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2015 Corporate Income Tax Rates
The following table shows the general and small business corporate income tax rates federally and for each province and territory for 2015. The small business rates are the applicable rates after deducting the small business deduction (SBD), which is available to Canadian-controlled private corporations (CCPCs). The small business rate is available on active business income up to the amount of the Business Limit. The federal business limit of $500,000 begins to be reduced when a CCPC's taxable capital reaches $10 million, and is eliminated when taxable capital reaches $15 million.
The federal general rate is net of the 10% federal tax abatement and 13% (2012 and later years) general rate reduction. The general rate reduction is disallowed for a personal services business (PSB), for taxation years beginning after October 31, 2011, resulting in a federal corporate tax rate of 28% for PSBs.
The general corporate tax rate applies to active business income in excess of the business limit.
The tax rate on capital gains is 50% of the tax rate on investment income, because only 50% of the capital gain is taxable. Dividends received from Canadian Corporations may be deductible under s. 112 of the Income Tax Act (ITA), but Part IV tax (ITA s. 186-187) may be payable on these dividends at a tax rate of 1/3 of the dividends received. Part IV tax becomes part of the corporation's refundable dividend tax on hand (RDTOH). RDTOH is available as a dividend refund when dividends are paid to shareholders of private corporations.
The federal tax rate on investment income includes a 6.67% refundable tax as per s. 123.3 of the ITA, which becomes part of RDTOH.
(1) NL, NT, NU and PE use the federal small business limit.
(2) Ontario 2009 budget reduced general rate to
(3) The Quebec 2015 Budget announced changes to the eligibility for the SBD - including, for businesses which are not in the primary or manufacturing sectors, the requirement to have more than 3 employees. Effective for taxation years beginning after December 31, 2016. The Budget also announced that the general corporate income tax rate will be gradually reduced starting in 2017, as follows:
The Quebec small business rate will remain unchanged at 8%, as the small business deduction rate will gradually increase while the general corporate income tax rate decreases.
(4) New Brunswick small business rate was lowered from 4.5% to 4.0% effective January 1, 2015, as per NB 2015 Budget. The General corporate income tax rate is increased to 14% effective April 1, 2016 as per the NB 2016 Budget.
(5) The Federal 2015 Budget announced that the Small Business Tax Rate and the non-eligible dividend tax credit would be revised starting in 2016. However, the Federal 2016 Budget proposes to leave the small business tax rate, non-eligible dividend gross-up and non-eligible dividend tax credit rate at 2016 levels.
(7) Alberta's Bill 2, which received Royal Assent on June 29, 2015, enacts a higher corporate tax rate effective July 1, 2015.
Sources for the above information
Revised: April 14, 2016
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