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Dual tax rates - Example 2Income earned in more than one province or territoryWhen you allocate taxable income to more than one province or territory, you also have to allocate proportionally any income eligible for the small business deduction. Corporation Y has permanent establishments in both Nova Scotia and the Yukon. Its tax year runs from September 1, 2004, to August 31, 2005. Corporation Y claimed the small business deduction when it calculated its federal tax payable. The lower rate of tax for Nova Scotia is 5%, and the higher rate of tax is 16 %. To calculate its Nova Scotia income tax, Corporation Y does the following calculations:
To calculate its Yukon income tax payable, Corporation Y would repeat the same steps, using the rates that apply. Forms and publicationsT2 Corporation Income Tax Return |
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