CRA Corporate Tax Law & CCPC Rules 2026
Canada Corporate Tax Small Business Deduction Guide
Authoritative guide to the 9% federal Small Business Deduction for CCPCs — $500,000 active business limit, passive income clawbacks ($50k threshold), and provincial rate comparisons.
Small Business Deduction Tax Savings Calculator
Calculate your federal corporate tax liability and SBD tax savings based on active business income.
First $500,000 CAD per year qualifies for 9% SBD rate
100% Eligible for 9% Federal Small Business Rate
Your active business income ($400,000 CAD) is fully within the $500,000 Small Business Limit. Taxed at 9% federal rate instead of 15% general rate.
Estimated Federal Tax: $36,000 CAD | Saves $24,000 CAD in federal corporate income tax annually.
Frequently Asked Questions
The Small Business Deduction (SBD) lowers the federal corporate income tax rate from 15% to 9% on up to $500,000 of active business income earned by a Canadian-Controlled Private Corporation (CCPC).
A CCPC is a private corporation incorporated in Canada that is not controlled by non-residents or public corporations, and meets CRA control guidelines.
If an associated group of CCPCs earns more than $50,000 in passive investment income (AAII) in a tax year, the $500,000 SBD business limit is reduced by $5 for every $1 of investment income over $50,000, reaching zero at $150,000.
Combined federal and provincial small business tax rates range from 9% to 12.2% depending on the province (e.g. 12.2% in Ontario, 11% in Alberta, 11% in BC).