About Corporation Capital Tax

The Corporation Capital Tax (CCT) is a tax levied on financial corporations with a permanent establishment in British Columbia and net paid up capital in excess of a minimum threshold amount.

Effective April 1, 2008, the Corporation Capital Tax Act is amended to phase out the existing corporation capital tax over the next three years, by reducing the rates by one-third each year. The rates will be pro-rated for taxation years that straddle April 1. The following table shows the current rates and the phase-out schedule over the next three years.

Corporation Capital Tax Rates

Tax Rate	Current	April 1, 2008	April 1, 2009	April 1, 2010
Small financial institutions*	1%	2/3 of 1%	1/3 of 1%	0%
Large financial institutions	3%	2%	1%	0%

* Financial institutions with paid up capital under $1 billion or that have a head office in BC.

Financial corporation

For the purposes of the CCT, a financial corporation is:

	a bank (including an authorized foreign bank), trust company, credit union, or loan corporation that is subsidiary to a bank
	the agent, assignee, trustee, liquidator, receiver or other official in whose hands, or under whose control, all or any part of the property of a bank, trust company, or credit union is placed

Net paid up capital

Net paid up capital for a financial corporation is generally made up of the total capital stock, contributed surplus and retained earnings of the corporation, minus the investment allowance.

Effective for taxation years beginning on or after October 1, 2006, net paid up capital includes accumulated other comprehensive income, as required under generally accepted accounting principles.

Investment allowance

A financial corporation may deduct from its total paid up capital an investment allowance equal to the proportion of the total paid up capital that the carrying value of those shares in the other financial corporation bears to the total assets of the financial corporation.

Three criteria must be met:

1. eligible shares must be shares of another financial corporation, other than exempt financial corporations
2. the other financial corporation must have a permanent business establishment in British Columbia
3. the taxation year of the financial corporation and the other financial corporation end on the same date

For authorized foreign banks, the shares must be held in the course of carrying on its Canadian banking business.

The investment allowance is limited to carrying value of the eligible shares used in the calculation of the allowance.

Changes to the CCT

The CCT no longer applies to general corporations and investment dealers for tax years starting on or after September 1, 2002. Please see Bulletin CCT 013 for more information on amendments to the Corporation Capital Tax Act. Also, please see our Archive section for information that applies to general corporations and investment dealers.

If you wish to correct information from a previous filing or voluntarily file a missing or late return, please use the Voluntary Disclosure program outlined in Bulletin CCT 009.