper invoicing and GST/HST.

Reasonableness Test

ITA s.67 denies the deduction of any outlay or expense to the extent it is unreasonable in the circumstances, and the CRA applies it most often to related-party compensation.

Salary vs. Dividends

The core owner-manager compensation question: pay yourself through payroll with CPP and RRSP room, or through dividends with no withholdings and simpler cash flow.

Shareholder Benefits (ITA 15(1))

When a corporation confers a benefit on a shareholder, the fair market value of the benefit is included in the shareholder's income and is not deductible by the corporation.

Shareholder Loans (ITA 15(2))

Loans from a corporation to a shareholder are included in the shareholder's income unless repaid within one year after the corporation's tax year-end.

Tax on Split Income (TOSI)

TOSI taxes certain types of income paid to family members from a related private corporation at the top marginal rate, unless an exclusion applies.

Record Keeping

Federal · 4 entries

CRA retention rules, electronic records, audit readiness.

Audit Readiness

Audit readiness is the practice of keeping books, reconciliations, and source documents organized so a CRA review can be answered within days, not weeks.

Electronic Records

CRA allows books and records to be kept in electronic form if they are readable, auditable, and accessible in Canada. ITA s.230.1 and GST/HST Memoranda 15.1 and 15.2 set the standards.

Six-Year Retention Rule

CRA requires corporations to keep books, records, and supporting documents for at least six years from the end of the tax year they relate to, with longer holds in several defined situations.

Source Documents

Source documents are the original evidence behind each ledger entry: invoices, receipts, contracts, bank statements, and anything else that proves what actually happened.

Incorporation

Federal · 3 entries

Federal vs. provincial, share structure, governance basics.

Federal vs. Provincial Incorporation

Founders can incorporate federally under the CBCA or provincially under a statute such as the BC Business Corporations Act. Each route offers different name protection, residency rules, and filing duties.

Share Classes

Share classes define who votes, who gets dividends, and who receives what on a wind-up. A clean share structure at incorporation avoids expensive reorganizations later.

Shareholders' Agreement

A shareholders' agreement is a private contract that supplements the articles and by-laws, setting the rules for control, transfers, and exits. Even a sole-shareholder corporation benefits from the estate-planning version.

British Columbia

British Columbia · 16 entries

BC PST, EHT, WorkSafeBC, corporate and personal tax.

BC Annual Report (Registry)

Every BC corporation must file an annual report with BC Registry Services within two months of the anniversary of incorporation; the current fee is approximately $42 and failure to file can lead to dissolution.

BC Basic Personal Amount

The BC basic personal amount is a non-refundable tax credit (approximately $12,932 for 2026 after indexation) that effectively exempts a baseline level of income from BC provincial tax.

BC Business Number

A BC corporation typically holds four distinct identifiers: the federal Business Number (BN), a BC Incorporation Number, a BC PST number if registered, and a WorkSafeBC account number.

BC Corporate Tax Rates

BC imposes a 2.0% small business rate on the first $500,000 of active business income for CCPCs and a 12% general corporate rate; combined with federal rates, the effective BC rates for 2026 are 11% (small business) and 27% (general).

BC Employer Health Tax

BC's Employer Health Tax (EHT) is a payroll tax on BC remuneration above a $1,000,000 exemption for regular employers, with a graduated notch rate between $1M and $1.5M and a flat 1.95% on payroll above $1.5M.

BC Holding Company

A BC holding company is a corporation used primarily to hold investments, shares of active operating companies, real property, or family trust interests; common uses include creditor protection, income splitting, capital gains planning, and BC-specific real estate structuring.

BC Personal Tax Brackets

BC uses a seven-bracket progressive personal income tax system with 2026 rates from 5.06% on the first income band up to 20.5% on income over $252,752; brackets are indexed annually.

BC Property Transfer Tax

BC Property Transfer Tax (PTT) is charged on the fair market value of real property at registration: 1% on the first $200,000, 2% up to $2M, 3% up to $3M, and 5% on the residential portion above $3M, with a 20% additional tax for foreign buyers in specified areas.

