Low-Cost Business Incorporation Services for Canadian Businesses

There is no single rate. Federal personal income tax for 2026 runs through five brackets: 14%, then 20.5%, 26%, 29% and 33% on the highest band, and your province's brackets stack on top, so your combined marginal rate is the federal rate plus the provincial one. The 2026 federal basic personal amount is $16,452, tapering to $14,829 as net income rises from $181,440 to $258,482. Capital gains and Canadian dividends are taxed on a different basis.

Medical costs give a non-refundable credit rather than a deduction. Eligible items include prescription drugs, dental work, eyeglasses and contact lenses, fees paid to medical practitioners authorised to practise, private health plan premiums, attendant care and travel for treatment unavailable locally. Over-the-counter products and most cosmetic procedures do not qualify. Only the portion above an income-based threshold counts, the claim period may end at any point in the tax year rather than following the calendar year, and pooling the family claim on one spouse usually helps.

A small business corporation is a Canadian-controlled private corporation that uses substantially all of its assets in an active business carried on mainly in Canada. The label matters because it opens access to the small business deduction, which for 2026 applies the 9% federal rate to the first $500,000 of active business income, and to the lifetime capital gains exemption on a share sale. Holding companies and passive investment corporations usually fail the asset test.

Enter zero only where a line asks for an amount and that amount genuinely is nil; otherwise leave it blank. Software fills lines from your slips and entries, so blank and zero normally produce the same assessment. What matters is that every slip and income line is reported. On paper forms, an empty identification field, election box or signature can delay processing, so complete those even when the figure beside them is nil.

Line 23600 is net income: total income from line 15000 less the deductions claimed on the lines in between, such as registered pension and RRSP contributions, union dues, child care, moving expenses and support payments. It is not the figure you pay tax on, taxable income comes further down the return, but it is the one most benefits and credits are tested against, including the Canada child benefit and the GST/HST credit.

Taxable means an amount has to be included in income and can be taxed. For income tax, taxable income is your total income less allowed deductions; tax is then calculated on that figure and reduced by credits. For GST/HST, a taxable supply is one that tax applies to, as opposed to an exempt supply such as long-term residential rent. Something taxable is not always taxed, because credits can reduce the tax to nil.

Not alone. A municipal council sets the property tax rate when it votes the annual budget and levy, and the mayor holds one vote, though a few provinces give mayors added budget powers that council can still override. Your bill is the assessed value of the property multiplied by that rate, plus an education portion the province sets. Assessments come from a provincial assessment body, not from the mayor.

Close the books for the fiscal year, prepare financial statements, then file a T2 return with the CRA for that year end within six months of it. For tax years beginning after 2023 — which covers every 2025 and 2026 year end — electronic filing is mandatory for essentially all corporations, with no gross-revenue threshold, and paper-filing a return that had to go in electronically draws a $1,000 penalty. Alberta and Quebec require their own provincial corporate return as well. A corporation with no activity still has to file. Keep the supporting records six years from the end of the last tax year they relate to.

Not quite. The business number is the root identifier for your business, and every account you register sits on it with a two-letter program identifier and a reference for that account, so GST/HST, payroll and corporate income tax all share one root. Your GST/HST number is that root plus the GST/HST program identifier. Quote the full account number on returns, remittances and invoices, not just the root, or payments can land in the wrong account.

Those lines are not on the T4 slip. A T4 uses box numbers; lines in the 20000s and 40000s belong to the T1 personal return. Line 23400 is net income before adjustments, line 23500 is the social benefits repayment and line 43500 is total payable. All three are calculated from the slips and amounts entered on the return rather than copied off a T4, and the notice of assessment confirms the final figures.

A property settlement on marriage breakdown is neither deductible to the payer nor taxable to the recipient, because it divides assets already owned rather than transferring income. A lump sum paid to clear arrears of support generally follows the same treatment. Periodic spousal support is different: paid under a written agreement or court order, it is deductible to the payer and taxable to the recipient, while child support under a more recent order is neither.

File on time anyway, then deal with the balance separately, because the late-filing penalty is avoidable even when the payment is not. The CRA accepts payment arrangements, where you propose instalments you can meet and usually disclose income and expenses to support them. Interest keeps running, so pay what you can immediately and arrange the remainder. Where penalties and interest built up through illness, disaster or CRA delay, Form RC4288 asks for taxpayer relief. A free 15-minute consultation can help you choose the route.