The small business deduction

If you are a Canadian Controlled Private Corporation of "CCPC"  than you qualify to claim the small business deduction on active business income earned in Canada only.  Active business includes all business but excludes the following:

1) Businesses that generate income from property, i.e interest, dividends, royalties, and rent and less than 6 full time employees.  These corporations are deem to be specific investment businesses and thus the small business deduction is not allowed.

2) Personal service businesses: Businesses that provide personal services through the corporation, and if it were not for the corporate structure the individuals would be considered employees of the companies using those services.

The small business deduction results in a 11% in 2015 ( to decrease to 10.5% in 2016),   The current limit Federally is $500,000.  Please note: the limit is to be shared among associated groups for companies.

If you have any additional questions regarding the small business deduction please contact an MP Group advisor.

Also, click here to read a great article from Maclean's and why the small business tax system does not need fixing

Looking for strategic advice?

Contact Us