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2026 Rates  ·  All 13 Provinces & Territories  ·  CCPC & General

Federal vs Provincial Corporate Tax Rates by Province — Canada 2026

The complete breakdown of federal and provincial corporate tax rates for every Canadian province and territory. Small business rates, general rates, combined rates, M&P credits, SBD thresholds, passive income grind and how the rates interact — with worked dollar examples.

Updated January 2026All 13 jurisdictionsCCPCs and general corporations
See All Rates Province Details
9%Federal SBD RateOn first $500K active income
15%Federal General RateIncome above $500K
12.2%Lowest Combined SBDOntario, Saskatchewan, NWT, Nunavut
26.5%Ontario General RateFederal 15% + Ontario 11.5%
$500KSBD LimitShared among associated corps
Table of Contents
1. How Federal and Provincial Corporate Tax Works 2. Federal Corporate Tax Rates 2026 3. Master Rate Table — All Provinces and Territories 4. Combined Small Business Rates — Ranked 5. Combined General Rates — Ranked 6. Province-by-Province Breakdown 7. Manufacturing and Processing Rates 8. Passive Income and the SBD Grind 9. Associated Corporations — Sharing the $500K Limit 10. Worked Dollar Examples 11. Tax Planning Considerations by Province 12. Frequently Asked Questions

1. How Federal and Provincial Corporate Tax Works in Canada

Canadian corporations pay corporate income tax at two levels: federal and provincial (or territorial). The federal government sets a base rate that applies to all corporations across Canada, and each province or territory adds its own rate on top. The two rates are calculated separately but reported on a single T2 return and paid as a combined amount to CRA (except in Quebec and Alberta, which administer their own provincial corporate tax and require a separate provincial return).

The federal rate structure has two tiers. The first tier is the Small Business Deduction (SBD) rate — a reduced rate of 9% that applies to the first $500,000 of active business income earned by Canadian-Controlled Private Corporations (CCPCs). The second tier is the general rate of 15% that applies to active business income above $500,000 and to all income earned by non-CCPCs. Each province adds its own two-tier structure on top, creating a combined rate that varies significantly by province and by income level.

The distinction between the SBD rate and the general rate is the single most important factor in Canadian corporate tax planning. An Ontario CCPC earning $500,000 in active business income pays a combined rate of 12.2% (federal 9% + Ontario 3.2%). The same income in the same province, but earned by a non-CCPC or above the $500,000 threshold, is taxed at 26.5% (federal 15% + Ontario 11.5%). The difference is $71,500 per year on $500,000 of income — which is why CCPC status and SBD eligibility are the foundation of every corporate tax plan in Canada.

2. Federal Corporate Tax Rates — 2026

The federal corporate tax rate structure applies uniformly across all provinces and territories. Provincial rates are added on top.

Rate TypeRateApplies ToKey Condition
Small Business Rate9%First $500,000 of active business incomeCorporation must be a CCPC; $500K limit shared among associated corporations
General Rate15%Active business income above $500,000 and all non-CCPC incomeAfter federal abatement of 10% and general rate reduction of 13%
Full Rate (before reductions)38%All corporate income before any reductionsStarting point before the 10% federal abatement and other deductions
Federal Abatement(10%)Taxable income allocated to a provinceReduces the 38% base rate to 28% for income earned in a province
General Rate Reduction(13%)Income not eligible for SBD or M&P deductionReduces the 28% rate to 15% for general-rate income
Investment Income — CCPC38.67%Aggregate investment income (interest, rents, non-eligible capital gains)Includes 10.67% refundable portion (RDTOH); refunded when taxable dividends paid

How the Federal Rate Reaches 9% and 15%

General rate path: 38% base – 10% federal abatement – 13% general rate reduction = 15%

SBD rate path: 38% base – 10% federal abatement – 19% small business deduction = 9%

The 19% SBD and the 13% general rate reduction are mutually exclusive — you receive one or the other, not both. Income eligible for the SBD gets the larger 19% reduction. Income not eligible for the SBD gets the 13% general rate reduction.

