xxiv 2023 Rates, Credits, and Other Data

Information Applicable to Individuals

2023 Rates, Credits, and Other Data

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Information Applicable to Individuals

Federal Tax Rates for Individuals (Based on a 6.3% indexed rate for 2023)

Taxable Income Marginal Rate

in Excess of Federal Tax on Excess
$  -0- $ -0- 15.0%
53,359 8,004 20.5%
106,717 18,942 26.0%
165,430 34,207 29.0%
235,675 54,578 33.0%

Federal Tax Credits for Individuals—Personal Tax Credits (ITA 118)

Reference
118(1.1) Basic Personal Amount (BPA) Each individual is entitled to one BPA plus a second BPA if that
individual supports a spouse, common-law partner, or eligible dependant if certain condi-
tions are met. There are three BPA alternatives each dependent on net income.
• $15,000 for individuals with net income (not taxable income) of $165,430 or less;
• $13,521 for individuals with net income of $235,675 or higher;
• Prorated for individuals with net income between $165,430 and $235,675 calculated
as $15,000 – [$1,479][(net income – $165,430) ÷ $70,245]

Individuals Who Are Legally Married or in a Common-Law Partnership 15% of the BPA of
the individual
118(1)(a) Supported Spouse or Common-Law Partner 15% of the same BPA amount of the individual
claiming the credit and:
if the spouse or common-law partner of the individual is dependent because of a mental
or physical infirmity, there is an additional amount of $2,499 added to the BPA. The total
of these two amounts is reduced by the net income of the individual’s spouse or com-
mon-law partner. Note that it is the BPA of the individual claiming the credit that is used
and not the BPA of the spouse or common-law partner who is claimed.

118(1)(b) Supported Eligible Dependant 15% of the same BPA amount of the individual claiming the
credit and:
if the dependent person is dependent because of a mental or physical infirmity, there is
an additional amount of $2,499 added to the BPA. The total of these two amounts is
reduced by the net income of the dependent person. Note that it is the BPA of the indi-
vidual claiming the credit that is used and not the BPA of the eligible dependant who is
claimed.

118(1)(b.1) Canada Caregiver for Child under 18 15% of $2,499.

118(1)(c) Individuals Not Legally Married or Not in a Common-Law Partnership 15% of the
BPA of the individual.

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 2023 Rates, Credits, and Other Data xxv
Information Applicable to Individuals

118(1)(d) Canada Caregiver 15% of $7,999, reduced by 15% of the dependant’s net income in excess of
$18,783.

118(1)(e) Additional Canada Caregiver When a supporting person is entitled to claim an individual as an
eligible dependant or a spousal or common-law partner and is also eligible to claim the caregiver
credit for that same individual the ITA prohibits the claiming of the caregiver credit (ITA 118(4)(c)).
In this case, if the caregiver credit calculation exceeds the credit amount that could have been
claimed for an eligible dependant or a spousal or common-law partner credit then 15% of the dif-
ference can be claimed as a separate additional caregiver credit.

118(2) Age The age credit base is $8,396. The base for this credit is reduced by 15% of the amount by
which the individual’s net income exceeds $42,335. Not available when income reaches $98,308.
Part or all of this credit can be transferred to a spouse or ­common-law partner.

118(3) Pension 15% of up to $2,000 of eligible pension income. Part or all of this credit can be trans-
ferred to a spouse or common-law partner. The pension credit is not subject to annual index
increases (ITA 117.1(2)).

118(10) Canada Employment Credit 15% of the lesser of $1,368 and the individual’s employment
income for the year. For the purpose of this credit, employment income is determined without
considering any employment deductions.

Other Common Federal Personal Tax Credits (Various ITA)

118.01 Adoption Expenses Credit 15% of eligible expenses (reduced by any reimbursements) up to a
maximum of $18,210 per adoption.

118.02 Digital News Subscriptions 15% of the lesser of $500 and the cost of qualifying subscription
expenses. Note that this credit is not eligible for annual indexing (ITA 117.1(2)).

