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The Corporation Capital Tax Act
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This version is current as of November 7, 2018.
It has been in effect since November 10, 2017.

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C.C.S.M. c. C226

The Corporation Capital Tax Act

HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Manitoba, enacts as follows:

Definitions

1(1)        In this Act

"amount" means

(a) money expressed in terms of the amount of money, or

(b) rights or things expressed in terms of the value in money of the rights or things; (« montant »)

"amount taxable" means

(a) in the case of a corporation resident in Canada the taxable paid up capital of the corporation, and

(b) in the case of a corporation not resident in Canada the taxable paid up capital of the corporation employed in Canada; (« montant imposable »)

"AOCI" means accumulated other comprehensive income; (« CAERE »)

"business" means an undertaking of any kind whatsoever, and, without restricting the generality of the foregoing, includes a profession, calling, trade, manufacture, or an adventure or concern in the nature of trade; (« entreprise »)

"corporation" means any corporation however or wherever incorporated and, where any corporation or the whole or any part of the property thereof is placed in the hands or under the control of an agent, assignee, trustee, liquidator, receiver, or other official, includes such agent, assignee, trustee, liquidator, receiver, or other official, and includes a Crown corporation with or without share capital, but does not include any other corporation incorporated without share capital; (« corporation »)

"Crown corporation" means a corporation, commission or association in which not less than 90% of the shares or capital is owned by Her Majesty in right of Canada or in right of a province or by a Canadian municipality, and includes a subsidiary wholly owned corporation to such a corporation, commission or association; (« corporation de la Couronne »)

"financial institution" means a bank, trust corporation, loan corporation or a trust and loan corporation; (« institution financière »)

"fiscal year" means the period for which the accounts of the business of a corporation are made up and accepted for the purposes of the Income Tax Act (Canada); (« exercice »)

"lien note" means a chattel paper that creates a purchase money security interest, as those terms are defined in The Personal Property Security Act; (« billet portant privilège »)

"loan corporation" means a corporation whose principal business is the making of loans; (« corporation de prêts »)

"minister" means the Minister of Finance; (« ministre »)

"property" means property of any kind whatsoever whether real or personal or corporeal or incorporeal and, without restricting the generality of the foregoing, includes a right of any kind whatever, a share or a chose in action, and, unless a contrary intention is evident, money; (« biens »)

"resident in Canada" means resident in Canada within the meaning of the Income Tax Act (Canada); (« résident du Canada »)

"return" means the corporation capital tax return, complete with financial statements as presented to the shareholders of the corporation, copies of all schedules required by and filed with income tax returns under the Income Tax Act (Canada) and all other information to be disclosed in the return; (« déclaration »)

"security interest" means a security interest as defined in The Personal Property Security Act; (« sûreté »)

"share" means a share of capital stock of a corporation; (« action »)

"shareholder" includes a member of a corporation or other person entitled to receive payment of a dividend or to share in a distribution on the winding-up of the corporation; (« actionnaire »)

"subordinated indebtedness" means indebtedness of a financial institution that by its terms will, in the event of the insolvency or winding-up of the institution, be subordinate in right of payment to

(a) all deposit liabilities of the institution, and

(b) all other liabilities of the institution except those that, by their terms, rank equally with or are subordinate to such indebtedness; (« titre secondaire »)

"subsidiary controlled corporation" means a corporation more than 50% of the issued share capital of which, having full voting rights under all circumstances, is owned directly or indirectly by the corporation to which it is subsidiary; (« filiale contrôlée »)

"subsidiary wholly owned corporation" means a corporation where all the issued share capital of which, except directors' qualifying shares, is owned directly or indirectly by the corporation to which it is subsidiary; (« filiale en propriété exclusive »)

"tax" means the tax imposed under this Act; (« impôt »)

"trust corporation" means a corporation licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada the business of offering to the public its services as trustee. (« corporation de fiducie »)

Meaning of "associated group for a calendar year"

1(2)        For the purpose of this Act, an associated group for a calendar year includes all the corporations that are associated with each other under section 256 of the Income Tax Act (Canada) at a time that, for each of them, is in a fiscal year that ends in the calendar year. A corporation might belong to more than one associated group for a calendar year.

