How Much Corporate Tax Does a Canadian Corporation Pay on $100,000 Profit?
A Canadian corporation with $100,000 of taxable income pays anywhere from about $11,000 to $27,000 in corporate income tax. The amount depends on two things: whether the corporation qualifies for the small business rate, and which province it operates in.
This guide walks through the calculation step by step, using current federal and provincial rates. It also shows how much the small business deduction can save you.
Note: rates below reflect recent published figures. Confirm them with the Canada Revenue Agency (CRA) and your provincial authority before you file.
Why Corporate Tax Matters to Small Business Owners
Corporate tax is often your largest annual cost after payroll. If you misjudge it, you can end up with a surprise balance owing, a cash shortfall, or poor decisions about how to pay yourself.
A $100,000 profit is a realistic benchmark for many owner-managed businesses. It is large enough to show how the rate structure works, and it sits well inside the income limits for the lowest rates.
Corporate Tax Basics in Canada
Federal Corporate Tax
Canadian corporations pay federal income tax on taxable income. The basic federal rate is 38%. After a 10% provincial abatement and a 13% general rate reduction, the net general federal rate is 15%.
Canadian-controlled private corporations (CCPCs) may also claim the small business deduction (SBD). It cuts the federal rate to 9% on the first $500,000 of active business income.
Provincial and Territorial Tax
Each province and territory adds its own corporate tax. Each sets a general rate and, in most cases, a lower small business rate. Provincial rates vary widely, so your province of operation matters.
Your tax is based on where your corporation has a permanent establishment. If you operate in several provinces, income is allocated among them using a formula based on salaries and gross revenue.
Step-by-Step Tax Calculation on $100,000 of Profit
Step 1: Determine Your Applicable Rates
Start by deciding which rate applies to you. The small business rate generally requires that your corporation:
- Is a CCPC for the whole tax year.
- Earns income from an active business, not passive investments such as interest, rent, or portfolio dividends.
- Has taxable capital within the allowable limit and is not part of an associated group that has already used up the $500,000 limit.
Corporations that do not qualify pay the general rate. This includes most public companies and corporations controlled by non-residents.
| Tax Type | Rate | Notes |
|---|---|---|
| Federal, small business | 9.0% | CCPCs, first $500,000 of active business income |
| Federal, general | 15.0% | Applies to income not eligible for the SBD |
| British Columbia, small / general | 2.0% / 12.0% | Small business limit of $500,000 |
| Alberta, small / general | 2.0% / 8.0% | Small business limit of $500,000 |
| Ontario, small / general | 3.2% / 11.5% | Small business limit of $500,000 |
| Quebec, small / general | 3.2% / 11.5% | Small business rate depends on paid-hours requirements |
Step 2: Calculate Federal Corporate Tax
Multiply your taxable income by the federal rate that applies to you.
- Small business: $100,000 × 9% = $9,000
- General rate: $100,000 × 15% = $15,000
The $6,000 difference at the federal level is the first piece of your SBD savings.
Step 3: Calculate Provincial Corporate Tax
Apply the same method with your provincial rate. Using Ontario as an example:
- Small business: $100,000 × 3.2% = $3,200
- General rate: $100,000 × 11.5% = $11,500
Use the rate for the correct period. Provincial rates sometimes change mid-year, which means a corporation with a non-calendar fiscal year may need to prorate.
Step 4: Total Tax and Effective Tax Rate
Add the federal and provincial amounts. For an Ontario CCPC:
- Small business: $9,000 + $3,200 = $12,200, an effective rate of 12.2%.
- General rate: $15,000 + $11,500 = $26,500, an effective rate of 26.5%.
Structured Data Analysis: Comparing Provinces
The table below applies the same $100,000 of taxable income to four provinces under both rate structures.
| Province | Scenario | Federal Tax | Provincial Tax | Total Tax | Effective Rate |
|---|---|---|---|---|---|
| British Columbia | Small business | $9,000 | $2,000 | $11,000 | 11.0% |
| British Columbia | General | $15,000 | $12,000 | $27,000 | 27.0% |
| Alberta | Small business | $9,000 | $2,000 | $11,000 | 11.0% |
| Alberta | General | $15,000 | $8,000 | $23,000 | 23.0% |
| Ontario | Small business | $9,000 | $3,200 | $12,200 | 12.2% |
| Ontario | General | $15,000 | $11,500 | $26,500 | 26.5% |
| Quebec | Small business | $9,000 | $3,200 |
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