118.041 Home Accessibility Credit 15% of the lesser of $20,000 and the amount of qualifying expendi-
tures for the year. Note that this credit is not eligible for annual indexing (ITA 117.1(2)).

118.05 First Time Home Buyers’ Credit 15% of $10,000 of the cost of an eligible home. Note that this
credit is not eligible for annual indexing (ITA 117.1(2)).

118.06 Volunteer Firefighters Credit 15% of $3,000 for qualifying volunteers. Note that this credit is not
eligible for annual indexing (ITA 117.1(2)).

118.07 Volunteer Search and Rescue Workers Credit 15% of $3,000 for qualifying ­volunteers. Note
that this credit is not eligible for annual indexing (ITA 117.1(2)).

118.1 Charitable Donations—Regular The general limit on amounts for this credit is 75% of net
income. There is an addition to this general limit equal to 25% of any taxable capital gains and 25%
of any recapture resulting from a gift of capital property. In addition, the income inclusion on capital
gains arising from a gift of some publicly traded shares is reduced from one-half to nil. For individu-
als, the credit is equal to:

[(15%)(A)] + [(33%)(B)] + [(29%)(C)] where:

A = The first $200 of eligible gifts.

B = The lesser of:
• total gifts, less $200; and
• taxable income, less $235,675.
C=T  he excess, if any, by which the individual’s total gifts exceed the sum of $200 plus
the amount determined in B.

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 xxvi 2023 Rates, Credits, and Other Data
Information Applicable to Individuals

118.2 Medical Expenses The medical expense tax credit is determined by the following formula:
[15%] [(B - C) + D], where:
is the total of an individual’s medical expenses plus medical expenses for a spouse or
B 
common-law partner, and any children who are less than 18 years of age at the
end of the taxation year.
is the lesser of 3% of the individual’s net income and $2,635. The threshold of $2,635
C 
is the lesser amount when net income is $87,833 or higher.
is the total of all amounts each of which is, in respect of a dependant of the individual
D 
(other than a child of the individual who is less than 18 years of age at the end of the
taxation year), an amount determined by the formula:
E - F, where:
E is the total of the dependant’s medical expenses.
F is the lesser of 3% of the dependant’s net income and $2,635.

118.3 Disability—All Ages 15% of $9,428. Part or all of this credit can be transferred to a person claim-
ing the disabled individual as a dependant.

118.3 Disability Supplement—Under 18 and Qualifies for the Disability Tax Credit 15% of $5,500,
reduced by the total of amounts paid for attendant care or supervision in excess of $3,221 that are
deducted as child care expenses, deducted as a disability support amount, or claimed as a medical
expense in calculating the medical expense tax credit.

Education-Related Credits
118.5 • Tuition Fees, which Includes Examination and Ancillary Fees
• 15% of qualifying tuition fees
• 15% of examination fees for both post-secondary examinations and examinations required
in a professional program
• 15% of ancillary fees that are imposed by a post-secondary educational institution on
all of their full- or part-time students. Up to $250 in such ancillary fees can be claimed
even if not required of all students. The $250 limit is not subject to annual indexing
(ITA 117.1(2)).

118.62 • Interest on Student Loans

15% of interest paid on qualifying student loans. In the 2023 federal budget the govern-
ment announced a plan to permanently eliminate interest on Canada student loans.

118.9 • Transfer of Tuition Credit

If the individual cannot use the credit, is not claimed as a dependant by a spouse or
common-law partner, and does not transfer the unused credit to a spouse or common-
law partner, then a parent or grandparent of the individual can claim up to $750 [(15%)
($5,000)] of any unused tuition credit. The amount that can be transferred is reduced
by the amount of the credit required to reduce the student’s federal income tax pay-
able to nil. The annual limit is not subject to annual indexing (ITA 117.1(2)).

118.7 Employment Insurance (EI) 15% of amounts paid by employees up to the maximum EI pre-
mium of $1,002 (1.63% of insurable earnings to a maximum of $61,500).

