Corporate Tax in Canada

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It is necessary to choose between the federal or provincial levels to start a business in Canada. Forming a Federal company allows that business to do business overseas and with all Canadian provinces, while incorporating a Provincial company allows that business to do business internationally and only in the province in which it is established. To set up a company in Canada, you must first decide whether to set up a federal company or a provincial company.

If you are considering starting a business in Canada, one of the most important things to know is the country's tax system. The corporate tax, which is an important part of starting a business and the continuity of the business, is of great importance. In this article, we gave information about Canadian corporate tax.

Corporate taxes in Canada are collected separately on a federal and provincial basis.

Federal rates

The basic rate of Part I tax is 38% of your taxable income, 28% after federal tax abatement.

After the general tax reduction, the net tax rate is 15%.

Provincial or territorial rates

In provinces and territories, there are two rates of income tax: a lower rate and a higher rate.

Lower rate

The lower rate applies to incomes eligible for the federal small business deduction. The basis for the small business discount is the business limit. Some states or territories choose to use the federal business limit, while others set their own business limits.

Higher rate

The higher rate applies to all other types of income.

The business limit in provinces and territories except Quebec and Alberta is $500,000.

According to the Canadian Income Tax Act, non-residents of Canada but who do business in Canada are required to fill out a Canadian tax refund form and pay the amount of tax calculated on income that can be taxed according to the principles set in the law.

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