Joint venture or partnership

1(3)        In computing its amount taxable for the purposes of this Act, every corporation carrying on a joint venture or in partnership with any other person or partnership must include its proportionate share of the assets, liabilities, and capital of the joint venture or partnership.

S.M. 1992, c. 52, s. 2; S.M. 1993, c. 14, s. 76; S.M. 1993, c. 46, s. 2; S.M. 1998, c. 30, s. 2; S.M. 2000, c. 39, s. 2; S.M. 2002, c. 19, s. 2; S.M. 2002, c. 47, s. 22; S.M. 2004, c. 43, s. 2; S.M. 2005, c. 40, s. 2; S.M. 2009, c. 26, s. 3; S.M. 2012, c. 1, s. 2; S.M. 2017, c. 40, s. 2.

Administration and enforcement

1.1         Part I of The Tax Administration and Miscellaneous Taxes Act applies to the administration and enforcement of this Act.

S.M. 2005, c. 40, s. 3.

2 and 3     [Repealed]

S.M. 2002, c. 19, s. 3.

Permanent establishment

4(1)        In this Act "permanent establishment" includes a fixed place of business and, without restricting the generality of the foregoing, includes branches, offices, and agencies.

Subsidiary's place of business

4(2)        For the purposes of this Act, the fact that a corporation has a subsidiary controlled corporation in a place or a subsidiary controlled corporation engaged in a trade or business in a place shall not of itself be deemed to mean that the first mentioned corporation is operating a permanent establishment in that place.

Place of permanent establishment

4(3)        For the purposes of this Act, and without restricting the generality of subsection (1),

(a) a corporation has a permanent establishment in the place designated in its charter or by-laws as being its head office;

(b) where a corporation carries on business through an employee, or through an agent who has general authority to contract for the corporation or who has a stock of merchandise owned by the corporation from which the agent fills orders, the employee or agent shall be deemed to operate a permanent establishment of the corporation;

(c) where a corporation, otherwise having a permanent establishment in Canada, owns land in a province, the land is a permanent establishment;

(d) the use by a corporation of substantial machinery or equipment in a particular place at any time in a fiscal year of the corporation constitutes a permanent establishment of the corporation in that place for the fiscal year; and

(e) [repealed] S.M. 2017, c. 40, s. 3;

(f) [repealed] S.M. 2017, c. 40, s. 3;

(g) where a corporation has no fixed place of business, it has a permanent establishment in the principal place in which the corporation's business is conducted.

S.M. 2007, c. 6, s. 2; S.M. 2017, c. 40, s. 3.

Rules for determining various amounts

5           In determining for the purposes of this Act the amount of a corporation's AOCI, its total assets, its cost of investments or its "any other surplus", the amount includes

(a) the amount by which any asset of the corporation is carried in the books of account of the corporation or on the balance sheet of the corporation in excess of the actual cost thereof; and

(b) the amount by which the value of any asset of the corporation has been written down and deducted from its income or undivided profits where that amount is not deductible, or if deductible has not been deducted in computing its income for the fiscal year or a previous fiscal year, under the Income Tax Act (Canada);

and excludes

(c) any amount by which the value of any asset of the corporation has been written down and deducted from its income or undivided profits where that amount is deductible and has been deducted in computing its income for the fiscal year or a previous fiscal year under the Income Tax Act (Canada) otherwise than under paragraph 20(1)(n) of that Act (reserve for unpaid amounts).

S.M. 1993, c. 46, s. 3; S.M. 2009, c. 26, s. 4; S.M. 2017, c. 40, s. 4.

6(1) and (1.1) [Repealed] S.M. 2017, c. 40, s. 5.

Tax payable by financial institution

6(2)        A financial institution must pay a tax for each fiscal year equal to 6% of its amount taxable as at the close of the fiscal year.

