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2017 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 2017. 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. This phase-out of the small business deduction is also in effect in some provinces.
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, until the end of 2015. The Federal 2016 Budget increased the corporate tax rate for PSBs 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) New Brunswick's 2017 budget lowered the Small Business Income Tax Rate from 3.5% to 3% effective April 1, 2017. Their Bill 23, November 2017, reduces the rate to 2.5% effective April 1, 2018. It also revises the non-eligible dividend tax credit rate.
(3) On October 16, 2017, the Department of Finance announced that the small business tax rate would be reduced to 10% effective January 1, 2018 , and to 9% effective January 1, 2019. The news release backgrounder indicated that the dividend tax credit rate for non-eligible dividends would be adjusted to reflect the reduced corporate tax rate, but did not indicate what the rate would be. On October 24, 2017, in conjunction with their Fall Economic Statement, the Department of Finance tabled a Notice of Ways and Means Motion to reduce the gross-up rate for non-eligible dividends to 16% in 2018, and 15% thereafter, with the non-eligible dividend tax credit revised to 8/11ths of the gross-up for 2018 and to 9/13ths of the gross-up for 2019 and later years.
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 changed this, to leave the small business tax rate, non-eligible dividend gross-up and non-eligible dividend tax credit rate at 2016 levels.
(4) Alberta's 2016 Budget indicates that the small business corporate tax rate is reduced from 3% to 2% effective January 1, 2017.
(5) Manitoba announced that their business limit would be increased to $500,000 from $450,000 in 2017, as per their December 1, 2015 news release. However, there was a change in government in 2016, and the 2017 Budget indicated that the increase would not happen.
(6) The BC September 2017 Budget Update lowered the small business corporate tax rate from 2.5% to 2.0% effective April 1, 2017. However, the general corporate income tax rate will increase to 12%, effective January 1, 2018.
(7) The Saskatchewan 2017 Budget announced that the general corporate income tax rate would be reduced to 11.5% on July 1, 2017, and to 11.0% on July 1, 2019. Subsequently, on November 7, 2017 they passed Bill 84 (pdf), which sets the general corporate income tax rate at 12% effective January 1, 2018, increases the small business threshold from $500,000 to $600,000 effective January 1, 2018, and sets the enhanced dividend tax credit rate at 11%. There is no change to the small business corporate income tax rate.
(8) The Nova Scotia 2017 Budget announced that the threshold for the small business deduction would be increased from $350,000 to $500,000 effective January 1, 2017. 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.
(9) The Yukon 2017 Budget announced that the general and small business corporate income tax rates would be reduced effective July 1, 2017.
(10) According to Quebec's Corporate Income Tax Changes page, the general tax rate will be reduced each year by 0.1% until 2020. Thus, it will be 11.7% in 2018, 11.6% in 2019 and 11.5% in 2020.
(11) Ontario's Fall Economic Statement indicated that the small business corporate income tax rate will be reduced to 3.5% effective January 1, 2018.
Sources for the above information- Canada Revenue Agency (CRA) Federal, Provincial and Territorial corporate income tax rates.
Revised: January 20, 2019
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