2019 Corporate Income Tax Rates

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2019 Corporate Income Tax Rates

The Federal small business corporate income tax rate is reduced to 9% effective January 1, 2019.  The Quebec and PEI small business rates are also reduced for 2019, and Manitoba’s small business limit is increased.

2019 Corporate Income Tax Rates

The following table shows the general and small business corporate income tax rates federally and for each province and territory for 2018.  The small business rates are the applicable rates after deducting the small business deduction (SBD), which is available to Canadian-controlled private corporations (CCPCs).  The small business rate is available on active business income up to the amount of the Business Limit.  The federal business limit of $500,000 begins to be reduced when a CCPC’s taxable capital reaches $10 million, and is eliminated when taxable capital reaches $15 million.  This phase-out of the small business deduction is also in effect in some provinces.  The federal 2018 budget implemented changes to reduce the business limit based on the investment income of a CCPC, for taxation years beginning after 2018.

The federal general rate is net of the 10% federal tax abatement and 13% (2012 and later years) general rate reduction.  The general rate reduction is disallowed for a personal services business (PSB), for taxation years beginning after October 31, 2011, resulting in a federal corporate tax rate of 28% for PSBs, until the end of 2015.  The Federal 2016 Budget increased the corporate tax rate for PSBs from 28% to 33% effective January 1, 2016.

2019 Corporate Income Tax Rates
  Active Business Income Investment
Income
CCPC
  General Small Business
(CCPC)
Business
Limit
Federal  (3) 15% 9% $500,000 38.7%
Alberta 12% 2% $500,000 12%
BC 12% 2% $500,000 12%
Manitoba (5) 12% 0% $500,000 12%
New Brunswick 14% 2.5% $500,000 14%
Newfoundland & Labrador (1) 15% 3% $500,000 15%
Nova Scotia (2) 16% 3% $500,000 16%
Northwest Territories (1) 11.5% 4% $500,000 11.5%
Nunavut (1) 12% 4% $500,000 12%
Ontario 11.5% 3.5% $500,000 11.5%
Prince Edward Island (1)(6) 16% 3.5% $500,000 16%
Quebec (4) 11.6% 6% $500,000 11.6%
Saskatchewan 12% 2% $600,000 12%
Yukon 12% 2% $500,000 12%

The general corporate tax rate applies to active business income in excess of the business limit.

See also Corporate Taxation of Investment Income

(1)  NL, NT, NU and PE use the federal small business limit.

(2) Nova Scotia provides a corporate tax holiday under s. 42 of their Income Tax Act for the first 3 taxation years of a new small business after incorporation.  See New Small Business Tax Deduction on the Nova Scotia website.

(3) On October 16, 2017, the Department of Finance announced that the small business tax rate would be reduced to 10% effective January 1, 2018 , and to 9% effective January 1, 2019.  On October 24, 2017, in conjunction with their Fall Economic Statement, the Department of Finance tabled a Notice of Ways and Means Motion to reduce the gross-up rate for non-eligible dividends to 16% in 2018, and 15% thereafter, with the non-eligible dividend tax credit revised to 8/11ths of the gross-up for 2018 and to 9/13ths of the gross-up for 2019 and later years.

  Will not happen New Legislation
  2015 2016 2017 2018 2019+ 2018 2019+
Small business tax rate 11% 10.5% 10% 9.5% 9% 10% 9%
Non-eligible dividend gross-up  18% 17% 17% 16% 15% 16% 15%
Non-eligible dividend tax credit 11.0169% 10.5217% 10% 9.5% 9% 10.0313% 9.0301%

(4) According to Quebec’s Corporate Income Tax Changes page, the general tax rate is reduced each year by 0.1% until 2020.  Thus, it will be 11.7% in 2018, 11.6% in 2019 and 11.5% in 2020.  The Quebec March 27, 2018 Budget announced an increase in the small business deduction rate for small and medium sized businesses (SMBs) in sectors other than the primary and manufacturing sectors.  This will reduce the small business tax rate to 7% effective for the period from March 28 to December 31, 2018, to 6% for 2019 and to 5% for 2020, and to 4% for 2021.  See Standardizing Tax Rates for SMBs on the Revenu Quebec website.

(5) The Manitoba 2018 Budget announced that the small business income limit would increase to $500,000 effective January 1, 2019.

(6) The Prince Edward Island 2018 Budget announced that the small business tax rate would be reduced by 0.5% in 2018 – effective January 1, 2018, as per Bill 33.  The non-eligible dividend tax credit rate will not change, other than the automatic change due to the change in gross-up rate.  PEI’s Bill 57 November 2018 reduces the small business tax rate to 3.5% effective January 1, 2019.

Sources for the above information

    – Canada Revenue Agency (CRA) Federal, Provincial and Territorial corporate income tax rates.

– Alberta corporate and commodity tax rates

– BC corporate income tax

– Manitoba corporate income taxes

– New Brunswick corporate income tax

– Newfoundland & Labrador corporate income tax

– Northwest Territories corporate income tax

– Nova Scotia corporate income tax & credits

– Nunavut Dept of Finance Taxation

– Ontario corporate income tax

– Saskatchewan corporate income tax

– Yukon income tax rates

– Provincial Budgets

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