Tax payable by Crown corporation

6(3)        A Crown corporation with a permanent establishment in Manitoba must pay a tax for each fiscal year equal to 0.5% of its amount taxable as at the close of the fiscal year.

S.M. 1989-90, c. 91, s. 12; S.M. 2006, c. 24, s. 2; S.M. 2007, c. 6, s. 3; S.M. 2008, c. 3, s. 2; S.M. 2010, c. 29, s. 4; S.M. 2012, c. 1, s. 3; S.M. 2013, c. 55, s. 2; S.M. 2015, c. 40, s. 1; S.M. 2017, c. 40, s. 5

Apportionment of tax

7(1)        Where a fiscal year of a corporation has less than 364 days, the tax otherwise payable by the corporation under this Act, except for this section, for that fiscal year shall be reduced in accordance with the following formula:

T = P × F/365

In this formula

T

is the tax for the fiscal year payable by the corporation by reason of the reduction allowed under this section;

P

is the tax for the fiscal year otherwise payable by the corporation under this Act except for this section; and

F

is the number of days in the fiscal year of the corporation.

7(1.1)      [Repealed] S.M. 2017, c. 40, s. 6.

Fiscal year end — ceasing to have a permanent establishment

7(2)        A corporation's fiscal year is deemed for the purposes of this Act to end on the day it ceases to have a permanent establishment in Manitoba.

Fiscal year end — sale of assets

7(3)        The minister, or a person designated by the minister for the purpose, may, for the purposes of this Act, deem a corporation's fiscal year to have ended on the day immediately before the day on which the corporation concludes any transaction or series of transactions that results in a sale, transfer or other disposition of more than 50% of its fixed assets and inventories.

S.M. 2000, c. 39, s. 3; S.M. 2010, c. 29, s. 5; S.M. 2017, c. 40, s. 6.

Capital of resident corporations

8(1)        The paid up capital of a corporation that is resident in Canada as at the close of a fiscal year is the aggregate of

(a) its paid up capital stock as at the close of the fiscal year, including

(i) any premiums received on the issue of its shares, and

(ii) for greater certainty, any preferred share liability,

but not including any discount allowed in accordance with the law on the issue of the shares;

(b) the earned surplus, capital surplus and any other surplus of the corporation as at the close of the fiscal year;

(c) all reserves of the corporation as at the close of the fiscal year, whether created from income or otherwise, including, for greater certainty, the corporation's AOCI and any deferred income tax or other deferred tax or royalty as recorded in the books of the corporation as at the close of the fiscal year but not including any reserve the amounts for the creation of which are permitted to be deducted from the income of the corporation under the Income Tax Act (Canada);

(d) all sums or credits advanced or loaned to the corporation by its shareholders directly or indirectly or by any other corporation and outstanding as at the close of the fiscal year, but not including its current accounts payable;

(e) all indebtedness of the corporation as at the close of the fiscal year, whether assumed or undertaken by it, represented by bonds, bond mortgages, debentures, mortgages, lien notes, and any other securities to which the property of the corporation, or any of it, is subject as at the close of the fiscal year, but not including its current accounts payable; and

(f) all other indebtedness of the corporation as at the close of the fiscal year, whether secured or unsecured, including, for greater certainty, bankers' acceptances but not current accounts payable.

Current accounts payable

8(2)        For the purposes of clauses (1)(d), (e) and (f) and subclause 9(1)(b)(ii), current accounts payable of a corporation as at the close of the fiscal year include:

(a) its employee source deductions;

(b) its current income taxes payable;

(c) its wages and salaries payable;

(d) its cheques issued and outstanding in excess of funds on deposit;

(e) its dividends payable;

(f) its trade accounts payable reported as a current liability, but not including indebtedness to shareholders of the corporation, if

(i) the account is not outstanding for more than 90 days as at the close of the fiscal year, or

(ii) the account is not a portion or a current portion of a long term debt to another corporation; and

(g) its lien notes payable to another corporation, but not including indebtedness to shareholders of the corporation, if

(i) the corporation is engaged in the business of a retail automobile or truck dealership or a retail farm machinery and equipment dealership, and

(ii) the lien note represents financing by way of a security interest in itemized new or used motor vehicle inventory or on itemized new or used farm machinery and equipment inventory.

