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%.
For Canadian-controlled private corporations claiming the small business deduction, the net tax rate is:
- 9% effective January 1, 2019
- 10% effective January 1, 2018
Provincial or territorial rates
Generally, provinces and territories have two rates of income tax – a lower rate and a higher rate.
Lower rate
The lower rate applies to the income eligible for the federal small business deduction. One component of the small business deduction is the business limit. Some provinces or territories choose to use the federal business limit. Others establish their own business limit.
Higher rate
The higher rate applies to all other income.
Provincial and territorial tax rates (except Quebec and Alberta)
The following table shows the income tax rates and business limits for provinces and territories (except Quebec and Alberta, which do not have corporation tax collection agreements with the CRA). These rates are in effect January 1, 2021, and may change during the year.
| Province or territory | Lower rate | Higher rate | Business limit |
|---|---|---|---|
| Newfoundland and Labrador | 3% | 15% | $500,000 |
| Nova Scotia | 2.5% | 14% | $500,000 |
| New Brunswick | 2.5% | 14% | $500,000 |
| Prince Edward Island | 2% | 16% | $500,000 |
| Ontario | 3.2% | 11.5% | $500,000 |
| Manitoba | nil | 12% | $500,000 |
| Saskatchewan | 0% | 12% | $600,000 |
| British Columbia | 2% | 12% | $500,000 |
| Nunavut | 3% | 12% | $500,000 |
| Northwest Territories | 2% | 11.5% | $500,000 |
| Yukon | 0% | 12% | $500,000 |
Source: CRA