Canada Corporation Tax Calculator (CCPC)

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 10–14% (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).

Since 2019, if your CCPC (or any associated corporation) earns more than $50,000 of adjusted aggregate investment income (AAII) in the prior year, the federal $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.

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 passive income grind, consider whether the investments belong inside the corp at all.

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. This calculator shows the pre-refund corporate tax — actual cash tax can be lower if dividends are paid out.

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.

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.