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2016 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 2016. 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 Federal 2016 Budget announced that the corporate tax rate for PSBs is increased from 28% to 33% effective January 1, 2016.
The general corporate tax rate applies to active business income in excess of the business limit.
(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. Bill 32, which received Royal Assent July 8, 2016 lowered the small business tax rate to 3.5% effective April 1, 2016. Dividend tax credits for both eligible and non-eligible dividends were also revised by Bill 32.
(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.
(6) Manitoba business limit will be increased from $425,000 to $450,000 on January 1, 2016, as per MB 2015 Budget, and to $500,000 in 2017 as per their December 1, 2015 news release. However, the 2017 increase did not happen.
(7) Alberta's 2016 Budget indicates that the small business corporate tax rate will be reduced from 3% to 2% effective January 1, 2017.
(8) Newfoundland & Labrador 2016 Budget announced that the general corporate tax rate would increase 1% (from 14% to 15%) effective January 1, 2016.
(9) Nova Scotia provides a corporate tax holiday under s. 42 of their Income Tax Act for the first 3 taxation years of a new small business after incorporation. See New Small Business Tax Deduction on the Nova Scotia website.
Sources for the above information- Canada Revenue Agency (CRA) Federal, Provincial and Territorial corporate income tax rates.
Revised: November 19, 2017
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