Newfoundland and Labrador capital tax on financial institutions

A provincial tax is levied on the taxable capital of financial institutions that have a permanent establishment in Newfoundland and Labrador. This tax applies to banks and trust and loans corporations.

The tax is equal to a certain percentage of the amount by which the corporation's taxable capital employed in the province for the year, including the offshore area, exceeds its capital deduction for the year. The rates are:

• 6% effective January 1, 2016
• 5% effective April 1, 2015
• 4% before April 1, 2015

The rate is prorated based on the number of days in the year when the tax year straddles these dates.

A penalty applies to financial institutions that have to pay this tax and do not file the required return on time. For more details, see Large Corporations.

The provincial capital tax cannot be reduced by any tax credits. However, you can deduct the capital tax payable when calculating federal income for tax purposes.

Instalment payment requirements are the same as for Part I tax. For more details, see Paying Instalments.

Capital deduction

A capital deduction of $5 million is available to a corporation that is not a member of a related group and has a capital of $10 million or less. If the corporation is a member of a related group, a capital deduction of $5 million to be allocated among members of the related group is available as long as the combined capital of all members of the related group is $10 million or less.

Allocating the deduction

Use Schedule 306, Newfoundland and Labrador Capital Tax on Financial Institutions – Agreement Among Related Corporations, to allocate the capital deduction. File this agreement with your return.

Reporting the tax

File a completed Schedule 305, Newfoundland and Labrador Capital Tax on Financial Institutions.

On line 518 of Schedule 5, Tax Calculation Supplementary – Corporations, enter the provincial tax on financial institutions payable.

Forms and publications

• Schedule 305, Newfoundland and Labrador Capital Tax on Financial Institutions
• Schedule 306, Newfoundland and Labrador Capital Tax on Financial Institutions – Agreement Among Related Corporations
• Schedule 5, Tax Calculation Supplementary – Corporations

Government partners

• Newfoundland and Labrador (provincial site)

Date modified:

2017-04-20