Corporate Taxation in Canada
Federal Corporate Tax Rates
General corporate income tax rate: 15%
Small business deduction (SBD): 9% on the first CAD 500,000 of active business income for Canadian-controlled private corporations (CCPCs)
Investment income tax: 30.67% (net of dividend refund)
These federal rates apply uniformly across all provinces and territories.
Provincial Corporate Tax Rates
Each province and territory in Canada imposes its own corporate income tax rates, which can vary based on business type and income level. Below is a summary of the general corporate tax rates and small business tax rates in 2025.
| Province | General Corporate Rate | Small Business Rate (up to CAD 500,000) |
| Alberta | 8% | 2% |
| British Columbia | 12% | 7.7% |
| Manitoba | 12% | 0% |
| New Brunswick | 14% | 7.5% |
| Newfoundland and Labrador | 15% | 9.5% |
| Nova Scotia | 14% | 9.5% |
| Ontario | 11.5% | 8.5% |
| Prince Edward Island | 13.5% | 9% |
| Quebec | 11.5% | 8.5% |
| Saskatchewan | 12% | 8% |
| Yukon | 12% | 2.5% |
| Northwest Territories | 11.5% | 8.5% |
| Nunavut | 8.5% | 8.5% |
Note: Rates are approximate and subject to changes by local Tax Authorities
Small Business Deduction (SBD)
The SBD is a federal tax incentive aimed at supporting small businesses. Most provinces align with the federal limit of CAD 500,000 in active business income eligible for the SBD. However, Saskatchewan has set a higher limit of CAD 600,000.
| Province / Territory | SBD Limit |
| Alberta | CAD 500,000 |
| British Columbia | CAD 500,000 |
| Manitoba | CAD 500,000 |
| New Brunswick | CAD 500,000 |
| Newfoundland and Labrador | CAD 500,000 |
| Nova Scotia | CAD 500,000 |
| Ontario | CAD 500,000 |
| Prince Edward Island | CAD 500,000 |
| Quebec | CAD 500,000 |
| Saskatchewan | CAD 600,000 |
| Yukon | CAD 500,000 |
| Northwest Territories | CAD 500,000 |
| Nunavut | CAD 500,000 |
Note: The SBD is phased out for CCPCs with taxable capital exceeding CAD 10 million, and completely eliminated at CAD 15 million.
Strategic Tax Advantages by Province
Alberta: Offers the lowest general corporate tax rate at 8%, making it attractive for businesses seeking to minimize tax liabilities.
Manitoba: Provides a 0% small business tax rate, significantly reducing the tax burden for qualifying small businesses.
Saskatchewan: Increased its SBD limit to CAD 600,000, allowing small businesses to benefit from a higher threshold for reduced tax rates.
Quebec: Offers various tax credits and incentives for research and development, making it favorable for innovation-driven companies.
Ontario: Provides specific tax credits for sectors like computer animation and special effects, benefiting businesses in the creative industries.
Key Takeaways
Tax Competitiveness: Canada’s corporate tax rates are competitive globally, with provinces offering various incentives to attract and retain businesses.
Small Business Support: The SBD and varying provincial tax rates provide substantial support for small businesses across the country.
Strategic Location: Provinces like Alberta and Manitoba offer low tax rates, while others like Quebec and Ontario provide sector-specific incentives.
Consultation Recommended: Given the complexity and variability of tax rates and incentives, consulting with a tax advisor is advisable to optimize tax planning strategies.
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