Canada Corporation Tax Calculator (CCPC)
Estimate combined federal + provincial corporate income tax for a Canadian-Controlled Private Corporation, including the small business deduction and the passive income grind.
Corporation Details
Taxed this year. It does not reduce this year's SBD.
Drives the SBD grind (ITA 125(5.1)(b)). Blank = same as this year.
Employed in Canada. SBD phases out from $10M to $50M (ITA 125(5.1)(a)).
Total Corporate Tax
$23,400Effective Rate
11.7%After-Tax Retained
$176,600Small Business Deduction Limit
Tax Breakdown
How does this compare across provinces?
Same ABI / passive income profile in Ontario, BC, Alberta, and Quebec.
Next step
Compare salary vs dividend payout →
See whether to extract corporate profit as salary or dividends.
Not incorporated?
Self-employment tax calculator →
Compare corporate vs sole-proprietor tax burden.
What's not included
- The timing of the RDTOH refund: it is shown above as a ceiling, and is only recovered to the extent taxable dividends are actually paid (38⅓% of them, capped at the balance)
- GRIP balance and eligible vs non-eligible dividend designation
- Provincial business limits above the $500,000 federal one (NS $700k, SK $600k, PE $600k)
- Manufacturing & processing (M&P) reduced rates
- SR&ED and other federal/provincial credits
- Loss carrybacks and carryforwards
- Quebec corporations file separately on TP-1; this calculator estimates combined federal + Quebec tax
How CCPC corporation tax works
A Canadian-Controlled Private Corporation (CCPC) gets a preferential federal rate of 9% on its first $500,000 of active business income each year — this is the Small Business Deduction (SBD). Active business income above the SBD limit, and income earned by larger or non-CCPC corporations, is taxed at the federal general rate of 15%. Each province layers its own SBD and general corporate rate on top, bringing the combined rate to roughly 9–12.2% (SBD) and 23–30% (general).
The SBD is one of Canada's most valuable tax incentives for small business owners. It can save tens of thousands of dollars per year in corporate tax compared to the general rate. However, you must meet strict eligibility requirements: your corporation must be Canadian-controlled, and the income must be from active business (not passive investments).
Combined corporate tax rates by province (2026)
Combined federal + provincial CCPC rates: the small business rate on active income up to the $500,000 SBD limit, and the general rate above it. Computed from the same rate table as the calculator.
| Province / territory | Small business rate | General rate |
|---|---|---|
| Ontario | 11.7% | 26.5% |
| Quebec | 12.2% | 26.5% |
| British Columbia | 11.0% | 27.0% |
| Alberta | 11.0% | 23.0% |
| Manitoba | 9.0% | 27.0% |
| Saskatchewan | 10.0% | 27.0% |
| Nova Scotia | 10.5% | 29.0% |
| New Brunswick | 11.5% | 29.0% |
| Newfoundland & Labrador | 11.0% | 30.0% |
| Prince Edward Island | 10.0% | 30.0% |
| Northwest Territories | 11.0% | 26.5% |
| Yukon | 9.0% | 27.0% |
| Nunavut | 12.0% | 27.0% |
Small business rate applies to the first $500,000 of active business income federally. Nova Scotia ($700k), Saskatchewan and PEI ($600k) set a higher provincial small-business limit, so income between $500k and those limits is taxed at the provincial small-business rate but the federal general rate — a nuance this calculator simplifies to the single $500,000 limit. Ontario's small-business rate cut (3.2% → 2.2%, effective 1 July 2026) is prorated for years straddling that date, so a calendar-2026 CCPC blends to a combined 11.7%; only fiscal years starting on or after 1 July 2026 get the full 11.2%. Quebec's matching cut applies only to tax years beginning after 29 April 2026, so a calendar-2026 Quebec CCPC stays at the pre-cut 12.2% for all of 2026 — the 11.2% rate first applies from fiscal 2027.
