Below you will find an analysis of the combined Federal(a)(b) and Provincial corporate income tax rates by province. The table is split into rates for Canadian Controlled Private Corporations (CCPC) and those corporations that are not Canadian controlled and private (Non-CCPC). CCPC's are corporations that are eligible for the federal small business deduction. Other corporations include those that are foreign owned or those whose shares are traded publicly. The tax rates are further split into rates for manufacturing income and non-manufacturing income.
| Non-CCPC's | CCPC's |
|---|
| Provinces | Mfg. | Non-Mfg. | Mfg. | Non-Mfg. |
|---|---|---|---|---|
| British Columbia | 38.6% | 45.6% | 23.1% | 23.1% |
| Alberta | 36.6% | 44.6% | 19.1% | 19.1% |
| Saskatchewan(c) | 39.1% | 46.1% | 21.1% | 21.1% |
| Manitoba(d) | 39.1% | 46.1% | 22.1% | 22.1% |
| Ontario(e) | 35.6% | 44.6% | 22.6% | 22.6% |
| Quebec(f) | 31.0% | 38.0% | 18.9% | 18.9% |
| New Brunswick(g) | 39.1% | 46.1% | 20.1% | 20.1% |
| Nova Scotia(h) | 38.1% | 45.1% | 18.1% | 18.1% |
| Prince Edward Island | 29.6% | 44.1% | 20.6% | 20.6% |
| Newfoundland(i) | 27.1% | 43.1% | 18.1% | 18.1% |
| Yukon Territory | 24.6% | 44.1% | 15.6% | 19.1% |
| Northwest Territories | 36.1% | 43.1% | 18.1% | 18.1% |
(a) The federal rates include the 4% (3% for 1994) corporate surtax applicable to all federal tax, net of applicable logging tax credits and special credits for investment corporations and credit unions. The federal surtax does not apply to non-resident-owned investment corporations nor to the capital gains refund recieved by a mutual fund or investment corporation.
(b) The 1995 Federal Budget proposed to increase the corporate surtax from 3% to 4% for taxation years ending after February 27, 1995. For taxation years that include February 27, 1995, the surtax increase will be prorated to reflect the number of days in the tax year which occurred after the budget date.
(c) The Saskatchewan small business tax rate decreased from 9% to 8.5%, effective January 1, 1994. This rate decreased again on January 1, 1995 to 8%. Effective July 1, 1995, the corporate income tax rate for large manufacturers and processors with Saskatchewan based operations will be reduced by a maximum of 7%. The reduction uses a base amount of 7% which will be multiplied by the corporation's allocation of income to Saskatchewan to arrive at the net Saskatchewan tax rate reduction. The net Saskatchewan tax rate reduction is then applied to the corporation's Saskatchewan share of Canadian manufacturing and processing profits to determine the amount of the tax reduction. CCPCs incorporated after March 26, 1986, and before April 1, 1992 may be granted a two-year tax holiday on up to $200,000 of active business income.
(d) The Manitoba small business tax rate decreased from 10% to 9.5% effective January 1, 1994 and was decreased further to 9% effective January 1, 1995. Qualifying Manitoba small businesses incorporated after August 8, 1988 and before January 1, 1993 are subject to a tax holiday in which the 10% rate will be phased in at 2% per year commencing with the second taxation year. A mining tax holiday is available for companies mining new mines in Manitoba after January 1, 1993.
(e) An Ontario surtax is levied on corporations claiming the Ontario small business deduction. The surtax is equal to the lesser of:
(f) CCPCs incorporated after May 1, 1986 may receive an exemption from income tax on their first $200,000 of eligible business income earned during their first three years. These Quebec rates are for active business income only. Non-active business income is taxed at 16.25%.
(g) The 1995 New Brunswick budget announced that the small business corporate income tax rate which applies to the first $200,000 of active business income for CCPCs will be reduced from 9% to 7% effective January 1, 1995.
(h) A tax holiday for new small businesses in Nova Scotia has been extended from two years to three years applicable to new small businesses incorporated after April 24, 1992.
(i) Effective January 1, 1995, the general Newfoundland corporate tax rate decreased to 14% and the tax rate for manufacturing and processing income decreased to 5%. The small business tax rate remained at 5%.
This above provided for information purposes only. Tax rates are current as indicated. Your particular situation may vary with your specific circumstances.
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