118.7 Canada Pension Plan (CPP) for Employees The maximum tax credit base for all individuals is
$3,123 [(4.95%)($66,600 maximum pensionable earnings - $3,500 exemption)]. The actual maxi-
mum CPP contributions for those individuals with pensionable earnings of $66,600 or more is
$3,754 [(5.95%)($66,600 maximum pensionable earnings - $3,500 exemption)]. The difference of
$631 [$3,754 - $3,123] is a net income deduction under ITA 60(e.1).

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 2023 Rates, Credits, and Other Data xxvii
Information Applicable to Individuals

118.7 Canada Pension Plan (CPP) for Self-Employed Individuals The maximum tax credit base for
self-employed individuals is $3,123 [(4.95%)($66,600 maximum pensionable earnings - $3,500
exemption)]. The actual maximum CPP contributions for self-employed individuals with pension-
able earnings of $66,600 or more is $7,508 [(5.95%)($66,600 maximum pensionable earnings -
$3,500 exemption)(2)]. The difference of $4,385 [$7,508 - $3,123] is a net income deduction.

122.51 Refundable Medical Expense Supplement The individual claiming this amount must be 18
or over at the end of the taxation year and have earned income of at least $4,083. The amount
is equal to the lesser of $1,399 and 25/15 of the medical expense tax credit. The refundable
amount is then reduced by 5% of family net income in excess of $30,964. Not available when
family income is more than $58,944.

122.9 Refundable Teacher and Early Childhood Educator School Supply Tax Credit A maximum of
25% of up to $1,000 of eligible expenditures that are made by eligible educators. The tax credit rate
changed from 15% to 25% beginning with the 2021 taxation year following an announcement by
the Federal government in the fall of 2021. The impact is that the maximum credit amount is
increased by $100 from $150 [(15%)($1,000)] to $250 [(25%)($1,000)]. This credit is not subject to
annual indexing (ITA 117.1(2)).

122.91 Canada Training Credit The lesser of training amount limit and 50% of eligible training costs
incurred in the previous year. Minimum required working income must be $10,994 and maximum
net income is $155,625 based on the previous taxation year’s income tax rate for the second high-
est bracket.

122.92 Multigenerational Home Renovation Tax Credit A maximum of 15% of $50,000 of qualifying
expenditures that are the costs of renovating, altering, or adding to a housing unit in Canada for the
purpose of creating a secondary unit that would enable either an individual 65 years of age or older
or a disabled individual to live together within that home with family members. Qualifying expendi-
tures are those incurred on or after January 1, 2023. The credit can only be claimed in the taxation
year in which the work is completed.

127(3) Political Donations Three-quarters of the first $400, one-half of the next $350, one-third of the
next $525, to a maximum credit of $650 on donations of $1,275. This credit is not subject to annual
indexing (ITA 117.1(2)).

127.4 Labour Sponsored Venture Capital Corporations (LSVCC) Credit The federal credit is equal to
15% of acquisitions of LSVCCs registered with a province or territory. This credit no longer applies
to federally registered LSVCCs.

ITA 82 and Dividend Gross-up and Dividend Tax Credit

ITA 121 • Eligible Dividends These dividends are grossed up by 38% with a federal dividend tax credit
of 6/11 of the gross up.
• Non-Eligible Dividends These dividends are grossed up by 15% with a federal dividend tax
credit of 9/13 of the gross up.

Other Data for Individuals

Part I.2 Old Age Security (OAS) Clawback Limits The tax (clawback) on OAS benefits is based on the
lesser of 100% of the OAS benefits received and 15% of the amount by which “threshold
income” (net income calculated without the net income deduction for the OAS clawback)
exceeds $86,912. OAS maximum benefits in 2023 are approximately $8,300 for individuals
between the ages of 65 and 74, meaning that when net income reaches $142,245 all of the OAS
would be clawed back. Maximum annual OAS payments for 2023 for individuals 75 years of age
and older is approximately $9,075, meaning that all of the OAS would be clawed back when net
income exceeds $147,412.

