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Corporate taxes in Canada come in layers, and income tax is only the first. A small Alberta company with $300,000 of profit pays about $33,000, or 11%, in federal and provincial income tax. But the same company also collects sales tax, remits payroll deductions and, once it pays you, triggers a second tax on you.
Which taxes does a corporation actually pay?
There are four you’ll meet. Corporate income tax is charged on profit, federally and by each province or territory. Sales tax (GST or HST, and provincial taxes in some places) is collected from customers and passed on, so it isn’t a cost of the company unless it can’t recover what it paid. Payroll deductions cover CPP, EI and income tax withheld from staff. And the owner pays personal tax on salary or dividends.
New owners tend to look at the first one and forget the rest. The payroll and sales tax dates arrive on their own schedule, well before the annual return.
How much is corporate income tax in 2026?
Federally the rate is 15% for most corporations. A Canadian-controlled private corporation gets a net 9% on the first $500,000 of active business income. The CRA’s corporation tax rates page shows both the 15% general and the 9% small business net rate. Provinces add their own rate, and the total is what matters.
| Province | Small business, combined | General, combined |
|---|---|---|
| Alberta | 11% | 23% |
| British Columbia | 11% | 27% |
| Manitoba | 9% | 27% |
| Nova Scotia | 10.5% (limit $700,000) | 29% |
| Ontario | About 11.7% for a calendar 2026 year, 11.2% later | 26.5% |
Ontario changed its small business rate from 3.2% to 2.2% on July 1, 2026, so the 2026 number is a blend that this site derived, and a company with a different year end gets a different figure. Alberta’s rates come from provincial pages we could only partly read. Rates can also move in the middle of a year, as Ontario’s just did, so check the current CRA table before you file.
What does a real year look like?
Take that Alberta company with $300,000 of profit. The corporate tax calculator shows $27,000 federal and $6,000 provincial, so $33,000, leaving $267,000 in the company. Earn the same $300,000 in a corporation that isn’t a CCPC and the bill is $69,000, or 23%, which is a big reason the CCPC test matters so much to owners who are thinking about how to set things up.
Now the owner wants money out. Paying $10,000 of eligible dividends to an Ontario resident leaves about $9,211 after personal tax, according to the dividend tax calculator. That’s one calculator’s result for one person with no other income counted, so your own figure will differ. Still, it shows why corporate tax isn’t the whole cost.
Where does the small business rate stop?
It ends sooner than most people expect. The $500,000 limit is shared between associated corporations. It shrinks when taxable capital passes $10 million, reaching nil at $50 million. It also shrinks with passive investment income, starting at $50,000 and reaching nil at $150,000. And only a CCPC qualifies in the first place. The CRA’s own explainer on the small business deduction rules describes the passive income step-down.
A quick picture: a company earning $75,000 of passive investment income in the prior year, with no associated companies, loses $125,000 of its limit, since the reduction is $5 for every $1 above $50,000. Its limit drops from $500,000 to $375,000. Our calculator ignores the taxable capital limit and credits, and it handles associated companies through an optional box. It’s a fair first estimate for a single, simple company, and not a substitute for the return itself.
What do people get wrong about corporate taxes?
The first mistake is treating the low rate as money you can spend. It’s the first layer, and you still pay tax when the cash reaches you. A second is missing remittance dates, which run on their own calendar (we didn’t check the penalty for being late). The payroll remittance calculator shows what a pay run adds up to.
A third is skipping the return in a quiet year. Say Marc in Moncton runs a small consulting company that earned nothing last year. It still has to file. A corporation’s annual return isn’t optional when there’s no profit. Our guide to the corporation income tax return covers the six-month deadline.
What should a new owner sort out first?
Start with the question of how the company will pay you, because that decides how much personal tax lands on top of the corporate bill. Then set up payroll and sales tax accounts before the first sale or the first cheque to staff, not after. Ask an accountant for a ballpark of the year’s total tax in the first quarter, while there’s still time to change course. And keep the company’s money in its own bank account: mixing it with household spending is the fastest way to make a simple year messy.
Where the numbers come from
Federal rates, the $500,000 limit and the phase-outs come from the Canada Revenue Agency corporation tax rates page and T2 guide. Provincial rates are from CRA provincial pages and provincial government pages, read in September 2026, and the combined figures are added by this site. We aren’t a government service and we don’t speak for one.
Frequently asked questions
What corporate taxes must a Canadian company pay?
Corporate income tax, sales tax collected and remitted, payroll deductions for staff, and the owner's personal tax on money taken out.
What is the federal corporate tax rate?
15% for most corporations, and 9% on the first $500,000 for a CCPC.
Is the small business rate the same in every province?
No. Each province adds its own rate, so the combined rate ranges from 9% in Manitoba to about 12% in the highest places.
Does the calculator include tax credits?
No. It uses the rates only and ignores credits, the capital and passive income limits, and associated corporations.
Do I still file if my company made no profit?
Yes. Every resident corporation files a T2 each year.
- 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