How Ontario Corporate Tax Is Calculated

Calculating taxes can be complex, and there are different rules for different types of businesses. In this article, we’ll focus on how corporate taxes are calculated in Ontario.

What is the Corporate Tax Rate in Ontario?

The corporate tax rate in Ontario is 11.5% on the first $500,000 of taxable income. This means that a company with a taxable income of $100,000 would pay $11,500 in corporate tax.

Your company’s total taxable income is its gross revenue from all sources, less any deductions the Income Tax Act allows. Once you have calculated your total taxable income, you can apply the corporate tax rates to calculate your taxes owing.

How are Capital Gains taxed in Ontario?


In Ontario, capital gains could be taxed at a similar rate as regular income. However, there are some special rules for calculating capital gains.

The first rule is that only half of your capital gains are included in your taxable income. This is because capital gains are considered a “preferential” tax treatment, and the government wants to encourage investment.

The second rule is that you can only deduct capital losses from other capital gains, not from regular income. So, if you have realized a capital gain of $1,000 and a capital loss of $500, your taxable income would only be $500 higher than it otherwise would be.

Third, there are some special rules for calculating capital gains on assets that are not publicly traded. For example, if you sell your house, the gain is calculated using the original purchase price plus any improvements you made to the property minus the selling price. These “unrealized” gains are not taxed until they are actually realized (i.e. when the property is sold).

Are there any exemptions to corporate tax?


Yes, there are a few exemptions to corporate tax. These include:

  • Small businesses: A corporation is exempt from taxation if its taxable income for the year does not exceed $500,000.
  • Non-profit organizations: Certain non-profit organizations are exempt from taxation.
  • Charitable organizations: Charitable organizations are also exempt from taxation.
  • Farm and fishery corporations: Farm and fishery corporations may be eligible for a partial exemption from taxation.

How do I file my corporate taxes?

First, you’ll need to determine your business’s taxation year. This is the 12-month period that you use to report your income and expenses for tax purposes. For most businesses, the taxation year is December 31 which is the same as the calendar year.

Once you’ve determined your taxation year, you’ll need to calculate your taxable income. To do this, you’ll need to total up all of your business’s income and subtract any allowable expenses. Allowable expenses include things like office supplies, employee salaries, and advertising costs.


Once you’ve calculated your taxable income, you’ll need to determine which tax bracket your business falls into.

After you’ve determined which tax bracket your business falls into, you can multiply your taxable income by the appropriate tax rate to calculate how much corporate tax you owe. Once you’ve calculated your corporate taxes owing, you can file your return online or mail it in to the Ministry of Finance.

Final Thoughts

Overall, the process of calculating Ontario corporate tax rate is relatively straightforward. By following the steps outlined in this detailed article, you should be able to calculate your company’s taxes owed with relative ease. Of course, if you have any questions or concerns along the way, be sure to seek out professional help to ensure that you are complying all of your corporate tax obligations.