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 xxviii 2023 Rates, Credits, and Other Data
Information Applicable to Individuals and Corporations

Chapter 4 Employment Insurance (EI) Clawback Limits The tax (clawback) on EI benefits is determined
under the EI Act and applied to the ITA. The clawback is based on the lesser of 30% of the EI ben-
efits received and 30% of the amount by which “threshold income” exceeds $76,875 (1.25 times
the maximum insurable earnings of $61,500). For this purpose, “threshold income” is net income
calculated without the net income deductions determined for both the OAS and EI clawbacks.

Chapter 9 Child Care Expenses The least of three amounts, none of which are subject to annual indexing:
1. The amount actually paid for child care services. If however the child is at a camp or
boarding school, this amount is limited to a weekly amount of $275 (any age if eligible
for disability tax credit), $200 (under 7 year of age), or $125 (age 7 through 16 or over 16
with a mental or physical impairment) regardless of the actual amount paid.
2. The sum of the annual child care expense amounts for eligible children. The per child
amounts are $11,000 (any age if eligible for disability tax credit), $8,000 (under 7 year
of age), or $5,000 (age 7 through 16 or over 16 with a mental or physical impairment).
3. 2/3 of the individual’s earned income (for child care expenses purposes).

Chapter 10 RRSP Deduction Room For 2023, the addition to RRSP deduction room is equal to:
• the lesser of $30,780 and 18% of 2022 earned income,
• reduced by the 2022 pension adjustment (PA) and any 2023 past service pension adjust-
ment (PSPA), and
• increased by any 2023 pension adjustment reversal (PAR).

Chapter 11 Capital Gains Deduction For 2023, the deduction limit for dispositions of shares of qualified
small business corporations (QSBC shares) is $971,190. There is an additional amount for farm or
fishing properties of $28,810, providing a total of $1,000,000 for such properties.

Provincial.Territorial Income Tax Rates and Provincial/Territorial Tax Credits for Individuals
Provincial/Territorial income taxes are based on federal taxable income, with most provinces and
territories adopting multiple income tax rates. The number of income tax rate brackets range
from three to five. Provincial and territorial tax credits are generally based on the minimum pro-
vincial/territorial rate applied to a credit base that is similar to that used for federal tax credits. In
addition to regular income tax rates, two provinces, Ontario and Prince Edward Island (PEI), also
include surtaxes.

Information Applicable to Individuals and Corporations

ITR 4301 Prescribed Interest Rates The following table show the base interest rate that would be used in
calculations such as imputed interest on loans. It also shows the interest rates charged on amounts
owing from and to the CRA. The interest rates have been as follows:
Year Quarter Base Rate Owing From* Owing To
2020 I, II 2% 4% 6%
2020 III, IV 1% 3% 5%
2021 All 1% 3% 5%
2022 I, II 1% 3% 5%
2022 III 2% 4% 6%
2022 IV 3% 5% 7%
2023 I 4% 6% 8%
2023 II 5% 7% 9%
*The interest rate earned on refunds from CRA to corporations is limited to the base
rate while the interest rate earned on refunds from CRA to individuals is as shown in the
“Owing From” column.

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 2023 Rates, Credits, and Other Data xxix
Information Applicable to Corporations

Automobile Deduction Limits

• For Class 10.1 passenger vehicles purchased, new or used, on or after January 1, 2023,
the CCA base is limited to the first $36,000 of the cost, plus the GST/HST & PST based on
that same amount.
• For zero-emission passenger vehicles (ZEPV) purchased, new or used, on or after January 1,
2023, the CCA base is limited to the first $61,000 of the cost, plus the GST/HST & PST
based on that same amount.
• Interest on financing of automobiles is limited to $10 per day.
• Deductible leasing costs are limited to $950 per month for leases entered into on or after
January 1, 2023.
• Operating cost benefit = $0.33 per kilometre.
• Deductible rates = $0.68 for first 5,000 kilometres, $0.62 for additional kilometres. The
rates are $0.72 and $0.66 per kilometre for the three territories).
CCA Rates See Appendix to Chapter 5.
Quick Method Rates (GST Only)
Percentage on GST Included Sales
First $30,000 On Excess
Retailers and Wholesalers 0.8% 1.8%
Service Providers and Manufacturers 2.6% 3.6%
Note Different rates apply in the provinces that participate in the HST.

