Corporate tax is the income tax a corporation pays on its profits, at combined federal and provincial rates, reported annually on the T2 return.
Every incorporated business files a T2 corporate return and pays tax on its taxable income. The rate depends on the type of income and the corporation. A CCPC claiming the small business deduction pays roughly 9% to 12.2% combined on its first $500,000 of active business income; income above that, or in a non-CCPC, is taxed at the general combined rate of about 23% to 31%.
The T2 is due six months after the fiscal year-end, but any balance owing is due earlier, two months after year-end, or three for a small CCPC. Corporations that owed tax in prior years generally must also pay monthly or quarterly instalments through the year.
An Ontario CCPC earns $300,000 of active business income. Within the small business limit, it pays roughly 12.2% combined, about $36,600, rather than the general rate that would apply to a larger or non-qualifying corporation.
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