Updated Checked by the Tax-Services.ca editorial team How we check
A small Canadian corporation with $300,000 of active business profit pays about $35,088 in corporate tax for a calendar 2026 year if it’s based in Ontario. That’s 11.7%, and it drops to 11.0% in British Columbia. The federal part is 9% on the first $500,000 for a Canadian-controlled private corporation, and the province adds its own slice.
What corporate tax rates apply in 2026?
Federal corporate tax has two speeds. Most corporations pay 15%. A Canadian-controlled private corporation (a CCPC) pays 9% on the first $500,000 of active business income, thanks to the small business deduction. The CRA’s corporation tax rates page gives both the 15% and the 9% net federal rates. Your province or territory then charges its own rate, and the two are added together.
The corporate tax calculator does that addition for you. These are the results it gives for a corporation with a calendar 2026 year.
| Case | Corporate tax | Rate |
|---|---|---|
| Ontario CCPC, $100,000 profit | $11,696 | 11.7% |
| Ontario CCPC, $300,000 profit | $35,088 | 11.7% |
| British Columbia CCPC, $300,000 profit | $33,000 | 11.0% |
| Ontario CCPC, $600,000 profit | $84,980 | 14.2% |
| Ontario, not a CCPC, $300,000 profit | $79,500 | 26.5% |
At $300,000 that Ontario company keeps $264,912 inside the corporation, and the non-CCPC keeps $220,500. The gap of $44,412 a year, a ballpark $44,000 on this profit, is why the CCPC label matters so much to owners.
Why is the Ontario rate a blend this year?
Ontario cut its small business rate from 3.2% to 2.2% on 1 July 2026. The Ontario government’s corporate income tax page puts it this way:
Effective July 1, 2026, the lower rate of Ontario corporate income tax is reduced from 3.2 per cent to 2.2 per cent.
Corporate Income Tax, ontario.ca
A corporation whose year runs from January to December straddles that date, so the tool prorates the two rates by days: 181 days at 3.2% and 184 at 2.2%, which comes to about 2.7%. We derived that blend ourselves. The CRA doesn’t print it, and a company with a different year end will land somewhere else. From 2027 the combined small business rate in Ontario is 11.2%.
Quebec runs on its own calendar for this cut, and we couldn’t open the Revenu Quebec page to confirm the detail. If you’re in Quebec, read that page before you budget.
A worked example at $600,000
Say an Ontario CCPC earns $600,000 of active business income. The first $500,000 gets the small business rate and the last $100,000 pays the general rate. The calculator shows $60,000 of federal tax and $24,980 of Ontario tax, for $84,980 in all. That leaves $515,020 in the company.
Notice what happened to the average rate. It jumped from 11.7% to 14.2%, although only a sixth of the profit is above the limit. The extra $100,000 is taxed at 26.5%, and that’s why owners near the line think hard about timing and about what counts as active business income.
When do you file and pay corporate tax?
The T2 return is due six months after the end of your tax year. A year ending on 31 December means a return due by 30 June. Paying is a different clock. The balance is generally due two months after year end, and for a CCPC that meets certain conditions it’s three months. For a December year end, that’s 28 February for most corporations and 31 March for an eligible CCPC.
Filing late while you owe money costs you, so pay on time even if the return isn’t finished. For tax years starting after 2023, most corporations must file the T2 electronically, using CRA-certified software. Insurance corporations, non-resident corporations, corporations exempt under section 149 and those reporting in functional currency are the exceptions. The CRA says it charges a $1,000 penalty when a corporation required to file electronically doesn’t.
Payroll runs on a separate schedule. If your company has staff, work out the deductions with the payroll remittance calculator.
Who pays the tax, the company or the owner?
Both, in different places. The corporation pays the corporate tax above on its profit. When the owner pulls money out, it shows up on a personal return: salary as employment income, or dividends, which are taxed again at personal rates. So a corporation can push tax into the future, but the money that finally reaches your pocket still gets taxed. Marcus, who runs a small shop in Hamilton, might leave $200,000 inside the company for years and pay personal tax only when he takes it out.
Mistakes and limits of these numbers
The calculator ignores several things that raise the bill or change the limit. Corporations with large taxable capital lose part of the small business limit. So do those with more than $50,000 of passive investment income. Associated corporations share one $500,000 limit, so two companies under the same owner don’t get two.
The tool also leaves out tax credits, and it doesn’t count the tax you pay when you take money out. Test that side with the dividend tax calculator, or compare against pay from the company with the self-employed tax calculator.
One more trap is the year end. Every rate above assumes a calendar year. If yours ends in March or September, the provincial cut is prorated differently.
Where we got these figures
The federal rates and the $500,000 limit come from the Canada Revenue Agency‘s corporation tax rate page and its T2 guide, checked for 2026. Provincial rates come from the CRA’s provincial pages and the Ontario government’s page on the 1 July 2026 change. Filing and payment dates are on the CRA’s corporation filing pages. No level of government runs or endorses this site.
Frequently asked questions
What is the corporate tax rate for a small business in 2026?
Federally, a Canadian-controlled private corporation pays 9% on the first $500,000 of active business income. Add the provincial rate, which is 2.0% to 2.7% in the cases we tested, for a combined 11.0% to 11.7%.
When is the T2 corporate tax return due?
Six months after the end of the tax year. A 31 December year end means 30 June.
When do I pay corporate tax?
The balance is generally due two months after year end, or three months for a CCPC that meets certain conditions.
Do I have to file my T2 electronically?
For tax years starting after 2023, most corporations do, with CRA-certified software. Insurance corporations, non-residents and section 149 exempt corporations are among the exceptions.
Does a second company give me a second $500,000 limit?
Not if the companies are associated. They share one small business limit.
- Dealing with the CRA: letters, audits and payments
Dealing with the CRA: what to do when a letter arrives, how a review differs from an audit, how My Account helps, and what to do if you can't pay