Canada’s taxation system is progressive and unique in many ways. Canada has created the most favorable conditions for business development and maintaining a high standard of living for its citizens. Loyal tax rates, a flexible system of accrual and deductions, numerous benefits attract businessmen from other countries, which contributes to the development of international relations and the Canadian economy.
One of the advantages of this country for starting a business is the lowest corporate tax rate in the world. In addition, startups and other projects can get very
favorable benefits or even completely exempt from paying income tax (for example, for Extra-provincial Corporation). The Canadian tax system is based on the principles of self-assessment (self-assessment) and self-reporting (self-reporting), which contributes to the transparency of taxation and provides entrepreneurs and individuals with additional opportunities.
Income tax for a Canadian corporation includes the federal rate and the provincial rate.
The federal rate after the general tax cut is 15%.
Provincial or territorial rates vary between provinces, ranging from 8% to 14%. They come into force on January 1, 2022 and may change throughout the year.
Small businesses are eligible for a reduced income tax rate of up to $500,000 on active business income.
The federal rate for Canadian Controlled Private Corporations (CCPCs) requiring a small business deduction is 9%.
In the provinces, CCPC levels are also lower, ranging from 2% in Alberta to 3.2% in Ontario. The lower rate applies to eligible small business income.
All resident corporations must file a T2 return for each tax year.
A non-resident corporation must file a return if it conducted business in Canada, had taxable capital gains, or disposed of taxable Canadian property.
