Enter your corporation’s passive investment income and active business income to see how much of the $500,000 small business limit survives, how much profit gets pushed to the general corporate rate, and the extra tax that costs. Rates are current for the 2025 tax year.
Your corporation
How it works. Passive investment income over $50,000 grinds the $500,000 small business limit by $5 for every $1 — at $150,000 the limit is gone. Active business income that no longer fits under the reduced limit is taxed at the general corporate rate instead of the small business rate, and the cost shown is that rate spread applied to the shifted income, assuming your province mirrors the federal grind.
Extra corporate tax this year
$0
$0 of active income is taxed at the general rate instead of the small business rate
The grind runs $5 per $1 of passive income over $50,000 — gone entirely at $150,000. The separate taxable-capital grind is not modelled here.
An estimate is a starting point. Get your real number.
This calculator uses published rates. Your actual position depends on the credits, deductions and structure behind your numbers.
- A professional tax accountant reviews your figures, not a formula
- Fixed quote before any work starts
- You pay after you approve the filing
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How the passive income grind works
A CCPC’s first $500,000 of active business income is taxed at the low small business rate — but only while the corporation’s investment side stays modest. Adjusted aggregate investment income (broadly: interest, rents, portfolio dividends and the taxable half of capital gains on investments) over $50,000 reduces the business limit by $5 for every $1. The corridor is short: at $75,000 of passive income the limit is $375,000, at $100,000 it is $250,000, and at $150,000 the small business deduction is gone entirely. Every dollar of active income squeezed out of the limit is taxed at the general corporate rate instead, and that spread — several points in every province — is the number this calculator puts on screen.
The grind looks at the previous year’s passive income, which makes it plannable. Common responses include timing the sale of investments so gains don’t land in one year, holding investments that defer income rather than paying it annually, corporate-owned life insurance, and simply drawing down the passive portfolio — for example to pay down debt or fund shareholder retirement. Which response fits depends on what the investments are for, which is a tax planning conversation rather than a formula.
What this calculator does not cover
There is a second, separate grind based on taxable capital employed in Canada between $10 million and $50 million — this tool does not model it, and a corporation caught by both uses whichever reduction is larger. Provincial treatment also varies: most provinces mirror the federal grind for their own small business rate, but not all do, so the provincial share of the estimate assumes yours mirrors it. For the full corporate bill on a given profit, use the corporate tax calculator, and for advice on structuring the investment side of a CCPC, see our corporate tax services.
| Passive income | Business limit left |
|---|---|
| $50,000 | $500,000 |
| $75,000 | $375,000 |
| $100,000 | $250,000 |
| $125,000 | $125,000 |
| $150,000+ | $0 |
Rates reviewed for the 2025 tax year by Udit Gupta, Founder and Tax Accountant. Federal and provincial rates change annually, and this tool is an estimate for planning rather than tax advice. Confirm current figures before relying on them for a filing.
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Rates and method reviewed by Udit Gupta
Ex Big 4 — Ernst & Young, Deloitte · International & cross-border tax specialist · CPA Canada (In-Depth Tax Program) · Chartered accountant, ICAI & MIA
Udit Gupta has over 15 years of experience helping corporations and business owners with corporate structuring, corporate tax filing, bookkeeping, payroll, GST/HST, cross-border tax and CRA representation. He is Big 4 trained, at Ernst & Young and Deloitte, and qualified as a chartered accountant in India and again in Malaysia. In 2014 he founded his accounting practice to serve entrepreneurs, startups and non-resident business owners across Canada. View full member bio.
The Institute of Chartered Accountants of India — member 521458 · Malaysian Institute of Accountants — member CA 44667 · Ex Big 4: Ernst & Young, Deloitte · CPA Canada (In-Depth Tax Program), completed 19 Dec 2023 · In-Depth GST/HST Part I, 12 Jul 2022 · Part II, 5 Jul 2023
Editorial policy. Every page is researched against primary sources — the Income Tax Act, CRA publications and CPA Canada guidance — and every rate or threshold is stated with the tax year it applies to.
Sources. CRA — Businesses · Income Tax Act (Justice Laws Website)