3. Master Rate Table — All Provinces and Territories 2026

The following table shows the provincial/territorial rate, the combined federal + provincial rate for both the small business tier and the general tier, and the M&P rate where a separate reduced rate exists. All rates are for 2026 and apply to taxation years ending in 2026.

Province / TerritoryProvincial SBD RateCombined SBD RateProvincial General RateCombined General Rate
Ontario3.2%12.2%11.5%26.5%
British Columbia2%11%12%27%
Alberta2%11%8%23%
Saskatchewan0% (first $600K)9%12%27%
Manitoba0%9%12%27%
Quebec3.2%12.2%11.5%26.5%
New Brunswick2.5%11.5%14%29%
Nova Scotia2.5%11.5%14%29%
Prince Edward Island1%10%16%31%
Newfoundland and Labrador3%12%15%30%
Northwest Territories2%11%11.5%26.5%
Nunavut3%12%12%27%
Yukon0% (first $500K)9%12%27%

Saskatchewan's $600,000 SBD Limit: Saskatchewan is the only province with a provincial SBD limit higher than the federal $500,000. Saskatchewan's provincial small business rate of 0% applies to the first $600,000 of active business income. However, the federal SBD rate of 9% only applies to the first $500,000 — so income between $500,001 and $600,000 gets the provincial 0% rate but the federal general rate of 15%, resulting in a combined rate of 15% on that slice of income.

4. Combined Small Business Rates — Ranked Lowest to Highest

For CCPCs earning active business income within the SBD limit, the combined small business rate determines how much tax is paid on the first $500,000 of income. This is the rate that matters most for the vast majority of Canadian small businesses.

RankProvince / TerritoryCombined SBD RateTax on $500K Income
1Manitoba9%$45,000
1Saskatchewan9%$45,000
1Yukon9%$45,000
4Prince Edward Island10%$50,000
5British Columbia11%$55,000
5Alberta11%$55,000
5Northwest Territories11%$55,000
8New Brunswick11.5%$57,500
8Nova Scotia11.5%$57,500
10Newfoundland and Labrador12%$60,000
10Nunavut12%$60,000
12Ontario12.2%$61,000
12Quebec12.2%$61,000

5. Combined General Rates — Ranked Lowest to Highest

For income above the $500,000 SBD limit or for non-CCPCs, the combined general rate applies. This rate also applies to CCPCs that have lost SBD eligibility through the passive income grind or taxable capital thresholds.

RankProvince / TerritoryCombined General RateTax on $1M Above SBD
1Alberta23%$230,000
2Ontario26.5%$265,000
2Quebec26.5%$265,000
2Northwest Territories26.5%$265,000
5British Columbia27%$270,000
5Saskatchewan27%$270,000
5Manitoba27%$270,000
5Nunavut27%$270,000
5Yukon27%$270,000
10New Brunswick29%$290,000
10Nova Scotia29%$290,000
12Newfoundland and Labrador30%$300,000
13Prince Edward Island31%$310,000

6. Province-by-Province Breakdown

Ontario

Ontario's combined SBD rate of 12.2% (federal 9% + provincial 3.2%) applies to the first $500,000 of active business income for qualifying CCPCs. The general rate of 26.5% applies to income above $500,000. Ontario does not have a separate reduced M&P rate at the provincial level — the Ontario M&P deduction was eliminated in 2009. Ontario CCPCs with qualifying M&P income can claim the federal M&P deduction which reduces the federal rate but does not affect the provincial rate. Ontario administers its corporate tax through CRA (no separate provincial return required). Ontario is Canada's largest corporate tax jurisdiction with over 800,000 active corporations.

British Columbia

BC's combined SBD rate of 11% (federal 9% + provincial 2%) is the lowest among the major provinces west of Manitoba. The general rate of 27% applies to income above $500,000. BC administers its corporate tax through CRA. BC's provincial SBD limit is $500,000, matching the federal limit. BC does not have a separate provincial M&P rate.

Alberta

Alberta has Canada's lowest combined general rate at 23% (federal 15% + provincial 8%). The SBD rate is 11% (federal 9% + provincial 2%). Alberta administers its own corporate income tax separately from CRA — corporations operating in Alberta must file a separate Alberta AT1 corporate tax return with Alberta Tax and Revenue Administration (TRA) in addition to the federal T2. Alberta's low general rate makes it the most tax-efficient province for corporations with income above the SBD limit.

