Navigating corporate income tax can be tough. In Canada, corporate income tax rates for 2024 comprise both federal and provincial/territorial components. Here's a comprehensive guide to these rates.
Federal Corporate Income Tax Rates:
- General Corporations: The basic federal tax rate is 38%. After accounting for a 10% provincial abatement and a 13% general rate reduction, the net federal tax rate is 15%.
- Canadian-Controlled Private Corporations (CCPCs): Eligible CCPCs benefit from a small business deduction, reducing the net federal tax rate to 9% on active business income up to the small business limit.
Provincial and Territorial Corporate Income Tax Rates:
Each province and territory imposes its corporate income tax rates, which vary depending on the type of corporation and income bracket. Below is a summary of the general and small business rates for 2024:
| Province/Territory | General Rate (%) | Small Business Rate (%) | Small Business Limit ($) |
| Alberta | 8.0 | 2.0 | 500,000 |
| British Columbia | 12.0 | 2.0 | 500,000 |
| Manitoba | 12.0 | 0.0 | 500,000 |
| New Brunswick | 14.0 | 2.5 | 500,000 |
| Newfoundland & Labrador | 15.0 | 3.0 | 500,000 |
| Northwest Territories | 11.5 | 4.0 | 500,000 |
| Nova Scotia | 14.0 | 2.5 | 500,000 |
| Nunavut | 12.0 | 3.0 | 500,000 |
| Ontario | 11.5 | 3.2 | 500,000 |
| Prince Edward Island | 16.0 | 1.0 | 500,000 |
| Quebec | 11.5 | 3.2 | 500,000 |
| Saskatchewan | 12.0 | 1.0 | 600,000 |
| Yukon | 12.0 | 0.0 | 500,000 |
Note: The small business limit is the maximum income eligible for the small business rate. For instance, Saskatchewan's limit is $600,000, while most other jurisdictions have a limit of $500,000.
Combined Federal and Provincial/Territorial Rates:
When combining federal and provincial/territorial rates, the overall corporate tax rate varies by jurisdiction.
- Alberta: The combined general rate is 23% (15% federal + 8% provincial).
- Ontario: The combined general rate is 26.5% (15% federal + 11.5% provincial).
- Quebec: The combined general rate is 26.5% (15% federal + 11.5% provincial).
These combined rates are subject to change based on provincial budgets and fiscal policies.
Special Considerations:
- Investment Income: CCPCs earning investment income are subject to an additional refundable tax of 10.67%, resulting in a higher federal rate on such income.
- Zero-Emission Technology Manufacturing: The federal government offers a temporarily reduced tax rate for eligible zero-emission technology manufacturing profits, halving the general corporate rate.
Calculating Taxable Income: A Step-by-Step Guide
Here's a simple guide to calculating corporate taxable income:
- Start with your total revenue.
- Subtract business expenses.
- Deduct capital cost allowance (CCA).
- Claim any SR&ED credits.
- The result is your taxable income.
Key Differences: Small Business and General Corporate Tax Rates
| Feature | Small Business Rate | General Corporate Rate |
| Who qualifies? | CCPCs only | All corporations |
| Income limit | Up to $500,000 (or $600K in SK) | No limit |
| Federal rate (2024) | 9% | 15% |
| Total tax burden | Lower (9–13%) | Higher (23–31%) |
Investment Income and Corporate Taxation in Canada
Investment income earned by a Canadian-Controlled Private Corporation (CCPC) is taxed differently than active business income.
What is Investment Income?
Investment income includes:
- Interest
- Dividends
- Rental income
- Royalties
- Capital gains (except from active business assets)
Tax Treatment:
- Investment income is not eligible for the small business deduction.
- It is taxed at a higher rate, including:
- A basic federal rate of 38.67%
- Minus a federal abatement of 10%
- Plus a refundable tax on investment income of 10.67%
The net federal tax on investment income is effectively 38.67%, but part of this (30.67%) may be refunded when dividends are paid to shareholders.
Key Differences: Active Business Income vs. Investment Income
| Feature | Active Business Income | Investment Income |
| Definition | Income from regular business activities | Income from passive sources (interest, rent, etc.) |
| Eligible for Small Biz Rate | Yes (up to $500K) | No |
| Federal Tax Rate | 9% (for CCPCs) | 38.67% (before refund) |
| Refundable Tax | Not applicable | Yes (refunded when dividends are paid) |
| Encouraged by Tax System | Encouraged via lower rates | Discouraged via higher rates |
It's essential for corporations operating in Canada to stay updated on both federal and provincial/territorial tax rates, as they can change based on government budgets and economic conditions. Consulting with tax professionals or referring to official publications from the Canada Revenue Agency and provincial tax authorities is advisable for the most current information.
Looking for personalized tax-saving advice? Feel free to reach out to Filing Taxes at 416-479-8532. Schedule an NTR engagement appointment with us and take the first step toward proper management of your finances.
Disclaimer: The information provided on this page is intended to provide general information. The information does not consider your personal situation and is not intended to be used without consultation from accounting and financial professionals. Salman Rundhawa and Filing Taxes will not be held liable for any problems that arise from the usage of the information provided on this page.