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Corporate tax

Corporate tax estimator

Reviewed by EverStone CPA · July 2026

Enter your corporation's taxable active business income and see the federal and provincial tax, split between income eligible for the small business deduction and income above the limit.

Leave at $500,000 unless the limit is shared with associated corporations or reduced by passive investment income or taxable capital.

Estimates for general information — not tax advice specific to your situation. Rates and rules change and your result depends on details a calculator cannot capture. We confirm the numbers for your circumstances in a free consult.

Nothing you type here leaves your browser. This calculator runs entirely on your device — no figures are sent to us or to anyone else.

Two rates, one return

A Canadian-controlled private corporation does not pay one corporate tax rate. It pays two. Active business income up to the business limit qualifies for the small business deduction and is taxed at 9% federally plus the province's lower rate. Everything above the limit is taxed at the federal general net rate of 15% plus the province's higher rate. In British Columbia that is the difference between 11% and 27% — the single largest rate step most owner-managed corporations will ever cross.

The limit is not always $500,000

The federal business limit is $500,000, but three provinces set their own: Nova Scotia at $700,000, and Prince Edward Island and Saskatchewan at $600,000. Where the provincial limit is higher, income in between is taxed at the federal general rate but still at the provincial lower rate, which is why the estimator shows the federal and provincial splits separately rather than one blended number.

The limit can also shrink. Associated corporations share a single business limit between them, and the limit is reduced where the associated group earns significant passive investment income or holds large taxable capital. Because association is decided on control and cross-ownership facts across the whole group, this is the input most often entered wrongly.

What the number is useful for

An estimate of the year's corporate tax is the starting point for three decisions: how much to leave in the company, whether to pay yourself in salary or dividends, and whether the corporation will owe instalments next year. It is not the figure that goes on the T2. The return runs through loss carryforwards, capital cost allowance choices, provincial allocation where the corporation operates in more than one province, and credits — and each of those can move the answer materially.

Before you rely on it

Run the estimate before your fiscal year-end rather than after it. Once the year closes, most of the levers that change a corporate tax bill — timing a bonus, timing an equipment purchase, choosing how much capital cost allowance to claim — are already fixed. If the number surprises you, that is the moment to talk. Corporate tax filing and year-round planning are what we do; the T2 deadline page covers when the return and the balance are actually due.

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Common questions

Corporate Tax Estimator FAQ

What is the small business deduction?+
It is a reduction in the federal corporate tax rate on active business income earned by a Canadian-controlled private corporation. It brings the federal rate on that income down from the 15% general net rate to 9%, up to the business limit — $500,000 federally. Provinces apply their own lower rate to the same kind of income, which is why the combined rate below the limit is so much lower than above it.
Why does income above $500,000 cost so much more?+
Above the business limit the corporation pays the general rates: 15% federally plus the province’s higher rate. In British Columbia that is 27% combined against 11% below the limit. The jump is deliberate — the small business deduction is meant to leave working capital in smaller corporations, not to subsidise large ones.
Do all provinces use the same $500,000 limit?+
No. Most follow the federal $500,000 business limit, but Nova Scotia uses $700,000 and Prince Edward Island and Saskatchewan use $600,000. Where a province sets a higher limit, income between the federal limit and the provincial one is taxed at the federal general rate but still at the provincial lower rate. This estimator applies each province’s own limit.
Can something reduce my business limit below $500,000?+
Yes, in two common ways. Associated corporations share one business limit between them, and the limit is ground down where the associated group holds significant passive investment income or has large taxable capital. Both are decided on facts about the whole group rather than one company, so enter the limit actually available to the corporation rather than assuming the full amount.
Does this cover investment income or capital gains?+
No. This estimator handles active business income only. Investment income inside a corporation is taxed under a separate regime with a refundable portion, and capital gains have their own inclusion rules. Mixing them into an active-income calculation produces a figure that will not match the return.
What does this estimator not account for?+
It does not account for Quebec, which administers its own corporate tax through Revenu Québec; income allocated across more than one province; the manufacturing and processing or zero-emission technology reductions; loss carryforwards; tax credits such as scientific research and experimental development; a tax year that straddles a rate change; or the additional tax on banks and life insurers. It also assumes the corporation is a Canadian-controlled private corporation.
When should I have the number checked?+
Before you set a salary or dividend for the year, before a large equipment purchase, and before your fiscal year-end while there is still time to act. An estimate built from a single income figure cannot see the timing choices that usually move a corporate tax bill more than the rate itself. Book a free consult and the figures get checked against your actual books.

Thinking about the step before this one? The incorporation calculator compares a corporation against a sole proprietorship, and sole proprietor vs. corporation walks through the trade-offs that a rate table cannot show.

Want these numbers confirmed for your business?

A free consult with a Fraser Valley CPA — we will check the figures against your actual situation and quote a fixed fee.

Book My Free ConsultCall (604) 832-1743