Worked example — Ontario CCPC, $600,000 active income (2026)
First $500,000 (SBD rate 11.7%): $500,000 × 11.7% = $58,500.
Remaining $100,000 (general rate 26.5%): $100,000 × 26.5% = $26,500.
Total corporate tax: $85,000 — an effective rate of 14.2% on $600,000. With no passive investment income, the full SBD limit is available.
The passive income grind on the SBD
Since 2019, if your CCPC (or any associated corporation) earns more than $50,000 of adjusted aggregate investment income (AAII), the $500,000 SBD limit is reduced by $5 for every $1 of AAII over $50,000. At $150,000 of AAII the SBD is gone entirely, and all your active business income is taxed at the higher general rate.
The year that counts is the previous one. The test is on the associated group's AAII for taxation years that ended in the prior calendar year, so a year with a large capital gain inside the corporation does not touch that year's SBD — it takes the limit away the following year. Enter the prior-year figure separately above.
A second grind applies to taxable capital. A CCPC whose group had more than $10 million of taxable capital employed in Canada in the previous year loses the SBD on a straight line, reaching nil at $50 million. The law reduces your limit by the greater of the two reductions, never by their sum.
This rule means CCPC owners who hold large investment portfolios inside their corp can pay meaningfully more tax on their operating profit. If the calculator above shows a grind, consider whether the investments belong inside the corp at all.
Investment income inside a CCPC
Passive investment income earned by a CCPC is taxed at a high rate — federal 38.67% (28% Part I plus a 10.67% Additional Refundable Tax) plus the provincial general corporate rate. Most of the tax (30.67% federally) is refunded to the corporation when it pays taxable dividends to its shareholders, through the RDTOH (Refundable Dividend Tax On Hand) mechanism, leaving about 8% federally as a permanent cost. The calculator shows the tax payable now with the refundable portion broken out beside it. Treat that portion as a ceiling: the dividend refund is 38⅓% of the taxable dividends actually paid, capped at the RDTOH balance, so profits left inside the corporation stay taxed at the full rate.
Associated corporations and the SBD
If you own multiple corporations, the CRA may consider them "associated" if you control them and they are part of the same group. Associated corporations must share the single $500,000 SBD limit across all of them. If you have two associated corporations and one has already claimed $350,000 of SBD on its active business income, the other can only claim $150,000 in SBD.
This rule prevents tax planning where owners split income across multiple companies to claim the SBD multiple times.
Dividend refundability and RDTOH
When a CCPC earns investment income at the high rate (38.67% federal), most of that tax is refundable. The RDTOH (Refundable Dividend Tax On Hand) account tracks the refundable tax, and the refund is triggered when the corporation pays taxable dividends to shareholders.
This calculator does not model the RDTOH account or refunds — it shows the total corporate tax before any dividend refunds. In practice, if you plan to pay dividends to shareholders, your net corporate tax bill will be lower due to refunds.
Frequently asked questions
What is the small business deduction (SBD)?
The Small Business Deduction (SBD) reduces the federal corporate tax rate from 15% to 9% on the first $500,000 of active business income (ABI) earned by a Canadian-Controlled Private Corporation (CCPC). Most provinces offer a matching provincial SBD, bringing the combined rate to roughly 9–12.2%. ABI above the $500,000 SBD limit is taxed at the general corporate rate (~23–30% combined, depending on province).
Why is my SBD reduced when I have passive investment income?
Since 2019, a CCPC holding the full $500,000 business limit loses $5 of it for every $1 of adjusted aggregate investment income (AAII) above $50,000, and the limit is gone once AAII reaches $150,000. The test is on the associated group's AAII for taxation years ending in the PRIOR calendar year, so a jump in passive income costs you the limit next year, not this one. The $5 rate scales with the limit you actually hold: a group member allocated $250,000 loses $2.50 per $1, and still reaches nil at $150,000 of AAII. A second, separate reduction applies to taxable capital employed in Canada above $10 million, and the law applies whichever of the two is larger — never their sum.
