Corporation tax rates

Federal

The basic rate of Part I tax is 38% of your taxable income, 28% after federal tax abatment.

For Canadian-controlled private corporations claiming the small business deduction the net tax rate is 12%.

For the other corporations, the net tax rate is 21%.

Provincial or territorial

Generally, provinces and territories have two rates of income tax—a lower rate and a higher rate.

The lower rate applies to either:

• the income eligible for the federal small business deduction; or
• the income based on limits established by the particular province or territory.

The higher rate applies to all other taxable income.

The following table shows the income tax rates for the provinces and territories that have corporation tax collection agreements with the federal government (this does not include Quebec, Ontario and Alberta). These rates are in effect on January 1, 2006, and may change during 2006.

*    5.4% effective April 1, 2006
**  1.5% effective July 1, 2006
*** 14% effective July 1, 2006
****11.5% effective July 1, 2006

See Dual rates for more detailed information.

Forms and publications

• T2 Corporation – Income Tax Guide (T4012)