Provincial or Territorial SIFT tax component

For 2009 and subsequent tax years, the provincial or territorial component of the SIFT trust's tax is based on its "provincial SIFT tax rate". The SIFT trust may also elect to apply this rate to its 2007 and 2008 tax years.

Where no election is made in the SIFT trust's 2007 or 2008 tax year, use the "provincial SIFT tax factor" of 13% as the provincial or territorial component in the SIFT trust's tax calculation.

Provincial SIFT tax rate

The "provincial SIFT tax rate" is a prescribed rate that is determined under subsection 414(3) of the Regulations to the Act.

A SIFT trust's "provincial SIFT tax rate" for a tax year is dependent on where the trust has a permanent establishment for that particular tax year.

• If the SIFT trust has no permanent establishment in a province or territory in the tax year, the SIFT tax rate for the tax year, is 10%.
  
• If the SIFT trust has a permanent establishment in a single province or single territory and no permanent establishment outside of that province or territory, the SIFT tax rate for the tax year is the "general corporate income tax rate" in the province or territory for the tax year.

If based on the trust's tax year, more than one general corporate income tax rate applies, complete Part A of Chart 8 to determine the SIFT trust's general corporate income tax rate for each province or territory in which the SIFT trust has a permanent establishment.

If the SIFT trust has a permanent establishment in a province or territory in a tax year and a permanent establishment outside that province or territory (whether inside or outside Canada) in that tax year, the general corporate income tax rate will need to be prorated based on the "taxable SIFT distributions" attributed to each jurisdiction. Use Part A of Chart 8 (if applicable) to determine the SIFT trust's general corporate income tax rate for each province or each territory and complete Part B of Chart 8 to determine the SIFT trust's provincial or territorial SIFT tax rate.

A SIFT trust's taxable distributions are its non-deductible distributions amount for the tax year.

Provincial or Territorial General Corporate Income Tax Rates

The definition of the "general corporate income tax rate" in subsection 414(1) of the Income Tax Act Regulations (the Regulations) is relevant for determining the “provincial SIFT tax rate” in subsection 414(3) of the Regulations, in particular, paragraph (b), and variable E of the formula in paragraph 414(3)(c).

Under the definition, for the province of Quebec, the general corporate income tax rate is set at 0%. This will ensure that a SIFT trust or SIFT partnership that has a permanent establishment (as defined in Part IV of the Regulations) in Quebec and that is subject to Quebec's provincial SIFT tax in respect of amounts attributable to that permanent establishment, will not be subject to the provincial component of the federal tax in respect of those amounts.

For each other province, the general corporate income tax rate for a tax year means the highest corporate income tax rate applicable to public corporations in that province for that tax year. (Note that for the Newfoundland offshore area, the laws of Newfoundland and Labrador apply and that, for the Nova Scotia offshore area, the laws of Nova Scotia apply.)

The following chart provides the provincial and territorial general corporate income tax rates for 2006 and subsequent tax years.

Forms and publications

• Guide T4013, T3 Trust Guide
• Form T3RET, T3 Trust Income Tax and Information Return
• Schedule, T3SCH11, Federal Income Tax

Government Partners

• Department of Finance Canada

Date modified:

2016-11-15