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Retained

  • Statutory Tax Rate 15
  • Surtax Based on Taxable Income 11.5
  • Surtax Based on Statutory Tax 0
  • Surtax Deductible from Taxable Income 0
  • Statutory Tax Deductable 0
  • Effective Tax Rate 26.5

Statutory Tax Rate

The rate of corporate income tax depends on the type of income earned, the status of the corporation and the Canadian province or territory in which the income is earned. The general federal rate of tax on corporations is 38%. A 10% rebate applies to the extent the income has been earned in a Canadian province, bringing the federal rate down to 28%.

The tax rate on corporate income that is earned in a Canadian province and that does not currently benefit from other preferential tax treatment is further reduced by a general rate reduction of 13 percentage points, resulting in a general rate of 15%. Provincial and territorial income taxes are not deductible for federal income tax purposes and range from 11% to 16%. For example, the provincial rate for Quebec is 11.6% (from 2019) making the combined federal and provincial effective tax rate 26.6%.

A reduced federal tax rate of 9.0% (from 2019) applies for small businesses on the qualifying active business income of a Canadian-controlled private corporation (CCPC) up to CAD 500,000. Provincial small business rates of 2.0% to 4.5% also apply. For CCPCs with taxable capital exceeding CAD 10 million to 15 million, the income amount eligible for the reduced rate is proportionately reduced, while the income of CCPCs with taxable capital exceeding CAD 15 million is not eligible at all. Further, from 1 January 2018, a formula-based reduction in the small business income limit (CAD 500,000 active income) eligible for the small business tax rate is introduced for CCPCs with significant passive income.

Surtax Based on Taxable Income

Provincial/Territorial rates: Alberta - 8% (reduced from 10% effective 1 July 2020), British Columbia - 12%, Manitoba - 12%, New Brunswick - 14%, Newfoundland and Labrador - 15%, Northwest Territories - 11.5%, Nova Scotia - 14% (reduced from 16% effective 1 April 2020), Nunavut - 12%, Ontario - 11.5%, Prince Edward Island - 16%, Quebec - 11.5%, Saskatchewan - 12%, Yukon - 12%

Effective Tax Rate

The rate of corporate income tax depends on the type of income earned, the status of the corporation and the Canadian province or territory in which the income is earned. The general federal rate of tax on corporations is 38%. A 10% rebate applies to the extent the income has been earned in a Canadian province, bringing the federal rate down to 28%.

The tax rate on corporate income that is earned in a Canadian province and that does not currently benefit from other preferential tax treatment is further reduced by a general rate reduction of 13 percentage points, resulting in a general rate of 15%. Provincial and territorial income taxes are not deductible for federal income tax purposes and range from 10% to 16%. For example, the provincial rate for Quebec is 11.5% (from 2020) making the combined federal and provincial effective tax rate 26.5%.

A reduced federal tax rate of 9.0% (from 2019) applies for small businesses on the qualifying active business income of a Canadian-controlled private corporation (CCPC) up to CAD 500,000. Provincial small business rates of 2.0% to 4.5% also apply. For CCPCs with taxable capital exceeding CAD 10 million to 15 million, the income amount eligible for the reduced rate is proportionately reduced, while the income of CCPCs with taxable capital exceeding CAD 15 million is not eligible at all. Further, from 1 January 2018, a formula-based reduction in the small business income limit (CAD 500,000 active income) eligible for the small business tax rate is introduced for CCPCs with significant passive income.