BC PST Exemptions

Key BC PST exemptions include production machinery and equipment, goods purchased for resale, prescription drugs, basic groceries and food products, children's clothing and footwear, and certain agricultural inputs.

BC PST Expansion (October 1, 2026)

Effective October 1, 2026, BC PST at 7% extends to accounting, architectural, engineering, geoscience, security, and real estate services; IT consulting is currently outside the expansion but monitor closely.

BC PST on Goods vs. Services

BC PST generally applies to tangible personal property and a narrow, enumerated list of services; most professional services remain exempt until the October 2026 expansion.

BC PST Overview

British Columbia levies a 7% Provincial Sales Tax (PST) on tangible personal property and specified services, administered separately from the federal 5% GST.

BC PST Registration

Vendors selling taxable goods or services in BC must register for PST through eTaxBC; voluntary registration is also available for businesses that want to reclaim resale exemptions.

BC Speculation and Vacancy Tax

BC's Speculation and Vacancy Tax (SVT) is an annual tax on residential property in specified taxable regions: 0.5% for Canadian citizens and permanent residents and 2% for foreign owners and satellite families, with an annual declaration required from all owners.

WorkSafeBC Premiums

WorkSafeBC premiums are assessed on insurable earnings per classification unit; the 2025 average base rate was approximately $1.55 per $100 of assessable payroll, with quarterly reporting and payment.

WorkSafeBC Registration

BC incorporated companies, including one-person corporations, must register with WorkSafeBC; active shareholders who perform work are treated as workers under the Workers Compensation Act.

Ontario

Ontario · 17 entries

Ontario HST, EHT, WSIB, corporate and personal tax.

Ontario Annual Return

Ontario corporations must file an annual return with the Ontario Business Registry within six months of the fiscal year-end; since October 2021 this filing is separate from the T2 and is no longer attached as Schedule 546.

Ontario Basic Personal Amount

The Ontario Basic Personal Amount is a non-refundable tax credit that shields approximately the first $12,747 of taxable income from Ontario tax in 2026 (confirm indexed figure), providing a credit equal to the amount times 5.05%.

Ontario Business Registry

The Ontario Business Registry (OBR), launched October 19, 2021, is the online system for incorporation, annual returns, business name registration, and most corporate filings, replacing ServiceOntario for these transactions.

Ontario Corporate Tax Rates

Ontario imposes a 3.2% small business rate on the first $500,000 of active business income, an 11.5% general rate, and a 10% manufacturing and processing rate under the Taxation Act, 2007 (Ontario).

Ontario EHT Exemption

Private sector employers receive a $1,000,000 EHT exemption (in effect since 2020) that eliminates Employer Health Tax on the first $1 million of Ontario payroll; associated employers must share the exemption.

Ontario Employer Health Tax

The Ontario Employer Health Tax (EHT) is an employer-paid payroll tax ranging from 0.98% to 1.95% on total Ontario remuneration, levied under the Employer Health Tax Act to fund the province's health system.

Ontario HST

Ontario levies a 13% Harmonized Sales Tax (5% federal + 8% provincial) administered by the Canada Revenue Agency under the federal Excise Tax Act.

Ontario HST Point-of-Sale Rebates

Ontario provides point-of-sale rebates of the 8% provincial portion of HST on books, children's clothing and footwear, diapers, feminine hygiene products, newspapers, and qualifying prepared food and beverages sold for $4 or less.

Ontario Innovation Tax Credit

The Ontario Innovation Tax Credit (OITC) is an 8% refundable credit for small CCPCs on eligible scientific research and experimental development (SR&ED) expenditures carried out in Ontario, stacking on top of the federal SR&ED credit.

Ontario Insurance Premium Tax

Ontario imposes a premium tax on insurance contracts: typically 2% on property and liability, 3% on accident and sickness, and 3.5% on auto (confirm 2026 rates); the tax is not recoverable by the insured.

Ontario Land Transfer Tax

Ontario Land Transfer Tax is a graduated tax from 0.5% to 2.5% on the value of consideration for real property; Toronto adds a Municipal LTT, and a 25% Non-Resident Speculation Tax applies to residential purchases by non-residents and foreign corporations.