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A corporate tax return is the T2, and the tax on it is worked out in two layers: a federal rate plus a provincial one. For a small Canadian-controlled private corporation in British Columbia, that adds up to 11% on the first $500,000 of active business income.
How is a corporate tax return worked out?
The return starts with your company’s profit for the year, adjusted for tax. Then two rates apply. The federal general rate is 15%. A CCPC gets the small business rate of 9% on the first $500,000 of active business income, and the province adds its own rate on top.
| Rate | Federal | British Columbia | Ontario, 2027 onward |
|---|---|---|---|
| Small business (CCPC, first $500,000) | 9% | 2% | 2.2% |
| General | 15% | 12% | 11.5% |
| Combined small business | 11% in BC, 11.2% in Ontario for a full year | ||
| Combined general | 27% in BC, 26.5% in Ontario | ||
Ontario’s small business rate fell from 3.2% to 2.2% on July 1, 2026. A company whose year straddles that date gets a blend, so a calendar 2026 return in Ontario sits near 11.7% combined. We derived that blend by days and it isn’t a published figure.
What does a corporate tax return cost on real profits?
Take a BC company with $600,000 of active business income. The first $500,000 gets the small business rate. The last $100,000 doesn’t.
Federal tax is $60,000 and provincial tax is $22,000, so $82,000 in all. That’s an average of 13.7%, well above 11%. The extra $100,000 alone is taxed at 27%, or $27,000, which is a jump most owners don’t see coming. Try your own profit in the corporate tax calculator.
Now the money that reaches you. What stays inside the company, $518,000 in this case, hasn’t been taxed on you personally yet. Paying yourself a dividend triggers a second layer, which the dividend tax calculator estimates.
One more way to see the cliff. If the same company earned $500,000 instead of $600,000, it would pay $55,000 (11% of $500,000). Going from $500,000 to $600,000 of profit adds $27,000 of tax, so $100,000 of extra profit leaves $73,000 behind. Good problem to have, but plan for it.
Which return do you file, the T2 or the short one?
The CRA has a nine-page T2 that any corporation can use. It also has a T2 Short Return, two pages plus one schedule, for corporations that meet the tests in guide T4012. Not sure you qualify? Ask your accountant which one applies before you file.
For tax years after 2023, most corporations have to send it electronically. The CRA charges $1,000 if a corporation that must e-file doesn’t. Insurance corporations, non-resident corporations and a couple of other types are exempt.
What does the estimate leave out?
Plenty, and it’s worth knowing what. Our calculator uses the rates only. It doesn’t apply the taxable capital reduction that starts at $10 million, or the passive income rules that shrink the small business limit. It skips associated corporations too, which share one $500,000 limit between them.
It also skips credits and the tax on paying yourself. If two of your companies are linked, the $500,000 is not $500,000 each. That’s the mistake we’d watch for first, because it’s easy to make when a family owns several companies and each one seems to stand alone on paper.
And Quebec plays by its own timing. Its small business rate follows a different start date from Ontario’s, and its Revenu Quebec pages weren’t readable for us, so we’ve left Quebec figures out of the table.
When is the corporate tax return due?
Within six months of year end, even if there’s no tax to pay. The balance of tax falls due earlier, two or three months after year end depending on your balance-due day. The exact test for three months wasn’t on the CRA pages we could read, so verify it for your company.
have to file a T2 return for every tax year, even if there is no tax payable.
T2 Corporation Income Tax Guide, before you start, canada.ca
Planning cash for the payment? If you also pay staff, the payroll remittance calculator shows the separate amount that goes to the CRA every pay period.
What should you have ready before the accountant starts?
Year end bank statements, a list of what customers still owe you and what you owe suppliers, payroll summaries, last year’s return and notice of assessment, and any loans between you and the company. If you can hand over a clean trial balance from your bookkeeping software, the job goes faster and the bill comes in lower. A few bucks saved on fees is a nice side effect.
Where we got these figures
Federal and provincial rates come from the Canada Revenue Agency‘s corporation tax rate pages and its Ontario provincial tax page, checked with this site’s 2026 data on September 29, 2026. Return types, filing dates and the electronic filing penalty come from the CRA’s T2 pages. No government body has reviewed or endorsed what you read here.
Frequently asked questions
What is the federal rate on a corporate tax return?
15% for most corporations. A CCPC pays 9% on the first $500,000 of active business income.
What is the small business limit?
$500,000 federally. Associated corporations share one limit.
What is the difference between the T2 and the T2 Short Return?
The T2 is a nine-page form any corporation can use. The Short Return is two pages plus one schedule and has eligibility tests in guide T4012.
Does my calculator result include credits?
No. It uses rates only and leaves out credits, capital and passive income limits and the tax on paying the owner.
When is the return due?
Six months after your tax year end. The tax balance is due two or three months after year end.
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