The following table shows the general and small business corporate income tax rates federally and for each province and territory for 2021. 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 2018 budget implemented changes to reduce the business limit based on the investment income of a CCPC, for taxation years beginning after 2018.
The federal general rate is net of the 10% federal tax abatement and 13% (2012 and later years) general rate reduction.
The Federal 2016 Budget increased the corporate tax rate for personal services businesses (PSBs) from 28% to 33% effective January 1, 2016.
| 2021 Corporate Income Tax Rates | ||||
| Active Business Income | Investment Income CCPC |
|||
| General | Small
Business (CCPC) |
Business Limit |
||
| Federal | 15% | 9% | $500,000 | 38.7% |
| Alberta | 8% | 2% | $500,000 | 8% |
| BC | 12% | 2% | $500,000 | 12% |
| Manitoba | 12% | zero% | $500,000 | 12% |
| New Brunswick | 14% | 2.5% | $500,000 | 14% |
| Newfoundland & Labrador (1) | 15% | 3% | $500,000 | 15% |
| Nova Scotia (2) | 14% | 2.5% | $500,000 | 14% |
| Northwest Territories (1)(6) | 11.5% | 2% | $500,000 | 11.5% |
| Nunavut (1) | 12% | 3% | $500,000 | 12% |
| Ontario | 11.5% | 3.2% | $500,000 | 11.5% |
| Prince Edward Island (1)(4) | 16% | 2% | $500,000 | 16% |
| Quebec (3) | 11.5% | 4% / 3.2% | $500,000 | 11.5% |
| Saskatchewan (7) | 12% | zero% | $600,000 | 12% |
| Yukon (5) | 12% | zero% | $500,000 | 12% |
The general corporate tax rate applies to active business income in excess of the business limit.
See also Corporate Taxation of Investment Income
(1) NL, NT, NU and PE use the federal small business limit.
(2) 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.
(3) The Quebec 2021 Budget announced a decrease in the small business tax rate, to 3.2% effective for a corporation's taxation years ending after March 25, 2021, the day of the budget speech. Quebec has more "eligibility requirements" for the SBD than other provinces. See Small Business Deduction (in French only).
(4) The PEI 2019 Budget reduced the small business tax rate to 3.0% from 3.5% for taxation years that begin on or after January 1, 2020.
Their 2020 Budget reduces the rate to 2% effective January 1, 2021.
Their 2021 Budget reduces the rate to 1% effective January 1, 2022.
(5) Yukon's 2020 Budget announced that the small business corporate income tax rate would be reduced to zero effective January 1, 2021. This automatically reduces their non-eligible dividend tax credit for 2021.
(6) Northwest Territories' 2021 Budget reduced the small business corporate income tax rate from 4% to 2% effective January 1, 2021.
(7) Saskatchewan's Bill 2, which received Royal Assent on Dec 10, 2020, reduced the Small Business corporate tax rate to 0% effective Oct 1, 2020, with an increase to 1% on Jul 1, 2022 and to 2% on Jul 1, 2023.