For small business owners in the province, a reduced rate of 3% will be used to determine your corporate income tax payable instead of the general corporate income tax rate of 15%.
The reduced rate of 3% applies to the first $500,000 of active business income earned in the province and that qualifies for the federal small business deduction.
In order to qualify for the small business deduction, the taxpayer must be a Canadian controlled private corporation (CCPC) throughout the tax year and maintain a permanent establishment in the province. In addition, the small business must carry on an active business in the province.
The Small Business Tax Rate is imposed under Section 40.1 of the Income Tax Act, 2000.
The Federal Government administers the Small Business Tax Rate on behalf of the Province. The Canada Revenue Agency (CRA) can answer your questions regarding the Small Business Tax Rate. You can contact them at 1-800-959-5525. Additional information can be obtained from the CRA website.