Saskatchewan

Saskatchewan's combined SBD rate of 9% is the lowest in Canada (tied with Manitoba and Yukon) because the provincial small business rate is 0%. Saskatchewan also has a unique $600,000 provincial SBD limit — higher than the federal $500,000. The general rate of 27% applies above the limit. Saskatchewan has a reduced M&P rate of 10% provincially (combined 25% with federal) for qualifying manufacturing and processing income.

Manitoba

Manitoba matches Saskatchewan with a combined SBD rate of 9% — the lowest in Canada — because the provincial small business rate is 0%. The $500,000 limit matches federal. The general rate of 27% applies above the SBD limit. Manitoba has a provincial M&P tax credit of 1% for qualifying manufacturing profits.

Quebec

Quebec's combined rates match Ontario: 12.2% SBD and 26.5% general. However, Quebec administers its own corporate income tax through Revenu Quebec — corporations operating in Quebec must file a separate CO-17 provincial corporate tax return in addition to the federal T2. Quebec also has a unique DPE (Déduction pour petite entreprise) that provides a reduced rate on the first $500,000 for qualifying M&P and primary sector businesses. Quebec's Innovation Tax Credit and R&D Super Deduction provide additional incentives not available in other provinces.

Atlantic Provinces (NB, NS, PE, NL)

The Atlantic provinces generally have higher combined general rates than Western Canada and Ontario. New Brunswick and Nova Scotia share a 29% combined general rate. Prince Edward Island has the highest combined general rate in Canada at 31%. Newfoundland and Labrador is at 30%. However, the SBD rates are competitive — PEI at 10% and New Brunswick and Nova Scotia at 11.5%. For small businesses earning within the SBD limit, the Atlantic provinces remain cost-competitive. The higher general rates primarily affect larger corporations and those with income above $500,000.

Territories (NWT, Nunavut, Yukon)

The territories offer competitive rates. Yukon has a 0% provincial small business rate (9% combined — tied for lowest in Canada). Northwest Territories matches Ontario and Quebec at 26.5% combined general rate. Nunavut's 27% general rate is mid-range. The territories do not require separate provincial returns — all territory corporate tax is administered through CRA on the T2.

7. Manufacturing and Processing (M&P) Rates

Certain provinces offer a reduced corporate tax rate on income derived from manufacturing and processing activities in Canada. The federal M&P deduction reduces the federal rate from 15% to 13% on qualifying M&P income. Some provinces provide additional M&P reductions at the provincial level.

ProvinceProvincial M&P RateCombined M&P Rate (with Federal 13%)Savings vs. General Rate
Saskatchewan10%23%4% savings vs. 27% general
Manitoba12% (with 1% credit)26%1% savings vs. 27% general
Ontario11.5% (no M&P reduction)24.5%2% savings (federal M&P only)
Alberta8% (no M&P reduction)21%2% savings (federal M&P only)
British Columbia12% (no M&P reduction)25%2% savings (federal M&P only)

M&P Qualification: To qualify for the federal M&P deduction, at least 10% of the corporation's gross revenue must come from manufacturing or processing goods for sale or lease in Canada. The corporation must use labour and capital in a process that transforms raw materials into finished or semi-finished products. Service businesses, construction companies and resource extraction operations generally do not qualify for the M&P deduction.

8. Passive Income and the SBD Grind

Since 2019, CCPCs with significant passive investment income face a reduction (grind) of their Small Business Deduction limit. For every $1 of Adjusted Aggregate Investment Income (AAII) above $50,000 in the prior taxation year, the $500,000 SBD limit is reduced by $5. At $150,000 of AAII, the SBD limit reaches zero — and the corporation loses the SBD entirely on all active business income.

SBD Grind Formula

SBD Limit Reduction = 5 x (AAII – $50,000)

AAII of $50,000 or less: No reduction — full $500,000 SBD available

AAII of $80,000: Reduction = 5 x ($80,000 – $50,000) = $150,000. SBD limit reduced to $350,000.

