Incorporate.ltd

🇨🇦 Corporate Tax in Canada

Headline rate: 15% federal + 0–16% provincial (23–31% combined)

Federal Corporation (Corp. / Inc. / Ltd.)

Federal corporate tax is 15% on taxable income. Provincial rates add 0–16% depending on the province, yielding a combined rate of approximately 23–31%. Canadian-Controlled Private Corporations (CCPCs) benefit from the small business deduction: the first CAD 500,000 of active business income is taxed at 9% federally (combined rate approximately 12–15% depending on province). The general rate reduction brings the net federal rate to 15% for income above the small business limit. Canada operates an integration system for dividends — eligible dividends receive a gross-up and dividend tax credit to reduce the combined corporate + personal tax burden. Capital gains are taxed at a 50% inclusion rate (the taxable half is included in income at the regular corporate rate).

Provincial Corporation (British Columbia) (Inc. / Ltd.)

A BC-incorporated corporation is subject to the same federal corporate tax rates as a federal corporation (15% general, 9% small business rate on the first CAD 500,000 for CCPCs). The BC provincial corporate tax rate is 12% general and 2% for small businesses. Combined general rate: 27%. Combined small business rate: 11%. CCPC status and the small business deduction apply regardless of whether the corporation is incorporated federally or provincially, provided the CCPC criteria are met.

Key Facts

  • Double tax treaties: 95
  • Memberships: WTO, OECD, G7, G20, USMCA, CPTPP, NATO, UN, Five Eyes, APEC
  • Legal system: Common law (civil law in Quebec)
  • Fiscal year: Company chooses (first fiscal year cannot exceed 53 weeks)

This content is educational and does not constitute legal or tax advice. Always consult a qualified professional for your specific situation. Data last verified March 2026.