Information Applicable to Corporations

Federal Corporate Income Tax Rates are as follows (federal tax abatement removed):
General Business Basic Corporate Income Tax Rate 38%
General Business Federal Abatement on income earned in Canada (10%)
General Business General Rate Reduction (GRR) (13%)
General Business (After Abatement and GRR) 15%
General Business Rate for Income Eligible for M&P Deduction 15%
Income Eligible for Small Business Deduction (SBD) (38% - 10% - 19%) 9%
Part IV Refundable Tax 38 1/3%
Part I Additional Refundable Tax on Investment Income of a CCPC (ART) 10 2/3%
Reference
89(1) General Rate Income Pool (GRIP) A CCPC’s GRIP is defined as follows:
• The GRIP balance at the end of the preceding taxation year; plus
• 72% of the CCPC’s taxable income after it has been reduced by amounts eligible for the
SBD and aggregate investment income; plus
• 100% of eligible dividends received in the year; plus
• adjustments related to amalgamations and wind-ups; less
• eligible dividends paid in the preceding taxation year.
125(1) Small Business Deduction (SBD) is equal to 19% of the least of:
A. Net Canadian active business income.
B. Taxable income, less:
1. 100/28 times the ITA 126(1) credit for income taxes paid on foreign non-business
income, calculated without consideration of the ART under ITA 123.3 or the GRR under
ITA 123.4; and
2. 4 times the ITA 126(2) credit for income taxes paid on foreign business income, calcu-
lated without consideration of the GRR under ITA 123.4.
C. The annual business limit of $500,000, less any portion allocated to associated
corporations, less the grinds for large corporations and passive income.

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 xxx 2023 Rates, Credits, and Other Data
Information Applicable to Corporations

125(5.1) Small Business Deduction Grind Grind to the SBD for a taxation year is the greater of the
following:
(1) TCEC (Taxable Capital Employed in Canada) Grind = A × B ÷ $90,000
A = The business limit for the year
B = 0.00225 (TCEC for the previous year - $10,000,000); and
(2) AAII (Adjusted Aggregate Investment Income) Grind = (D ÷ $500,000) × 5 (E - $50,000)
where
D = The business limit for the year
E = AAII for the preceding year
If there are associated corporations, then the combined TCEC and AAII of all associated corpora-
tions for the previous year would be added.

123.3 Additional Refundable Tax on Investment Income (ART) is equal to 10 2/3% of the lesser of:
• the corporation’s “aggregate investment income” (AII) for the year [as defined in
ITA 129(4)]; and
• the amount, if any, by which the corporation’s taxable income for the year exceeds the
amount upon which the SBD is determined.

123.4(2) General Rate Reduction (GRR) is equal to 13% of full rate taxable income. This is taxable income
reduced by the amount upon which the SBD is determined, income eligible for the M&P deduc-
tion, and the corporation’s “aggregate investment income” (AII) for the year.

125.1 Manufacturing and Processing Deduction (M&P) is equal to 13% of the lesser of:
A. M&P profits, less the amount upon which the SBD is determined; and
B. taxable income, less the sum of:
1. the amount upon which the SBD is determined;
2. four times the foreign tax credit for business income calculated without consideration
of the ITA 123.4 GRR; and
3. “aggregate investment income” (of CCPCs) as defined in ITA 129(4).

126(1) Foreign Tax Credits for Corporations The foreign non-business income tax credit is the lesser of:
• the income tax paid to the foreign government (for corporations, there is no 15% limit
on the foreign non-business income taxes paid); and
• an amount determined by the following formula:
Foreign Non-Business Income
c d [Income Tax Otherwise Payable]
Adjusted Division B Income

126(2) The foreign business income tax credit is equal to the least of:
• the income tax paid to the foreign government;
• an amount determined by the following formula:

Foreign Business Income  

c d [Income Tax Otherwise Payable]; and
Adjusted Division B Income

• Income tax otherwise payable for the year, less any foreign tax credit claimed on non-
business income under ITA 126(1).

