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Ontario’s Bill 138 Receives Royal Assent

Ontario’s Bill 138 Receives Royal Assent

Province reduces its small business corporate income tax rate to 3.2% (from 3.5%)


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Ontario's Bill 138 received Royal Assent on December 10, 2019. The bill reduces the small business corporate income tax rate to 3.2% (from 3.5%), as announced in Ontario's 2019 Fall Economic Update. The bill also includes other measures from the Update that increase the non-eligible dividend tax rate for individuals and reduce the tax rate on aviation fuel for certain northern regions. All measures are effective January 1, 2020.

The reduction to the small business corporate income tax rate is considered substantively enacted for purposes of IFRS and Accounting Standards for Private Enterprise (ASPE) on November 6, 2019, the date Bill 138 received first reading (as Ontario has a majority government). The reduction is considered enacted for U.S. GAAP purposes on December 10, 2019, the date the bill received Royal Assent.

Corporate income tax measure

This measure reduces Ontario's small business corporate income tax rate to 3.2% (from 3.5%) effective January 1, 2020. It applies to the first $500,000 of qualifying active business income of a Canadian-controlled private corporation. The tax rate reduction is prorated for taxation years straddling January 1, 2020.

For more information, contact your KPMG adviser.

Information is current to December 17, 2019. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500

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