AAII of $150,000 or more: SBD limit reduced to $0. All active business income taxed at the general rate.

Worked Example — SBD Grind Impact (Ontario CCPC)

CCPC with $400,000 active business income and $90,000 AAII in prior year

SBD limit reduction: 5 x ($90,000 – $50,000)$200,000
Reduced SBD limit: $500,000 – $200,000$300,000
Tax on first $300,000 at 12.2% SBD rate$36,600
Tax on remaining $100,000 at 26.5% general rate$26,500
Total tax on $400,000 active income$63,100
Tax without grind (full SBD on $400,000 at 12.2%)$48,800
Additional tax caused by SBD grind$14,300

The SBD grind applies at the federal level and affects the combined rate in every province. A corporation that loses the SBD due to passive income pays the general rate in whatever province it operates — $14,300 more in the Ontario example above. This is why passive income management inside CCPCs is one of the most important corporate tax planning considerations in Canada.

9. Associated Corporations — Sharing the $500,000 SBD Limit

Associated corporations must share the $500,000 federal SBD limit. Two corporations are associated if one controls the other, both are controlled by the same person or group, or a person who controls one corporation is related to a person who controls the other and either person owns 25% or more of the shares of the other corporation. The association rules under Section 256 of the Income Tax Act are among the most complex provisions in Canadian tax law.

The practical impact is significant. An owner with two CCPCs must allocate the single $500,000 SBD limit between them on Schedule 23 (filed as part of the T2). If Corporation A is allocated $300,000 and Corporation B is allocated $200,000, each can only claim the SBD on their respective allocation — any active business income above their allocation is taxed at the general rate. The allocation is filed on Schedule 23 and must be agreed upon by both corporations.

10. Worked Dollar Examples — Tax by Province

Example 1 — CCPC with $200,000 Active Business Income

All income within SBD limit — comparing 5 provinces

Manitoba / Saskatchewan / Yukon (9%)$18,000
British Columbia / Alberta (11%)$22,000
Ontario / Quebec (12.2%)$24,400
Nova Scotia / New Brunswick (11.5%)$23,000
Prince Edward Island (10%)$20,000
Example 2 — CCPC with $800,000 Active Business Income (Ontario)

$500,000 at SBD rate + $300,000 at general rate

Tax on first $500,000 at 12.2% (Ontario SBD)$61,000
Tax on remaining $300,000 at 26.5% (Ontario general)$79,500
Total Ontario CCPC tax on $800,000$140,500
Effective rate17.56%
Example 3 — Same $800,000 in Alberta

$500,000 at SBD rate + $300,000 at general rate

Tax on first $500,000 at 11% (Alberta SBD)$55,000
Tax on remaining $300,000 at 23% (Alberta general)$69,000
Total Alberta CCPC tax on $800,000$124,000
Savings vs. Ontario$16,500

11. Tax Planning Considerations by Province

The provincial rate differential creates planning opportunities that depend on where the corporation has a permanent establishment. Key considerations include:

  • Permanent establishment allocation: Corporations with operations in multiple provinces allocate taxable income among provinces based on revenue and payroll using Schedule 5. A corporation with a sales office in Ontario and a warehouse in Alberta allocates income to both provinces — with the Alberta portion taxed at Alberta's lower general rate
  • Alberta advantage for high-income corporations: Corporations with active business income significantly above $500,000 benefit most from Alberta's low 8% provincial general rate. The $16,500 annual savings on $800,000 of income grows proportionally with income level
  • Saskatchewan and Manitoba for SBD-range businesses: Small CCPCs earning within the $500,000 SBD limit pay the lowest combined rates in Saskatchewan, Manitoba and Yukon (9%). The 3.2% difference between these provinces and Ontario (12.2%) is $16,000 per year on $500,000 of income
  • Passive income management is province-agnostic: The SBD grind applies at the federal level and affects all provinces equally. A corporation that loses the SBD due to passive income pays the general rate regardless of province — making passive income management important in every jurisdiction
  • Quebec and Alberta separate returns: Corporations with permanent establishments in Quebec or Alberta must file separate provincial returns (CO-17 and AT1 respectively) in addition to the federal T2. This creates additional compliance costs but also provides access to province-specific credits not available federally

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Frequently Asked Questions — Corporate Tax Rates by Province

Common questions from Canadian business owners about federal and provincial corporate tax rates.

