31 (1) A corporation may, in computing the amount of its tax payable under this Division for a taxation year, deduct an Ontario small business deduction if, (a) the corporation has made a deduction under section 125 of the Federal Act for the year; or (b) the corporation would have been entitled to a deduction under section 125 of the Federal Act if its business limit for the year under paragraph 125 (1) (c) of that Act had been determined without reference to subsection 125 (5.1) of that Act. 2018, c. 17, Sched. 42, s. 7. Calculation of Ontario small business deduction (2) A corporation’s Ontario small business deduction for a taxation year is the amount determined by multiplying its Ontario small business income for the year by its small business deduction rate for the year.  2007, c. 11, Sched. A, s. 31 (2). Ontario small business income (3) A corporation’s Ontario small business income for a taxation year is the lesser of “A” and “B” where, “A” is the amount calculated using the formula, C × D in which, “C” is the least of, (a) the amount determined under paragraph 125 (1) (a) of the Federal Act in respect of the corporation for the year, (b) the amount determined under paragraph 125 (1) (b) of the Federal Act in respect of the corporation for the year, and (c) the corporation’s Ontario business limit for the year, and “D” is the corporation’s Ontario domestic factor for the year, and “B” is the corporation’s Ontario taxable income for the year. 2010, c. 26, Sched. 20, s. 3. Small business deduction rate (4) A corporation’s small business deduction rate for a taxation year is the sum of, (a) 8.5 per cent multiplied by the ratio of the number of days in the taxation year that are before July 1, 2010 to the total number of days in the taxation year; (b) 7.5 per cent multiplied by the ratio of the number of days in the taxation year that are after June 30, 2010 and before July 1, 2011 to the total number of days in the taxation year; (c) 7 per cent multiplied by the ratio of the number of days in the taxation year that are after June 30, 2011 and before January 1, 2018 to the total number of days in the taxation year; (d) 8 per cent multiplied by the ratio of the number of days in the taxation year that are after December 31, 2017 and before January 1, 2020 to the total number of days in the taxation year; and (e) 8.3 per cent multiplied by the ratio of the number of days in the taxation year that are after December 31, 2019 to the total number of days in the taxation year. 2009, c. 34, Sched. U, s. 7; 2012, c. 9, s. 7; 2017, c. 34, Sched. 40, s. 6 (2); 2019, c. 15, Sched. 38, s. 2. Ontario business limit (5) For the purpose of this section, a corporation’s Ontario business limit for a taxation year is $500,000 unless the corporation is associated in the taxation year with one or more other Canadian-controlled private corporations, in which case, except as otherwise provided in this section, its Ontario business limit is nil.  2010, c. 1, Sched. 29, s. 4. Associated corporations (5.1) Despite subsection (5), if all the Canadian-controlled private corporations that are associated with each other in a taxation year file with the Federal Minister an agreement under subsection 125 (3) of the Federal Act, the Ontario business limit for the year of each of the corporations is, (a) if the total of the percentages assigned in the agreement does not exceed 100 per cent, $500,000 multiplied by the percentage assigned to that corporation in the agreement; and (b) in any other case, nil.  2010, c. 1, Sched. 29, s. 4. Failure to file agreement (5.2) Subject to subsection (5.3), if any of the Canadian-controlled private corporations that are associated with each other in a taxation year has failed to file an agreement as contemplated by subsection (5.1) within 30 days after notice in writing by the Federal Minister has been forwarded to any of them that such an agreement is required for the purpose of any assessment of tax under this Part, the Ontario Minister shall, for the purpose of this section, allocate an amount to one or more of them for the taxation year.  2010, c. 1, Sched. 29, s. 4. Same (5.3) The total amount allocated by the Ontario Minister under subsection (5.2) must equal the least of the amounts that would, if none of the corporations were associated with any other corporation during the year and if this Act were read without reference to subsection (5.4), be the Ontario business limits of the corporations for the year.  2010, c. 1, Sched. 29, s. 4. Special rules for Ontario business limit (5.4) Despite subsections (5) to (5.3), (a) if a Canadian-controlled private corporation (in this paragraph referred to as the “first corporation”) has more than one taxation year ending in the same calendar year and is associated in two or more of those taxation years with another Canadian-controlled private corporation that has a taxation year ending in that calendar year, the Ontario business limit of the first corporation for each taxation year ending in the calendar year in which it is associated with the other corporation that ends after the first such taxation year ending in that calendar year is, subject to the application of clause (b), an amount equal to the lesser of, (i) its Ontario business limit determined under subsection (5.1) or (5.2) for the first such taxation year ending in the calendar year, and (ii) its Ontario business limit determined under subsection (5.1) or (5.2) for the particular taxation year ending in the calendar year; and (b) if a Canadian-controlled private corporation has a taxation year that is less than 51 weeks, its Ontario business limit for the year is that proportion of its Ontario business limit for the year determined without reference to this clause that the number of days in the year is of 365.  2010, c. 1, Sched. 