Updated Checked by the Tax-Services.ca editorial team How we check
Accounting for a business in the territories comes down to three things that differ from the provinces: the corporate tax rate you book, the sales tax you collect, and how far you sit from your advisers. On a $300,000 profit, a qualifying small corporation pays $27,000 in combined tax in Yukon, $33,000 in the Northwest Territories and $36,000 in Nunavut. The federal share is the same in all three. The territorial share is what moves.
What corporate tax rates apply in Yukon, the NWT and Nunavut?
The CRA collects territorial corporate tax for you on the same T2 return, so there is no second filing to chase. It publishes one lower rate for income that earns the federal small business deduction and one higher rate for the rest. The table shows the rates on the CRA pages as read in September 2026.
| Territory | Lower rate | Higher rate | Limit for the lower rate |
|---|---|---|---|
| Yukon | 0% | 12% | $500,000 |
| Northwest Territories | 2% | 11.5% | CRA page gives no figure |
| Nunavut | 3% | 12% | CRA page gives no figure |
Add the federal 9% small business rate or 15% general rate to get the combined figure. The CRA’s corporation tax rates page confirms both federal numbers and says the lower rate is for Canadian-controlled private corporations claiming the small business deduction. For the two territories with no limit on the page, the federal $500,000 business limit is the usual ceiling. We couldn’t confirm a separate territorial limit, so check the current CRA page before you rely on that.
What does that cost on a real profit?
Take a Canadian-controlled private corporation with $300,000 of active business income and nothing else going on. We ran it through the corporate tax calculator.
| Head office | Federal tax | Territorial tax | Total |
|---|---|---|---|
| Yukon | $27,000 | $0 | $27,000 |
| Northwest Territories | $27,000 | $6,000 | $33,000 |
| Nunavut | $27,000 | $9,000 | $36,000 |
The gap between Yukon and Nunavut is $9,000 a year on the same profit. That’s real money, but it only matters if you can choose where the head office sits, and most people can’t. The tool ignores credits and covers associated companies and passive income only through optional boxes. Treat the result as a first pass for your bookkeeper, not a filing.
Smaller profit, same pattern. A shop clearing $120,000 pays $10,800 federal at 9%. Add $0 in Yukon, $2,400 in the NWT or $3,600 in Nunavut, and the totals are $10,800, $13,200 and $14,400. A gap of $3,600 is still a few bucks you’d rather keep, but nobody relocates over it.
What happens when profit passes the limit?
Here Yukon is the only territory where the page gives us a limit to work with. Say a Yukon corporation earns $600,000 and has no associated companies. The first $500,000 gets the 9% federal and 0% territorial rates, which is $45,000. The last $100,000 is taxed at 15% federal and 12% territorial, which is $27,000. Total tax is $72,000, or 12% of the profit. That’s our own arithmetic from the table above and it ignores the capital and passive income reductions, so it’s a ballpark, not a bill.
The lesson for your books: the average rate climbs as profit crosses the limit, so a budget built on one flat percentage will be wrong in a strong year.
Is there a sales tax on top of the GST?
Not on our list. The CRA rate table we work from shows GST at 5% in all three territories and no territorial sales tax. So a $1,000 sale carries $50 of GST. Compare that with $150 of HST in New Brunswick or $110 in Saskatchewan on the same sale, and you’ll see why a supplier from the south sometimes quotes you a tax line you don’t recognize.
The GST/HST calculator handles a single invoice. It saves you a spreadsheet column.
One trap. If you ship goods or sell services to customers in a province, the rate can follow the customer, not your office. The CRA’s place of supply rules decide that, and we haven’t tried to summarize them here. Read the CRA page on which rate to charge before your first sale to a buyer in Quebec or Ontario.
How do payroll and remittances look up north?
Employers withhold tax, CPP and EI from each pay and send it to the CRA along with their own share. The territory changes only the income tax part. For one employee paid $3,000 every two weeks ($78,000 a year), the payroll remittance calculator puts the total to remit at about $886 a pay period in Nunavut and about $928 in the Northwest Territories. Most of that is identical in both places. The difference comes from territorial income tax.
The tool leaves out workers’ compensation and other payroll levies. Those are set by each territory, and we didn’t confirm their current rates.
If you want the employee’s side of the same paycheque, the take-home pay calculator shows it.
What records do you need, and where can you keep them?
Books and records must be kept in Canada, in English or French, unless the CRA gives written permission otherwise. The retention rule is short and worth reading once in the CRA’s own words.
Generally, you must keep all required records and supporting documents for a period of six years from the end of the last tax year they relate to.
Where to keep your records, for how long and how to request the permission to destroy them early, canada.ca
If you keep records electronically, the CRA wants them in a readable format you can restore, and a backup you’ve never tested doesn’t count for much.
This matters more in a small northern community than elsewhere. A slow connection is not an excuse for a missing file. Pick a bookkeeping tool that can export your data, keep a dated copy somewhere other than the laptop you work on, and try to restore it once. The CRA lets you destroy paper originals after scanning only if the images meet the national standard for imaging, so check that before you shred anything.
What mistakes cost small northern businesses money?
The first is assuming the small business rate applies to everything. It needs a Canadian-controlled private corporation and active business income within the limit. The second is forgetting that a rate published for the territory may have changed since our reading, so book the rate for your actual year end. The third is treating GST as income. It belongs to the CRA, and a separate bank account for it makes the filing less painful.
Your own tax as an owner is a separate calculation. If you live in a prescribed northern zone you may qualify for the northern residents deductions, claimed on Form T2222 with your personal return, not through the company. For a rough owner-side figure, try the income tax calculator.
Sources, and how we checked them
Territorial corporate rates come from the CRA‘s Yukon, Northwest Territories and Nunavut corporation tax pages, which were last updated in 2024 and 2025. Federal rates come from the CRA’s corporation tax rates page. The sales tax rates come from the CRA’s GST/HST rate information. Record rules come from the CRA’s electronic records guidance, updated September 2026. The northern residents deduction comes from the CRA’s line 25500 page, updated January 2026. We couldn’t confirm territorial payroll levies, so none are quoted. This site is independent and has no tie to the CRA or any government.
Frequently asked questions
Do the territories have a territorial sales tax?
Not on the CRA rate table we use. GST at 5% applies in Yukon, the Northwest Territories and Nunavut, with no territorial sales tax on top.
Which territory has the lowest corporate tax for a small business?
Yukon, where the CRA shows a 0% lower rate on up to $500,000. The Northwest Territories shows 2% and Nunavut 3%.
Do I file a separate territorial corporate return?
No. The CRA collects territorial corporate tax on the T2 return, with the territorial amount calculated on a schedule.
How long must I keep business records?
Six years after the end of the year they relate to. They must be kept in Canada, unless the CRA gives written permission otherwise.
Can I keep my books in the cloud?
The CRA still requires the records to be kept in Canada and to be readable and restorable. Check where your software provider stores the data.
All family and benefits calculators
- 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