What is the corporate tax rate for a small business in Ontario in 2026?
The combined federal and Ontario small business rate for qualifying CCPCs is 12.2% on the first $500,000 of active business income (federal 9% plus Ontario 3.2%). Income above $500,000 is taxed at the general rate of 26.5% (federal 15% plus Ontario 11.5%). The $500,000 limit is shared among associated corporations. Get CPA Help →
Which province has the lowest corporate tax rate in Canada?
For small businesses within the SBD limit, Manitoba, Saskatchewan and Yukon have the lowest combined rate at 9% because the provincial small business rate is 0%. For general-rate income above $500,000, Alberta has the lowest combined rate at 23% because its provincial general rate is 8%. The best province depends on whether the corporation's income is primarily within or above the SBD limit.
What is the difference between the SBD rate and the general rate?
The Small Business Deduction rate is a reduced rate available only to Canadian-Controlled Private Corporations on the first $500,000 of active business income, which is 12.2% combined in Ontario. The general rate of 26.5% applies to income above $500,000 and to all income earned by non-CCPCs. The difference on $500,000 of income is $71,500 per year, which is why CCPC status is the foundation of corporate tax planning in Canada.
What is the passive income SBD grind and how does it affect my rate?
If your CCPC earns more than $50,000 in Adjusted Aggregate Investment Income in the prior year, the $500,000 SBD limit is reduced by $5 for every $1 of income above $50,000. At $150,000 of investment income the SBD limit reaches zero and all active business income is taxed at the general rate, which is 26.5% in Ontario instead of 12.2%. This grind applies at the federal level and affects all provinces. Active vs Passive Income Guide →
Do I need to file separate provincial and federal corporate tax returns?
In most provinces, no, because CRA administers both federal and provincial corporate tax through a single T2 return. The exceptions are Quebec and Alberta. Corporations with a permanent establishment in Quebec must file a separate CO-17 return with Revenu Quebec, and corporations in Alberta must file a separate AT1 return with Alberta Tax and Revenue Administration. All other provinces and territories are administered through the federal T2.
What does CCPC status mean and why does it matter for tax rates?
A Canadian-Controlled Private Corporation is a private corporation that is not controlled directly or indirectly by non-residents or by a public corporation. CCPC status unlocks the Small Business Deduction of 12.2% versus 26.5% in Ontario, the 35% refundable SR&ED credit versus 15% non-refundable, the Lifetime Capital Gains Exemption on share sales, and the enhanced Immediate Expensing incentive. Losing CCPC status through non-resident shareholders or going public eliminates all of these benefits.
How much does corporate tax filing cost?
Gondaliya CPA charges a flat fee starting from $400 including HST for T2 corporate tax return preparation and CRA filing. The director's personal T1 return and CRA audit support are both included at no extra charge, and there is no hourly billing. Under our 60-Day Fees-Matching Policy, we match any lower written quote from a licensed Ontario CPA firm for the same scope of work. Know Your Exact Fee →
What is the federal corporate tax rate in 2026?
The federal small business rate is 9% on the first $500,000 of active business income for qualifying CCPCs, and the federal general rate is 15% on income above $500,000 and on all non-CCPC income. Both are reached from a 38% base rate after the 10% federal abatement, with the 19% small business deduction producing the 9% rate and the 13% general rate reduction producing the 15% rate.
How is the combined corporate tax rate calculated?
The combined rate is simply the federal rate plus the provincial or territorial rate for the same income tier. For an Ontario CCPC within the SBD limit, the combined small business rate is 9% federal plus 3.2% Ontario, which equals 12.2%. Above the SBD limit, the combined general rate is 15% federal plus 11.5% Ontario, which equals 26.5%. The two rates are calculated separately on the T2 but paid as a single combined amount.
Why is Alberta considered the best province for corporate tax?
Alberta has Canada's lowest combined general rate at 23%, because its provincial general rate is only 8% compared to 11.5% in Ontario. For a corporation with $800,000 of active business income, the Alberta structure saves roughly $16,500 per year compared to Ontario, and the saving grows with income. Alberta's advantage is greatest for corporations earning well above the $500,000 SBD limit, since below that limit the combined small business rate is 11%.
What is the corporate tax rate in Quebec?
