Deduction

The deduction granted in the calculation of a corporation's paid-up capital is $1,000,000 for 2007 and subsequent years. This deduction is in addition to the other deductions the corporation may claim and is calculated before the reduction for investments, where applicable.

Reduction of the deduction

For an SMB, the deduction is reduced in proportion to the business's size. For a particular taxation year, the maximum reduction of the deduction is one dollar for every three dollars exceeding the paid-up capital determined for the previous taxation year. The amount is subtracted from the deduction the corporation may claim for a particular taxation year.

Minimum amount of tax

A minimum amount of tax on paid-up capital of $250 must be paid by

• financial institutions
• government corporations.

For other corporations, the minimum amount of $250 has been eliminated. However, insurance corporations must still pay a minimum amount based on the type of activities carried on by the corporation.

Farming and fishing

A farming corporation or a corporation whose activities consist primarily of carrying on a fishing business may claim a deduction in the calculation of its paid-up capital if it is not entitled to the temporary exemption.

This deduction is $5,000,000 if the taxation year begins after February 20, 2007.

In the case of associated corporations, the deduction must be apportioned. However, two corporations associated with each other only because of their association to a third and same corporation, may each claim the deduction in full in the calculation of their paid-up capital provided the third corporation elects to no longer be considered an associated corporation.