29, s. 4. Ontario business limit reduction (5.5) Despite subsections (5) to (5.4), a Canadian-controlled private corporation’s Ontario business limit for a particular taxation year ending in a calendar year and ending after May 1, 2014 and beginning before April 7, 2022 is the amount, if any, by which its Ontario business limit otherwise determined under subsections (5) to (5.4) for the particular taxation year exceeds the amount determined by the formula, A × (B/$11,250) × C/E in which, “A” is the amount that would, but for this subsection, be the corporation’s business limit for the particular taxation year, “B” is the amount determined by the formula, 0.225% × (D − $10 million) in which, “D” is, (a) if, in both the particular taxation year and the preceding taxation year, the corporation is not associated with any corporation, the taxable capital employed in Canada (within the meaning assigned by subsection 181.2 (1) or 181.3 (1) or section 181.4 of the Federal Act, as the case may be) of the corporation for the preceding taxation year, (b) if, in the particular taxation year, the corporation is not associated with any corporation but was associated with one or more corporations in the preceding taxation year, the taxable capital employed in Canada (within the meaning by subsection 181.2 (1) or 181.3 (1) or section 181.4 of the Federal Act, as the case may be) of the corporation for the particular taxation year, or (c) if, in the particular taxation year, the corporation is associated with one or more particular corporations, the total of all amounts each of which is the taxable capital employed in Canada (within the meaning assigned by subsection 181.2 (1) or 181.3 (1) or section 181.4 of the Federal Act, as the case may be) of the corporation or of any of the particular corporations for its last taxation year that ended in the preceding calendar year. “C” is the number of days in the particular taxation year that are after May 1, 2014, and “E” is the total number of days in the particular taxation year. 2014, c. 7, Sched. 29, s. 7; 2023, c. 8, Sched. 9, s. 4 (1). Same, tax years beginning on or after April 7, 2022 (5.5.1) Despite subsections (5) to (5.5), a Canadian-controlled private corporation’s Ontario business limit for a particular taxation year beginning on or after April 7, 2022 and ending in a calendar year is the amount, if any, by which its Ontario business limit otherwise determined under subsections (5) to (5.4) for the particular taxation year exceeds the amount determined by the formula, A × (B/$90,000) in which, “A” is the amount that would, but for this subsection, be the corporation’s business limit for the particular taxation year, and “B” is the amount determined by the formula, 0.225% × (D − $10 million) in which, “D” is, (a) if, in both the particular taxation year and the preceding taxation year, the corporation is not associated with any corporation, the taxable capital employed in Canada (within the meaning assigned by subsection 181.2 (1) or 181.3 (1) or section 181.4 of the Federal Act, as the case may be) of the corporation for the preceding taxation year, (b) if, in the particular taxation year, the corporation is not associated with any corporation but was associated with one or more corporations in the preceding taxation year, the taxable capital employed in Canada (within the meaning by subsection 181.2 (1) or 181.3 (1) or section 181.4 of the Federal Act, as the case may be) of the corporation for the particular taxation year, or (c) if, in the particular taxation year, the corporation is associated with one or more particular corporations, the total of all amounts each of which is the taxable capital employed in Canada (within the meaning assigned by subsection 181.2 (1) or 181.3 (1) or section 181.4 of the Federal Act, as the case may be) of the corporation or of any of the particular corporations for its last taxation year that ended in the preceding calendar year. 2023, c. 8, Sched. 9, s. 4 (2). Same (5.6) If a corporation assigns to another corporation all or any portion of its business limit for a taxation year under subsection 125 (3.2) of the Federal Act, the Ontario business limit of the corporation for the year under subsection (5.5) or (5.5.1), as the case may be, is reduced by the total of all amounts each of which is the portion, if any, of the business limit assigned to the other corporation under the Federal Act. 2017, c. 8, Sched. 30, s. 5; 2023, c. 8, Sched. 9, s. 4 (3). Specified partnership income (6) In applying subparagraph 125 (1) (a) (ii) of the Federal Act for the purposes of this section, for a taxation year beginning on or before March 21, 2016, the reference to “specified partnership income” in that subparagraph shall be read as a reference to the amount that would be determined under the definition of “specified partnership income” in subsection 125 (7) of that Act in respect of a partnership if, (a) the dollar amount in subparagraph (i) of the description of “M” in that definition were the dollar amount set out in subsection (5); and (b) subparagraph (ii) of the description of “M” in that definition were read as a reference to the amount obtained, (i) by dividing the dollar amount set out in subsection (5) by 365 and rounding the result to the next highest whole number if the result is not a whole number, and (ii) by multiplying the amount determined under subclause (i) by the total of all amounts each of which is the number of days in a fiscal period of the partnership that ends in the taxation year.  2010, c. 1, Sched. 29, s. 4; 2018, c. 8, Sched. 32, s. 2 (1). Specified partnership income, tax year after March 21, 2016 (7) In applying subparagraph 125 (1) (a) (ii) of the Federal Act for the purposes of this section, for a taxation year beginning after March 21, 2016, the reference to “specified partnership income” in that subparagraph shall be read as a reference to the amount that would be determined under the definition of “specified partnership income” in subsection 125 (7) of that Act in respect of a partnership if the dollar amount in subsection 125 (2) of that Act were a reference to the dollar amount set out in subsection (5) of this Act. 2018, c. 8, Sched. 32, s. 2 (2). Section Amendments with date in force (d/m/y) 2008, c. 7, Sched. S, s. 6 - 01/01/2008 2009, c. 34, Sched. U, s. 7 - 15/12/2009 2010, c. 1, Sched. 29, s. 4 - 18/05/2010; 2010, c. 26, Sched. 20, s. 3 - 08/12/2010 2012, c. 9, s. 7
- 01/07/2012 2014, c. 7, Sched. 29, s. 7 - 24/07/2014 2017, c. 8, Sched. 30, s. 5 - 22/03/2016; 2017, c. 34, Sched. 40, s. 6 (1, 2) - 14/12/2017 2018, c. 8, Sched. 32, s. 2 (1, 2) - 08/05/2018; 2018, c. 17, Sched. 42, s. 7 - 21/06/2018 2019, c. 15, Sched. 38, s. 2 - 01/01/2020 2023, c. 8, Sched. 9, s. 4 (1-3) - 07/04/2022