1. Corporate Tax Rates (Ontario – 2026)

Small Business (CCPC – up to $500,000 income)

• Federal: 9%
• Ontario: 3.2%
• Combined: ~12.2%

Applies to Canadian-Controlled Private Corporations (CCPCs) on active business income.

General Corporate Rate (above $500,000)

• Federal: 15%
• Ontario: 11.5%
• Combined: ~26.5%

Investment Income (Passive income)

• Around 50%+ tax (partially refundable)

Includes:

• Interest
• Rental income
• Portfolio investments

2. Small Business Deduction (SBD)

• Applies to first $500,000 of active business income
• Reduces tax to ~12.2%
• Can be reduced if:
  • High passive income (> $50,000)
  • Large taxable capital (> $10–15M)

3. Filing Requirements

T2 Corporate Tax Return

• Mandatory for ALL corporations (even inactive)

Filing Deadline

• 6 months after fiscal year-end

Payment Deadline

• Usually:
  • 2 months after year-end
  • 3 months for eligible small businesses

4. Key Compliance Areas

CRA Requirements

• File:
  • T2 return
  • Financial statements
• Maintain proper bookkeeping

Other Taxes to Manage

• GST/HST filings
• Payroll deductions
• WSIB (if applicable)

5. Important Tax Concepts

Active vs Passive Income

• Active business income → lower tax
• Passive income → high tax (integration system)

Dividend vs Salary Planning

• Owners can pay themselves via:
  • Salary (deductible expense)
  • Dividends (tax-efficient in some cases)

Proper planning reduces total tax burden.

Tax Integration System

• Designed so:
  • Corporate + personal tax ≈ individual tax
• Prevents double taxation

6. Common Tax Credits (Ontario)

Businesses can reduce taxes using:

• SR&ED (R&D credits)
• Ontario Innovation Tax Credit
• Apprenticeship & hiring credits

7. Frequent Mistakes to Avoid

Missing filing deadlines
Mixing personal & business expenses
Ignoring passive income impact
Not planning salary/dividends
Poor record-keeping

8. Tax Planning Tips

Stay within $500K limit (if possible)
Use deductions (expenses, capital cost allowance)
Plan bonuses before year-end
Track passive income carefully
Work with a CPA for optimization

9. When You Must Pay Attention Most

• When income approaches $500,000
• When earning investment income inside corporation
• When expanding or incorporating new companies
• When paying dividends vs salary

Quick Summary

• Small business tax: ~12.2%
• General corporate tax: ~26.5%
• Filing deadline: 6 months after year-end
• Payment deadline: 2–3 months after year-end
• Passive income tax: ~50%+