Corporation income tax

File a corporation income tax return, look up tax rates, and learn about provincial and territorial corporate taxes.

Corporate income taxes: a high-level overview

This table summarizes the corporate tax rates, provincial and territorial corporation taxes, and tax credits.

Every resident corporation (excluding tax-exempt Crown corporations, Hutterite colonies, and registered charities) is required to file a company income tax (T2) return each fiscal year, even if no tax is due. This includes the following:

non-profit organizations.
tax-exempt corporations.
inactive corporations.

The majority of corporations can electronically file their returns via the Internet. Certain corporations with annual gross revenues over $1 million are required to comply.

In certain circumstances, non-resident corporations are required to file a T2 return. See Who is required to file a corporation income tax return (T2) by contacting Bomcas Accounting and tax services.

We offer two distinct T2 returns:

T2 Corporation Income Tax Return – The T2 Corporation Income Tax Return is a nine-page form that may be used by any corporation.
T2 Short Return — This is a two-page return supplemented by a single schedule.

Corporate tax rates.

By comparing federal, provincial, and territory rates, you can determine when to use the lower or higher rate.

Provincial and territorial governments levy corporation taxes.

What’s new in tax reporting and credit claims for corporations, as well as related forms and publications.

The federal government’s rates.

The basic rate of the Part I tax is 38% of taxable income, or 28% after federal tax breaks.

Following the general tax cut, the net tax rate is 15%.

The net tax rate for private corporations run by Canadians that use the small business deduction is shown in the table below:

The rate was 9% as of January 1, 2019.
10% starting on January 1, 2018.
Tariffs imposed by provinces or territories apply.
In general, provinces and territories have two income tax rates: one that is lower and one that is higher.

Reduced interest rates.

The lower rate is applicable to income that qualifies for the federal small business deduction. One of the components of the small business deduction is the company limit. Several provinces and territories have decided to adhere to the federal business restriction. Others set their own commercial boundaries.

The rate has risen.

All other income is taxed at a higher rate.

Rates of taxation in each province and territory (except Quebec and Alberta)

The table below summarizes the income tax rates and exemptions available to businesses in each province and territory (except Quebec and Alberta, which do not have corporation tax collection agreements with the CRA). These prices are effective as of January 1, 2021, and are subject to vary during the year.

Taxation of corporations in the provinces and territories

What has changed recently in the world of business? Apart from federal income taxes, you’ll also have to figure out and pay provincial and territorial income taxes.

With the exception of Quebec and Alberta, provinces and territories pass their own corporate income tax legislation, which is then administered by the Canada Revenue Agency (CRA). It is necessary to compute provincial and/or territorial income taxes and credits on the federal return if the corporation has a permanent establishment in a province or territory other than these two. This is in addition to federal income taxes and credits.

Corporations from all provinces and territories should first determine whether or not Schedule 5 is required in their jurisdiction before proceeding forward.

In most cases, provinces and territories have two different tax rates. Check with Bomcas Accounting and Tax team for information on calculating provincial and territorial credits, refunds, and taxes, as well as other tax-related tax issues for each provinces and territories in Canada.

Alberta
British Columbia
Manitoba
New Brunswick
Newfoundland and Labrador
Northwest Territories
Nova Scotia
Nunavut
Ontario
Prince Edward Island
Saskatchewan
Yukon

The processes of filing a tax return and claiming a credit are two separate and different processes.

You should include the provincial or territorial tax on line 760 of your T2 Corporation Income Tax Return if you do not require Schedule 5 (and if you do not reside in Quebec or Alberta).

Federal government credits.

Federal income tax credits may be available to you.

Maintaining a record of events.

Discover what a record is, your responsibilities, and the various types of records.

Dividends.

This section covers the designation of qualified dividends, Part III.1 tax information, and general and low-rate income pools.

Corporate tax payments.

Payment settlement, payment of your company tax amount, and prepayment of reassessments are all possibilities.

Businesses are usually compelled to pay their taxes in installments. Depending on the day it is due, you must pay your tax balance two or three months following the end of the fiscal year.

My Business Account can be used to request a variety of services, including an interest review, credit or refund transfer, payment search, a payment search request form, remittance vouchers, copies of notices and statements, customized statements, changes to mailing instructions or statement inhibition, and return envelopes.

Reassessments.

Submit a request for reconsideration of your T2 return and read about the dates for reassessment.

Transfer pricing is a word that applies to both the cost of a transfer price memorandum and international transfer pricing.

International spin-offs.

Overseas spin-offs for shareholders of foreign corporations in Canada.

Source of information coming for CRA