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Canada: Domestic Corporate Taxation

Income Tax Rates

Corporation tax rates vary depending on the territories and provinces in which the business operates. The effective federal rate is 28% (i.e. 38% less federal tax abatement of 10%).

Companies can claim a small business deduction. For Canadian-controlled private corporations, the net tax rate (from January 1, 2008) is 11%. For other corporations, the net tax rate (from January 1, 2010) is 18%; this rate will be 16.5% from January 1, 2011, and 15% from January 1, 2012.

Provincial and territorial tax rates (excluding Quebec and Alberta, which do not have tax collection agreements with the Canada Revenue Agency (CRA)) are charged at either a lower rate (which applies to income eligible for the small business deduction or income based on limits set by the province or territory), or a higher rate on all other taxable income. From January 1, 2010, the lower rate ranges from 0% (in Manitoba) to 4.5% (in Ontario and New Brunswick); the higher rate ranges from 10% (in British Columbia and New Brunswick) to 16% (in Nova Scotia and Prince Edward Island).

 

 

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