CCPC Small Business Deduction

by NewBiz
(Brampton, ON)

CCPCs are taxed favorably on active income through the small business deduction.


We have started a small business incorporated in Ontario that will make a small profit of around CAD $20,000 this year. This is an import/wholesale oriented business and should qualify as Canadian Controlled Private Corporation.

I understand there is a tax deduction that applies to such companies and it comes out to be about CAD $32,000.

Does this mean that we will have $0 tax liability for the year for both the federal and provincial taxation?


image of fancy scroll lines

Hey There,

Corporate taxes are not my speciality ... but what I think you are referring to is the rate reduction called the small business deduction.

CCPCs are taxed favorably on active income through the small business deduction. The threshold for a CCPC is $500,000 federally.

This amount is eligible for an 11% tax rate as opposed to the 18% general corporate tax rate. This results in a maximum tax savings of $35,000 calculated as follows:

$500,000 x 18% = $90,000 in tax owing
$500,000 x 11% = $55,000 in tax owing

$90,000 - $55,000 = $35,000 in tax savings

If this is what you are referring to, don't confuse tax savings with tax owing. You will still owe federal taxes on the $20,000 net profit at 11% which equals a tax liability of $2,200.

Each province has their own corporate tax rate as well.

As of July 1, 2010, Ontario's rate is 4.5% for a qualifying CCPC. Prior to this the CCPC small business tax rate was 5.5%. The Ontario general corporate rate was 14% and reduced to 12% on July 1, 2010.

The Ontario general corporate rate is set to be reduced each July 1 for the period 2011-2013 by half a percentage a year.

Click here to post comments

Return to CCPC.

Share this page:
Enjoy this page? Please pay it forward. Here's how...

Would you prefer to share this page with others by linking to it?

  1. Click on the HTML link code below.
  2. Copy and paste it, adding a note of your own, into your blog, a Web page, forums, a blog comment, your Facebook account, or anywhere that someone would find this page valuable.

Enjoy A Tea Break With
Me Today. Let's Chat!

Use the search feature to quickly find the
information you're looking for.

Your Learning Curve!


Warm up your tea cup and check out these chats ...

Click on image above to read the chat.

Join Me On Facebook

Help support this site by "liking" me! Here's where I post current information.

Listed Under Websites NOT Local Business.
This website is NOT associated with the business operating in Bonnyville AB.

A Handy Reference