Updated Checked by the Tax-Services.ca editorial team How we check
Corporate taxation in Canada has two layers. Federal tax is 15% on general income, or 9% on the first $500,000 of active business income for a qualifying Canadian-controlled private corporation, and the province or territory adds its own rate. In British Columbia that makes 11.0% on small business income and 27.0% on general income.
How is a corporation taxed differently from you?
A corporation is its own taxpayer. It files a T2 return, pays its own bill, and the rate doesn’t climb with income the way your personal rate does. There are two rates and a line between them, the business limit.
The low rate is the small business deduction. Only a CCPC can claim it, and it applies to active business income up to the limit, which is $500,000 federally. The limit is shared with associated corporations, so splitting a business into three companies doesn’t get you three limits. It also shrinks when the group’s taxable capital is between $10 million and $50 million, and when passive investment income passes $50,000. We took those two phase-outs from the CRA guide, and our calculator ignores both.
What are the rates?
| Layer | Rate |
|---|---|
| Federal, general income | 15% (38% less a 10% abatement and the general reduction) |
| Federal, small business income to $500,000 | 9% |
| British Columbia | 2% small, 12% general |
| Manitoba | 0% small, 12% general |
| New Brunswick | 2.5% small, 14% general |
| Nova Scotia (limit $700,000) | 1.5% small, 14% general |
Ontario changed its small business rate from 3.2% to 2.2% on July 1, 2026. A company with a calendar year gets a blend, and we worked out about 2.7% ourselves, so the roughly 11.7% combined figure isn’t published. From 2027 the combined rate should be 11.2%. Quebec collects its own corporate tax and we couldn’t read its official page, so we don’t quote a firm number. The CRA’s corporation tax rates page has the full provincial table if you need a province not shown here.
Where does the province you pick change the bill?
The federal 9% is the same coast to coast, so the province is what moves the total. Add the small business rates above to the federal 9% and $100,000 of qualifying income looks like this.
| Province | Combined small business rate | Tax on $100,000 |
|---|---|---|
| Manitoba | 9.0% | $9,000 |
| Nova Scotia | 10.5% | $10,500 |
| British Columbia | 11.0% | $11,000 |
| New Brunswick | 11.5% | $11,500 |
The spread is about $2,500 a year on $100,000, which is real money but a long way short of what the choice between a CCPC and a non-CCPC costs. Nobody should move a business over a few points before checking the rest of the picture.
What do two incomes cost?
Start with a British Columbia CCPC earning $100,000 of taxable income. Federal tax is $9,000 and provincial tax is $2,000, so it pays $11,000, or 11.0%, and $89,000 stays in the company.
Now $700,000. The first $500,000 pays 9% federal ($45,000) and 2% provincial ($10,000). The other $200,000 pays 15% and 12%, which is $30,000 and $24,000. The total is $109,000, an average of 15.6%. Try any province in the corporate tax calculator and watch how the average climbs after the limit.
Is corporate taxation the end of the tax?
No, and this is where people get caught. The money is taxed in the company, and if you take it out as a dividend, you pay again. The dividend tax calculator shows the personal side. Salary works differently and adds payroll remittances, which the payroll remittance calculator covers.
Sales tax is a third stream. GST/HST isn’t a cost of the corporation when it’s collected and remitted properly, but late returns are. Use the GST/HST calculator to see the amounts.
Mistakes and limits
Assuming every small company gets the 9%. It doesn’t. A company that isn’t a CCPC, or that has used up its limit through associated firms, pays the general rate. On $300,000 in British Columbia, a non-CCPC pays $81,000 against $33,000 for a CCPC.
The calculator is an estimate. It doesn’t model the phase-outs, associated groups or credits, and it uses the head office province. Provincial rates for Alberta, Saskatchewan, Prince Edward Island and Newfoundland and Labrador were less firmly confirmed, so check those on the provincial site.
Deadlines matter too. The balance is due two months after year end (three for many small CCPCs) and the return is due six months after. Late filing costs 5% of the unpaid tax plus 1% a month.
Where we got these figures
Federal and provincial rates, the business limit, the phase-outs and the deadlines come from the Canada Revenue Agency corporation tax pages and the T2 guide, read in September 2026. We aren’t a government service and we don’t speak for one.
Frequently asked questions
What is the federal corporate tax rate?
15% on general income, and 9% on the first $500,000 of active business income for a qualifying CCPC.
Who can use the small business rate?
Only a Canadian-controlled private corporation. The limit is shared with associated corporations and can shrink with large taxable capital or passive income.
Is the small business limit the same everywhere?
Federally it's $500,000. Our data shows Nova Scotia using $700,000 for its provincial part, so check your province's page.
Is corporate income taxed twice?
It's taxed in the company, and a dividend paid to you is taxed again in your hands.
What will a BC corporation pay on $700,000?
$109,000, or about 15.6%, using the 9% and 2% small rates on the first $500,000 and the general rates on the rest.
- Self-employed taxes in Canada: income, CPP and GST
How tax works when you are self-employed in Canada: reporting income and expenses, paying both halves of CPP, instalments and when to register for GST