What are the Corporate Tax Rates in Canada?

Your corporate taxes are based on your business’ net income, not the actual sales. The federal corporate tax rate, for small businesses is 11%, for up to $500 000 in net income. If your company’s income is above $500,000 then the general rate is 16.5%.

The table below specifies the tax rate that applies for each province, as it varies from one to the other:

Corporation tax rates (2014)

General

Small Business

Business Threshold

Federal 15% 11% $500,000
Alberta 10% 3% $500,000
BC 11% 2.5% $500,000
Manitoba 12% 0% $425,000
New Brunswick 12% 4.5% $500,000
Newfoundland & Labrador 14% 4% / 3% $500,000
Nova Scotia 16% 3% $350,000
Northwest Territories 11.5% 4% $500,000
Nunavut 12% 4% $500,000
Ontario 11.5% 4.5% $500,000
Prince Edward Island 16% 4.5% $500,000
Québec 11.9% 8% $500,000
Saskatchewan 12% 2% $500,000
Yukon 15% 4%/ 3% $400,000

 

If you’re paying/ earning a salary or receiving/ distributing dividends from the corporation, you are required to pay personal income taxes on all the funds withdrawn. Salaries are an expense to your business, thus could be deducted for your corporate taxes. Dividends are paid out of your company’s net earnings, AFTER taxes. On a personal level, salary and dividends are taxed at different rates. A wide variety of accounting softwares are readily available via Canadian accounting software deals to help you manage everything efficiently.

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