8(3)        [Repealed] S.M. 1994, c. 23, s. 2.

Capital of banks

8(4)        Notwithstanding subsection (1), the taxable paid up capital of a bank at the close of a fiscal year is the aggregate of

(a) its paid up capital stock, including

(i) any premiums received on the issue of its shares, and

(ii) for greater certainty, any preferred share liability,

but not including any discount allowed in accordance with the law on the issue of shares;

(b) its contributed surplus;

(c) its retained earnings;

(d) its reserves including, for greater certainty, its AOCI;

(e) any tax paid appropriations included in its "appropriation for contingencies" account; and

(f) its subordinated indebtedness that is evidenced by obligations issued for a term of at least five years.

Capital of trust and loan corporations

8(5)        Notwithstanding subsection (1), the taxable paid up capital of a trust and loan corporation, a trust corporation or a loan corporation at the close of a fiscal year is the aggregate of

(a) its paid up capital stock, including

(i) any premiums received on the issue of its shares, and

(ii) for greater certainty, any preferred share liability,

but not including any discount allowed in accordance with the law on the issue of shares;

(b) its earned surplus, capital surplus and any other surplus;

(c) all its reserves, whether created from income or otherwise, including, for greater certainty, the corporation's AOCI and any deferred income tax or other deferred tax or royalty as recorded in the books of the corporation but not including any reserve the amounts for the creation of which are permitted to be deducted from the income of the corporation under the Income Tax Act (Canada); and

(d) its subordinated indebtedness that is evidenced by obligations issued for a term of at least five years.

S.M. 1989-90, c. 91, s. 12; S.M. 1994, c. 23, s. 2; S.M. 1998, c. 30, s. 3; S.M. 2001, c. 43, s. 4 and 21; S.M. 2003, c. 4, s. 2; S.M. 2004, c. 43, s. 3; S.M. 2009, c. 26, s. 5; S.M. 2010, c. 29, s. 6; S.M. 2017, c. 40, s. 7.

Capital of non-resident corporations

9(1)        The paid up capital employed in Canada of a corporation that is not resident in Canada as at the close of a fiscal year is the greater of the amount calculated under the following clause (a) or the amount calculated under the following clause (b):

(a) The amount that is equal to 12.5 multiplied by the corporation's taxable income earned in Canada for the fiscal year as determined under the Income Tax Act (Canada);

(b) The amount by which

(i) the amount of the total assets of the corporation in Canada as at the close of the fiscal year,

exceeds

(ii) its current accounts payable as at the close of the fiscal year relating to its permanent establishments in Canada.

(c) to (e) [repealed] S.M. 2017, c. 40, s. 8.

9(2) and (3)[Repealed] S.M. 2017, c. 40, s. 8.

S.M. 1989-90, c. 91, s. 12; S.M. 1993, c. 14, s. 76; S.M. 1994, c. 23, s. 3; S.M. 1999, c. 3, s. 2; S.M. 2017, c. 40, s. 8.

10(1)       [Repealed] S.M. 2017, c. 40, s. 9.

Non-resident corporation

10(2)       The taxable paid up capital employed in Canada as of the end of the fiscal year of a corporation that is not resident in Canada is the paid up capital employed in Canada as at the end of the fiscal year.

10(3) and (4) [Repealed] S.M. 2017, c. 40, s. 9.