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 2023 Rates, Credits, and Other Data xxxi
Information Applicable to Corporations

129(4) Refundable Portion of Part I Income Tax Payable is defined as the least of three items:
1. the amount determined by the formula
A - B, where
A
is 30 2/3% of the corporation’s AII for the taxation year, and
B
is the amount, if any, by which the foreign non-business income tax credit
exceeds 8% of its foreign investment income for the taxation year.
2. 30 2/3% of the amount, if any, by which the corporation’s taxable income for the taxation
year exceeds the total of:
• the amount upon which the SBD is determined;
• 100 ÷ 38 2/3 of the tax credit for foreign non-business income; and
• 4 times the tax credit for foreign business income.
3. the corporation’s income tax for the taxation year payable under Part I.

129(4) Aggregate Investment Income (AII) is the sum of:

• net taxable capital gains for the year, reduced by any net capital losses deducted for
the taxation year; and
• income from property including interest, rents, and royalties, but excluding taxable
dividends that are deductible in computing taxable income. Since foreign dividends are
generally not deductible, they would be included in AII.

129(4) ELIGIBLE Refundable Dividend Tax on Hand (RDTOH) is defined as follows:

Beginning Balance The balance in the eligible RDTOH at the end of the preceding taxation
year.
Additions
• Part IV taxes paid on eligible dividends from non-connected taxable Canadian corpora-
tions. These are commonly referred to as portfolio dividends.
• Part IV taxes paid on eligible dividends from connected corporations to the extent
that such dividends included a dividend refund from the paying corporation’s eligible
RDTOH.
Deduction Dividend refund claimed from the eligible RDTOH account for the previous
taxation year.

NON-ELIGIBLE Refundable Dividend Tax on Hand (RDTOH) is defined as follows:

Beginning Balance The balance in the non-eligible RDTOH at the end of the preceding
taxation year.
Additions There are three items that are added to the non-eligible RDTOH beginning
balance:
• The Part I refundable tax for the year.
• Part IV taxes paid on non-eligible dividends from connected corporations to the extent
that such dividends included a dividend refund from the paying corporation’s non-­
eligible RDTOH.
• Part IV taxes paid on non-eligible dividends from non-connected taxable Canadian
­corporations.
Deduction Dividend refund claimed from the non-eligible RDTOH account for the
previous taxation year.

186(1) Part IV Tax is assessed at a rate of 38 1/3% of portfolio dividends, plus dividends received from
a connected company where that connected company was entitled to a dividend refund as a result
of the dividend payment.

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 xxxii 2023 Rates, Credits, and Other Data
Tax Related Websites

Tax Related Websites

GOVERNMENT
Canada Revenue Agency (Main Page) www.canada.ca/en/revenue-agency
Canada Revenue Agency (Technical Publications) https://www.canada.ca/en/revenue-agency/
services/tax/technical-information/income-tax.html
Department of Finance Canada www.canada.ca/en/department-finance.html

CPA FIRMS
BDO www.bdo.ca/en-ca/services/tax/domestic-tax-services/overview
Deloitte. www2.deloitte.com/ca/en/pages/tax/topics/tax.html
Ernst & Young https://www.ey.com/en_gl/tax
KPMG www.kpmg.com/ca/en/services/tax
PwC Canada www.pwc.com/ca/en/services/tax.html

OTHER
CPA Canada www.cpacanada.ca
Canadian Tax Foundation www.ctf.ca
ProFile Tax Suite profile.intuit.ca
Income Tax Act https://laws-lois.justice.gc.ca/eng/acts/I-3.3/page-1.html
Excise Tax Act https://laws-lois.justice.gc.ca/eng/acts/E-14.1/page-1.html
Other Canadian Law www.canlii.org/en

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