General information about tax on paid-up capital

Corporations having an establishment in Québec at any time during a taxation year must pay tax on their paid-up capital. The calculation of paid-up capital is based on financial statements drawn up in accordance with generally accepted accounting principles. Paid-up capital includes such elements as

• paid-up capital stock
• surpluses
• provisions and reserves (including future income tax liabilities or deferred income tax credits)
• debts secured by corporation property
• loans and advances granted to the corporation
• bank acceptances and other similar obligations
• other debts outstanding for more than six months.

Cooperatives, cooperative syndicates and mining corporations that have not reached the production stage are exempt form the tax on paid-up capital.

The tax on paid-up capital, except the tax applicable to insurance corporations and life insurers, will be gradually reduced until it is abolished on January 1, 2011. The rates in effect are shown in a table.

For more information, you may consult the Guide de la déclaration de revenus des sociétés (CO-17.G).