Ontario Taxes — Frequently Asked Questions

Yes. The Ontario small business corporate income tax rate falls from 3.2% to 2.2% effective July 1, 2026 under Bill 97, the Plan to Protect Ontario Act (Budget Measures), 2026, which received Royal Assent on March 26, 2026. The cut is prorated for tax years that straddle July 1, so a December year-end gets a blended rate for 2026.

No. The Ontario small business limit remains $500,000, the same as the federal limit. A private member's bill, Bill 12 (Cutting Taxes on Small Businesses Act, 2025), proposed raising it to $600,000 but only reached First Reading and never became law. Plan on $500,000 until legislation says otherwise.

No. Ontario harmonized its provincial sales tax with the GST, so businesses charge a single 13% HST (5% federal + 8% provincial) instead of separate GST and PST. Unlike BC's PST, the provincial portion of HST is recoverable by registrants through input tax credits, which makes it a flow-through rather than a hard cost.

13% — a 5% federal component and an 8% provincial component charged as one tax. Registered businesses collect 13% on taxable supplies and claim input tax credits for the HST paid on their own purchases, remitting only the difference. RN Canada's sales tax calculator works out the HST on any Ontario transaction.

No. The Canada Revenue Agency administers Ontario corporate income tax, so an Ontario corporation files one federal T2 return that covers both federal and Ontario tax. This differs from Alberta, where a corporation must also file the provincial AT1 return.

The EHT is a payroll tax on Ontario remuneration. Eligible employers claim an exemption on the first $1,000,000 of Ontario payroll and pay up to 1.95% on the excess. Employers, or associated groups, with more than $5,000,000 of annual Ontario payroll lose the exemption entirely and pay on their whole payroll.

Once Ontario payroll passes the $1,000,000 exemption, on the excess only — so a $1,800,000 payroll is taxed on $800,000. Above $5,000,000 of Ontario payroll the exemption disappears and the 1.95% applies to the full amount. Associated employers share one exemption between them.

Ontario's general provincial rate is 11.5%, which combines with the 15% federal general rate for 26.5% on active business income above the small business limit and on income that does not qualify for the small business deduction. Ontario sits between Alberta's 8% and BC's 12% provincial general rates.

Alberta, once a company outgrows the small business limit: 23% combined against Ontario's 26.5%, plus Alberta has no provincial payroll or health tax. Ontario's offsetting advantage is that its 13% HST is fully recoverable by registrants, whereas Alberta charges only 5% GST and BC adds unrecoverable PST.

A City of Toronto tax of 3% of a property's Current Value Assessment on homes declared or deemed vacant. Owners must file an occupancy declaration each year, and a missed declaration can result in the property being deemed vacant. It targets residential property, not general business income, but it matters to corporations holding Toronto residential real estate.

Toronto charges its own land transfer tax on top of the provincial one. From April 1, 2026, graduated rates apply to residential properties containing one or two single-family residences priced above $3,000,000, rising through bands from 4.40% to 8.60%. A Municipal Non-Resident Speculation Tax of 10% has also applied to certain purchases by foreign buyers since January 1, 2025.

Six months after the tax year end — June 30 for a December 31 year end. The tax itself is due earlier: generally two months after year end, or three months for a CCPC claiming the small business deduction that meets the conditions. Filing late triggers penalties even when the tax was paid on time.

The general minimum wage is $17.60 per hour and rises to $17.95 on October 1, 2026. Ontario indexes the rate annually, so employers should budget the increase from the October pay period rather than the calendar year. Employer costs above the wage itself include CPP, CPP2, EI, EHT and WSIB premiums.

Most do. WSIB premiums are set per business class as a rate per $100 of insurable earnings; the 2025 average premium rate was $1.25 per $100. Coverage is mandatory for many industries and optional for some, so confirm your classification before assuming you are exempt.

It caps the active business income eligible for the low small business rate, and it is shared among associated Canadian-controlled private corporations rather than granted per company. The limit is also ground down where the associated group's taxable capital exceeds $10 million or its passive investment income exceeds $50,000.

Ontario applies the old and new small business rates to the days in the tax year falling before and after July 1, 2026. A December 31, 2026 year end therefore uses a blended rate for calendar 2026, while a year end starting on or after July 1, 2026 uses the full 2.2%. RN Canada's corporate tax calculator has a period selector for exactly this.

Registration is required once taxable revenue passes the $30,000 small supplier threshold over four consecutive calendar quarters, and it is optional before that. Voluntary registration can pay for itself when you have significant HST on start-up costs, since registrants recover it through input tax credits.

The same federal deductions as everywhere in Canada: CPP on earnings up to the $74,600 ceiling, CPP2 between $74,600 and $85,000, and EI at the employee rate of $1.63 per $100 up to $68,900 of insurable earnings. Ontario adds the Employer Health Tax above the $1,000,000 exemption and WSIB premiums where coverage applies.

No. A Canadian-controlled private corporation gets the small business rate on active business income within the $500,000 limit; everything above the limit, most investment income, and companies that are not CCPCs are taxed at the 11.5% Ontario general rate, or 26.5% combined with the federal rate.