Deduction from paid up capital of Crown corporation

10(5)       In computing its taxable paid up capital as at the close of a fiscal year, a Crown corporation may deduct, as an investment allowance, the amount calculated in accordance with the following formula:

P × C/B

In this formula,

P

is the paid up capital of the Crown corporation as at the close of the fiscal year;

C

is the cost of investments held by the Crown corporation at the end of the fiscal year in shares and bonds of, and loans and advances to, other corporations and in bonds, debentures and other securities of any government, municipality or school corporation, but not including

(a) cash on deposit with any financial institution or credit union that accepts deposits in the normal course of its business,

(b) a loan or advance in the nature of a certificate of term deposit, bearer deposit note, bearer discount note, swap deposit or banker's acceptance note to any corporation doing the business of a financial institution, unless it was outstanding for more than 90 days as at the close of the fiscal year, or

(c) a trade account receivable by the Crown corporation and reported as a current asset of the Crown corporation, unless

(i) the account was outstanding for more than 90 days as at the close of the fiscal year, or

(ii) the account was a portion or a current portion of a long term debt receivable from another corporation;

B

is the value of the total assets of the corporation as at the close of the fiscal year.

S.M. 1992, c. 52, s. 3; S.M. 1996, c. 66, s. 2; S.M. 1998, c. 30, s. 4; S.M. 2012, c. 1, s. 4; S.M. 2017, c. 40, s. 9.

10.1        [Repealed]

S.M. 2003, c. 4, s. 3; S.M. 2005, c. 40, s. 4; S.M. 2006, c. 24, s. 3; S.M. 2012, c. 1, s. 5; S.M. 2017, c. 40, s. 10.

11          [Repealed]

S.M. 1992, c. 52, s. 4; S.M. 2005, c. 40, s. 5.

11.1        [Repealed]

S.M. 1993, c. 46, s. 4; S.M. 2005, c. 40, s. 5.

11.2        [Repealed]

S.M. 1997, c. 49, s. 2; S.M. 2002, c. 19, s. 3.

12          [Repealed]

S.M. 1989-90, c. 91, s. 12; S.M. 1991-92, c. 31, s. 2; S.M. 1994, c. 23, s. 4; S.M. 1997, c. 49, s. 3; S.M. 1998, c. 30, s. 5; S.M. 2002, c. 19, s. 3; S.M. 2003, c. 4, s. 4; S.M. 2006, c. 24, s. 4; S.M. 2011, c. 41, s. 2.

13(1)       [Repealed] S.M. 2017, c. 40, s. 11.

Exemption for corporations exempt from income tax

13(2)       Subject to subsection (3), no tax is payable by a corporation under this Act in respect of a fiscal year in which its total taxable income, determined for the purposes of the Income Tax Act (Canada), is exempt from income tax under subsection 149(1) of that Act.

Crown corporations

13(3)       Subsection (2) does not apply to any Crown corporation which, in the opinion of the minister, is engaged in a commercial operation.

Exemption for small financial institutions

13(4)       No tax is payable under this Act for a fiscal year by a financial institution if, at the close of the fiscal year,

(a) its taxable paid up capital is less than $4,000,000,000; and

(b) where it is a member of an associated group of corporations for the calendar year in which that fiscal year ends, the total of the taxable paid up capital of the members of the group that are financial institutions is less than $4,000,000,000.

S.M. 2008, c. 3, s. 3; S.M. 2011, c. 41, s. 3; S.M. 2012, c. 1, s. 6; S.M. 2013, c. 55, s. 3; S.M. 2017, c. 40, s. 11.

13.1        [Repealed]

S.M. 2008, c. 3, s. 4; S.M. 2009, c. 26, s. 6; S.M. 2010, c. 29, s. 7; S.M. 2017, c. 40, s. 12.

14          [Repealed]

S.M. 1989-90, c. 91, s. 12; S.M. 1991-92, c. 31, s. 3; S.M. 1994, c. 23, s. 5; S.M. 1997, c. 49, s. 4; S.M. 1998, c. 30, s. 6; S.M. 2002, c. 19, s. 3; S.M. 2003, c. 4, s. 5; S.M. 2006, c. 24, s. 5; S.M. 2011, c. 41, s. 4.

Deduction for capital used outside Manitoba

15          There may be deducted from the tax otherwise payable for a fiscal year by a corporation that has a permanent establishment outside Manitoba in that year the amount determined by the following formula:

Deduction = T × A/B

In this formula,

T

is the tax otherwise payable by the corporation for that year;

A

is the portion of the corporation's taxable income for that year under the Income Tax Act (Canada) that, according to Part IV of the Income Tax Regulations (Canada), is not taxable income earned in the year in Manitoba;

B

is the corporation's taxable income for that year under the Income Tax Act (Canada).

