Taxes
Canada — Tax: Corporate Tax
Canada's federal general corporate tax rate is 15%. Canadian-Controlled Private Corporations (CCPCs) qualify for the Small Business Deduction (SBD), which cuts the federal rate to 9% on the first $500,000 of active business income; the $500,000 business limit begins shrinking once taxable capital reaches $10 million and is fully eliminated at $50 million, and is separately ground down when adjusted aggregate investment income (passive income) falls between $50,000 and $150,000 (fully eliminated at $150,000). Provincial rates are added on top: combined federal+provincial small-business rates range from 9% (Manitoba) to 13% (Northwest Territories), while general (non-SBD) combined rates typically run 23-27%. Ontario's small-business rate drops to 2.2% from 1 July 2026, and Quebec's drops from 3.2% to 2.2% for tax years beginning after 29 April 2026.
Key facts
- Federal general corporate rate: 15%; CCPC Small Business Deduction rate: 9% on first $500,000 of active business income.
- SBD business limit shrinks once taxable capital hits $10M, eliminated at $50M; also ground down by passive income between $50,000-$150,000.
- Combined federal+provincial small-business rates: 9% (Manitoba) to 13% (Northwest Territories); general combined rates: 23-27%.
- Ontario's small-business rate falls to 2.2% from 1 July 2026; Quebec's falls from 3.2% to 2.2% for years starting after 29 April 2026.
Costs
- Federal general rate: 15%
- Federal small-business rate (CCPC, on first $500,000): 9%
Common mistakes
- Assuming the SBD rate applies with no taxable-capital or passive-income limits — both can eliminate the business limit entirely.
- Overlooking province-specific 2026 small-business rate cuts (Ontario, Quebec) when estimating combined tax liability.