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Glossary  -> Canadian Controlled Private Corporation (CCPC)

Canadian Controlled Private Corporation (CCPC)

Income Tax Act s. 125, s. 110.6(2.1), s. 121, s. 82(1)(b)(ii)

A CCPC is a private corporation which is controlled by Canadian residents. A corporation will not qualify as a CCPC if it is controlled directly or indirectly by a public corporation or non-residents, or a combination of the two.

A CCPC is eligible for the small business deduction, which provides a reduction in corporate income tax on active business income.

Dividends received from a CCPC are eligible for the small business dividend tax credit.

When the shares of a qualifying CCPC are sold,  the shareholder(s) may avoid capital gains tax by utilizing all or part of the $800,000+ lifetime capital gains exemption (LCGE).

On July 18, 2017, the federal government tabled legislative proposals that restricted income sprinkling by CCPCs, limited the use of the LCGE, and increasing the tax paid on passive income earned by a CCPC.  A consultation period ensued, and on October 16, 2017 the government started announcements about revisions to these measures, including the abandonment of proposed changes to the LCGE.

Revised: July 21, 2021

 

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