Managing a corporation comes with a unique set of challenges and headaches. Even small businesses with few assets and lower revenue find it difficult to calculate the corporate tax rate because the rate varies from province to province, and regulations change regularly.
You should always consult an experienced tax accountant to calculate your business’ corporate tax rate for filing and planning purposes. This post explains Canada’s various corporate tax rates and how you can calculate them.
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How Does Canada’s Corporate Tax Rate Work?
A corporation’s tax rate depends on its revenue, location, services, and sources of income. All corporations and small businesses operating in Canada pay the same corporate tax rate, regardless of how it is calculated. Canada only exempts Crown corporations, Hutterite colonies, and registered charities from this obligation.
Canada has two levels of federal corporate tax rates, also known as dual tax rates.
The federal small business tax rate, or CCPCs (Canadian-controlled private corporations), are taxed at 9% at the federal level. To qualify for this corporate tax rate, you must meet specific requirements.
| Small Business (CCPC) Tax Rate 2022 | |
| Federal | 9% |
| Alberta | 2% |
| BC | 2% |
| Manitoba | 0% |
| New Brunswick | 2.5% |
| Newfoundland & Labrador | 3% |
| Nova Scotia | 3%/2.5% |
| Northwest Territories | 4% |
| Nunavut | 3% |
| Ontario | 3.2% |
| Prince Edward Island | 3% |
| Quebec | 5% |
| Saskatchewan | 2% |
| Yukon | 2% |
General corporations are taxed at 38%, with discounts of 10% and reductions of 13%, resulting in a net tax of 15%.
| General / M&P Tax Rate 2022 | |
| Federal | 15% |
| Alberta | 10%/8% |
| BC | 12% |
| Manitoba | 12% |
| New Brunswick | 14% |
| Newfoundland & Labrador | 15% |
| Nova Scotia | 16%/14% |
| Northwest Territories | 11.5% |
| Nunavut | 12% |
| Ontario | 11.5% |
| Prince Edward Island | 16% |
| Quebec | 11.5% |
| Saskatchewan | 12% |
| Yukon | 12% |
Corporations must pay not only the federal corporate tax rate but also the provincial corporate tax rate, which varies from province to province. Furthermore, dividends, capital gains, and investment income are taxed differently.
Canada Corporate Tax Rate Calculator
Understanding your corporation’s finances and navigating provincial and federal regulations are necessary for calculating your corporate tax rate. Many commercially available corporate tax rate calculators must provide accurate estimates, which may cause even more confusion.
You can ensure total accuracy for your corporate tax rate calculation by working with an experienced CPA (Chartered Professional Accountant). An error, missed document, or miscalculation can result in severe penalties that affect your bottom line. Calculate, file, and plan your corporate income tax with the help of a corporate tax accountant.
Manage Your Corporate Taxes
It may be challenging to manage your corporate tax rate, file your taxes, plan your payments, and pay your taxes. In addition to your company’s revenue, where it operates, how it generates revenue, and what dividends it produces, it also depends on the structure of its shareholders. There is no standard corporate tax structure for all companies.
With WTC Chartered Professional Accountant, you don’t have to worry about predicting your corporate tax rate. Corporations of all sizes can rely on us to navigate these complex regulations, including those operating in Canada but based abroad.
When it comes to tax accounting, working with qualified and experienced professionals is always a good idea. Discover how they can help you plan your payable tax thoroughly and make intelligent financial decisions.