For this purpose, if a corporation has no taxable income for the year, its taxable income for that year is deemed to be $1,000.

S.M. 1989-90, c. 91, s. 12; S.M. 2007, c. 6, s. 4; S.M. 2017, c. 40, s. 13.

No payments less than $1

16          Notwithstanding any other provision of this Act, where the balance of tax as calculated under clause 17(1)(b) is less than $1. no balance of tax is payable under that clause.

S.M. 2006, c. 24, s. 6.

Corporation to file return and pay tax

17(1)       For each fiscal year of a corporation in which it has a permanent establishment in Manitoba, the corporation, on or before the last day of the sixth month following the end of the fiscal year, must

(a) file a return with the minister; and

(b) pay to the minister the tax payable by the corporation for that year, less the total of any instalments paid by it on account of its tax payable for that year.

Quarterly instalments

17(2)       A corporation must pay quarterly instalments on account of its tax payable for a fiscal year if

(a) its estimated tax payable for that year exceeds $5,000. and it was not required to pay instalments for the immediately preceding fiscal year; or

(b) its tax payable for the immediately preceding fiscal year exceeded $5,000.

Due dates and amount of quarterly instalments

17(3)       The quarterly instalments payable under subsection (2) by a corporation for a fiscal year are payable on or before the 15th day of the 3rd, 6th, 9th and 12th months following the end of the immediately preceding fiscal year, and are equal to

(a) if clause (2)(a) applies, 25% of its estimated tax payable for that year; or

(b) if clause (2)(b) applies, 25% of the lesser of

(i) its estimated tax payable for that year, and

(ii) its tax payable for that preceding fiscal year.

17(4) to (7) [Repealed]

S.M. 1989-90, c. 91, s. 12; S.M. 1991-92, c. 31, s. 4; S.M. 1993, c. 46, s. 5; S.M. 1994, c. 23, s. 6; S.M. 1997, c. 49, s. 5; S.M. 2005, c. 40, s. 5; S.M. 2007, c. 6, s. 5; S.M. 2008, c. 3, s. 5; S.M. 2017, c. 40, s. 14.

17.1        [Repealed]

S.M. 1994, c. 23, s. 7; S.M. 1997, c. 49, s. 6; S.M. 2007, c. 6, s. 5.

18 to 20    [Repealed]

S.M. 1991-92, c. 31, s. 5; S.M. 1997, c. 49, s. 7; S.M. 1999, c. 3, s. 3; S.M. 2005, c. 40, s. 5; S.M. 2007, c. 6, s. 6.

Change in fiscal year

21          A corporation shall not change its fiscal year for the purposes of this Act unless prior thereto it has notified the minister of the proposed change and obtained the concurrence of the minister to the proposed change.

22 to 51    [Repealed]

S.M. 1989-90, c. 91, s. 12; S.M. 1991-92, c. 31, s. 6 and 7; S.M. 1991-92, c. 41, s. 5; S.M. 1992, c. 52, s. 5 to 10; S.M. 1993, c. 46, s. 6 to 9; S.M. 1997, c. 49, s. 8; S.M. 1998, c. 30, s. 7 to 11; S.M. 2001, c. 41, s. 2 and 3; S.M. 2002, c. 19, s. 4; S.M. 2003, c. 4, s. 6 to 11; S.M. 2004, c. 43, s. 4 to 7; S.M. 2005, c. 40, s. 5 to 7; S.M. 2006, c. 24, s. 7; S.M. 2007, c. 6, s. 6 ; S.M. 2017, c. 40, s. 15.

NOTE: This Act was enacted as part of the roll of statutes re-enacted by SM 1988, c. 1, and designated as the Re-enacted Statutes of Manitoba, 1988. Except as otherwise provided in those Acts, they came into force on October 19, 1988 (the day that SM 1998, c. 1 received royal assent).