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Business Income Tax Rates

Business Income Tax Rates Canada

Effective January 1, 2010 the corporate income tax rate falls to 18% from 21% before January 2008. Yearly tax reductions will see the corporate income tax rate fall to 15% as of January 1, 2012. These corporate income tax reductions, says the Department of Finance Canada, will give Canadian corporations the lowest tax rate on new business investment in the Group of Seven (G7) by 2011 and the lowest statutory tax rate in the G7 by 2012.

The corporate tax rate will decrease as follows:

  • 21% before January 1, 2008
  • 19.5% effective January 1, 2008
  • 19% effective January 1, 2009
  • 18% effective January 1, 2010
  • 16.5% effective January 1, 2011
  • 15% effective January 1, 2012

Provincial or territorial rates

Generally, provinces and territories have two rates of income tax – a lower rate and a higher rate.

Lower Provincial Income Tax Rate

The lower provincial income tax rate applies to either:

  • the income eligible for the federal small business deduction; or
  • the income based on limits established by the particular province or territory.

Higher Provincial Income Tax Rate

The higher provincial income tax rate applies to all other taxable income.

Provincial and territorial tax rates (except Quebec and Alberta)

The following table shows the income tax rates for provinces and territories (except Quebec and Alberta, which do not have corporation tax collection agreements with the Canada Revenue Agency).

These Corporate Tax Rates for Canadian Provinces & Territories are in effect on January 1, 2008, and many will change during 2008.

Province or territory Lower rate Higher rate
Newfoundland and Labrador 5% 14%
Nova Scotia 5% 16%
Prince Edward Island 4.3% 16%
New Brunswick 5% 13%
Ontario 5.5% 14%
Manitoba 2% 14%
Saskatchewan 4.5% 13%
British Columbia 4.5% 12%
Yukon 4% 15%
Northwest Territories 4% 11.5%
Nunavut 4% 12%

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The above information provided by Canada Revenue Agency.