Quebec's combined rates match Ontario at 12.2% on the small business tier and 26.5% on the general tier. The key difference is administration, because Quebec collects its own corporate income tax through Revenu Quebec and requires a separate CO-17 provincial return in addition to the federal T2. Quebec also offers province-specific incentives, including a reduced rate for qualifying manufacturing and primary sector businesses and additional research and development credits.
How does the $500,000 small business limit work?
The Small Business Deduction applies to the first $500,000 of active business income earned by a CCPC in a year. Income within that limit is taxed at the low combined rate, and income above it is taxed at the general rate. The $500,000 limit must be shared among associated corporations, and it can be reduced by the passive income grind or by high taxable capital. Only Saskatchewan uses a higher provincial limit of $600,000 for its provincial rate.
What happens to my rate on income above $500,000?
Active business income above the $500,000 SBD limit is taxed at the combined general rate for your province. In Ontario that is 26.5%, in Alberta 23%, and in Prince Edward Island 31%. A CCPC earning $800,000 in Ontario pays 12.2% on the first $500,000 and 26.5% on the remaining $300,000, for a blended effective rate of about 17.6% across the whole amount.
Do the territories have lower corporate tax rates?
The territories are competitive. Yukon has a 0% provincial small business rate, giving a 9% combined small business rate that ties for the lowest in Canada. Northwest Territories matches Ontario and Quebec at 26.5% combined on the general tier, and Nunavut sits at 27%. All three territories are administered through the federal T2, so no separate territorial return is required.
What is the M&P rate and does my corporation qualify?
The Manufacturing and Processing rate is a reduced rate on income from manufacturing or processing goods for sale or lease in Canada. The federal M&P deduction lowers the federal general rate from 15% to 13%, and some provinces such as Saskatchewan add a further reduction. To qualify, at least 10% of the corporation's gross revenue must come from qualifying manufacturing or processing activity. Service, construction and resource extraction businesses generally do not qualify.
How do associated corporations share the SBD limit?
Associated corporations must share a single $500,000 SBD limit and allocate it between them on Schedule 23 filed with the T2. Corporations are generally associated where one controls the other, both are controlled by the same person or group, or related persons each control a corporation and cross-own 25% or more. If the limit is split $300,000 to one and $200,000 to the other, each claims the low rate only on its allocation, with the rest taxed at the general rate.
What is Adjusted Aggregate Investment Income?
Adjusted Aggregate Investment Income is the measure of a CCPC's passive income used to test the SBD grind. It generally includes interest, most rents, portfolio dividends and the taxable portion of capital gains, with certain adjustments. When it exceeds $50,000 in a year, it reduces the following year's SBD limit by $5 for every $1 above $50,000. Managing this figure is central to keeping the low small business rate.
Is investment income taxed differently from active business income?
Yes. Active business income within the SBD limit is taxed at the low combined rate, but aggregate investment income earned inside a CCPC is taxed at a much higher rate of about 38.67% federally. Part of that tax, the refundable dividend tax on hand, is refunded to the corporation when it pays taxable dividends to shareholders. This design aims to remove the advantage of holding passive investments inside a corporation.
Which province is best for a small business earning under $500,000?
For a CCPC earning entirely within the SBD limit, Manitoba, Saskatchewan and Yukon offer the lowest combined small business rate at 9%, followed by Prince Edward Island at 10% and British Columbia and Alberta at 11%. Ontario and Quebec sit at the higher end of the small business tier at 12.2%. The right choice also depends on where the corporation actually carries on business, since rates follow the permanent establishment, not the owner's preference.
How does multi-province income allocation work?
A corporation with a permanent establishment in more than one province allocates its taxable income among those provinces on Schedule 5, generally based on the proportion of gross revenue and salaries in each province. Each province then applies its own rate to its share. A corporation with operations in both Ontario and Alberta pays Ontario's rate on the Ontario portion and Alberta's lower rate on the Alberta portion.