What are associated corporations and how do they affect the SBD?
Associated corporations — generally CCPCs controlled by the same person or related group — must share a single $500,000 SBD limit. If your associated corporations have already used part of the limit, your effective SBD limit is reduced by that amount.
Are corporate investment income taxes refundable?
Partly. Of the 38.67% federal Part I tax on CCPC investment income, 30.67% is refundable to the corporation when it pays taxable dividends to shareholders, through the Refundable Dividend Tax On Hand (RDTOH) account. Only about 8% federally is a permanent cost. The calculator shows the tax payable now and the refundable portion beside it; the refund itself arrives at 38 1/3% of the taxable dividends actually paid, capped at the RDTOH balance, so it is a ceiling rather than a certainty.
What's the difference between eligible and non-eligible dividends?
Dividends paid out of income that benefited from the SBD are non-eligible dividends — they have a smaller gross-up and dividend tax credit because the underlying corporate income was taxed at a low rate. Dividends paid from income taxed at the general rate (above the SBD limit) are eligible dividends. The personal tax treatment is integrated to roughly match if you'd earned the income directly.
How does Quebec differ?
Quebec corporations file a federal T2 return with the CRA and a separate TP-1 return with Revenu Québec. The combined federal + Quebec rates shown in this calculator approximate the total corporate tax burden but you must file the two returns separately. Quebec also has stricter SBD eligibility tests (e.g., minimum paid hours).
Who has to file a T2 corporate tax return in Canada?
Most resident corporations must file a T2 for every tax year, even when the corporation was inactive or has no tax payable. Some non-resident corporations must also file when they carried on business in Canada, had a taxable capital gain, or disposed of taxable Canadian property. Registered charities and a small number of other entities follow different filing rules.
What is the corporate tax return deadline in Canada?
The T2 filing deadline is six months after the corporation's tax year-end. The balance is due earlier: generally two months after year-end, or three months for a qualifying CCPC that claimed the small business deduction and meets the CRA's prior-year taxable-income test.
How do I file a T2 corporation income tax return?
For tax years starting after 2023, most corporations must prepare and transmit the T2 electronically using CRA-certified corporation tax software. The filing normally includes the T2, General Index of Financial Information, and every schedule that applies. Save the CRA confirmation number and pay any balance by the separate balance-due date.
Do corporate tax rates vary by province?
Yes. Federal corporate tax applies across Canada and each province or territory adds its own small-business and general rate. The table above compares the combined rates. Alberta and Quebec also administer separate provincial corporate income tax returns, while the CRA administers provincial corporate tax for the other jurisdictions.
File the T2 after estimating the tax
The calculator estimates the tax but does not prepare or transmit a corporate return. Follow the T2 corporate tax return guide for filing steps, the six-month return deadline, the earlier balance-due date, GIFI, and mandatory electronic filing.
Sources
Last updated June 2026. Combined federal + provincial CCPC rates re-verified against the CRA corporation tax rates table for 2025 and 2026.
June 15 self-employed tools: quarterly instalments, GST/HST registration, self-employed tax buffer, June 15 filing guide, T2125 mistakes
Related Calculators
CCPC Dividend vs Salary Calculator
Compare salary vs dividends from your CCPC — total tax, take-home pay, RRSP room, and CPP.
Self-Employment Tax Calculator
Income tax, double CPP, and quarterly installment estimates for self-employed Canadians.
GST/HST Registration Threshold Calculator
$30K rolling 4-quarter test + voluntary registration ROI for CCPCs and sole props.
CRA Quarterly Tax Instalments Calculator
T1033 threshold + 3 CRA methods + missed-payment penalty.
Capital Gains Tax Calculator
Capital gains tax with 50% inclusion rate and LCGE for qualifying small business shares.