What is the effective corporate tax rate on $800,000 of income?
For an Ontario CCPC, tax on $800,000 of active business income is $61,000 on the first $500,000 at 12.2% plus $79,500 on the next $300,000 at 26.5%, for a total of $140,500. That is an effective rate of about 17.6% across the whole amount. The same $800,000 in Alberta is taxed at $55,000 plus $69,000, for a total of $124,000, roughly $16,500 less than Ontario.
Do non-CCPCs pay a higher corporate tax rate?
Yes. Non-CCPCs, including public corporations and corporations controlled by non-residents, do not qualify for the Small Business Deduction, so all of their active business income is taxed at the general rate. In Ontario that means 26.5% from the first dollar rather than 12.2%. This is one of the main reasons preserving CCPC status is central to corporate tax planning.
What is the RDTOH and how does it affect my rate?
The Refundable Dividend Tax On Hand is a notional account that tracks the refundable portion of tax a CCPC pays on investment income. When the corporation later pays taxable dividends to shareholders, a portion of that tax is refunded, at a rate of roughly $38.33 for every $100 of taxable dividends paid. It does not change the headline corporate rate but it affects the true cost of earning and distributing investment income.
Does Saskatchewan really have a $600,000 small business limit?
Yes, but with an important caveat. Saskatchewan's provincial small business rate of 0% applies to the first $600,000 of active business income, which is higher than the federal $500,000 limit. However, the federal 9% rate still only applies to the first $500,000. Income between $500,001 and $600,000 receives the provincial 0% rate but the federal general rate of 15%, so the combined rate on that slice is 15%, not 9%.
How do I know if my corporation is a CCPC?
A corporation is generally a CCPC if it is a private corporation resident in Canada that is not controlled, directly or indirectly, by one or more non-residents, by one or more public corporations, or by a combination of the two. Control is tested on both a legal and a factual basis. Because bringing in non-resident investors or going public can quietly end CCPC status, please confirm your status with a CPA before any change in ownership.
What corporate tax rate applies to a holding company?
A holding company is taxed on the type of income it earns. Active business income routed through it can qualify for the small business rate, but most holding companies earn investment income such as interest, portfolio dividends and rents, which is taxed at the higher passive rate of about 38.67% federally, subject to the refundable dividend mechanism. Intercorporate dividends between connected Canadian corporations are often received tax-free, subject to specific rules.
When are corporate taxes due for my province?
The balance of corporate tax is generally due two months after the fiscal year-end, or three months for a qualifying CCPC claiming the small business deduction, and the T2 return is due six months after year-end. These federal deadlines apply across all provinces. Quebec and Alberta have their own returns with corresponding deadlines, so a corporation operating there must meet both the federal and the provincial due dates.
Can changing my province of operation lower my corporate tax?
It can, but only if the corporation genuinely establishes a permanent establishment and carries on real business activity in the lower-rate province, because rates follow where business is actually conducted. Simply registering an address in Alberta without real operations there does not move the income. Please treat any interprovincial planning as a substance question first, and confirm the structure with a CPA before relying on a lower provincial rate.
Do the provincial rates in this guide change every year?
Provincial and territorial corporate rates can change with each provincial budget, and the federal rates can change with the federal budget. The rates in this guide are current for 2026 and apply to taxation years ending in 2026. Because a province can announce a rate change mid-year, please confirm the current rate for your year-end with a CPA before filing rather than relying on a prior-year figure.
How do I make sure my corporation pays the lowest correct rate?
The lowest correct rate comes from preserving CCPC status, keeping passive income below the grind threshold, allocating the SBD limit correctly across associated corporations, and applying the right provincial rate to each permanent establishment. We review all of these on every T2 we prepare, at an AFFORDABLE flat fee that includes HST, and confirm your exact fee before we start. Payment is by Interac e-Transfer to info@gondaliyacpa.ca with auto-deposit enabled. Book Free Consultation →

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