The Small Business Tax Help Blog

Question: How is a corporation defined as a small business in Ontario for tax purposes?

Is it based on net income? or Total Revenue before cost deduction? or based on number of employees hired? or …?

Answer: The only answer I was able to find for you was on the CRA’s website for Corporate income taxes.

I found a section on which corporations could claim the Small Business deduction. The formula for determining the deduction uses income as the criteria

——————————-

Note: For 2007, the business limit is $400,000

source: http://www.cra-arc.gc.ca/E/pub/tg/t4012/t4012-06-e.html#P2862_208254

Corporations that were Canadian-controlled private corporations (CCPCs) throughout the tax year may be able to claim the small business deduction (SBD). The SBD reduces Part I tax that the corporation would otherwise have to pay.

The SBD rate is currently 16%.

The SBD rate is increased to 17%, effective January 1, 2008. The rate is prorated for tax years that straddle December 31, 2007.

The SBD is calculated by multiplying the SBD rate by the least of the following amounts:

* the income from active business carried on in Canada (line 400);
* the taxable income (line 405);
* the business limit (line 410); or
* the reduced business limit (line 425).

The following section explains each of the above amounts.

Once you have calculated the SBD, enter it on line 430.

Scotiabank reports third quarter earnings of over $1 billion

Earnings per share of $0.98 compared to $0.87

Finding More Tax Deductions for Small Business Owners in 2009, 2010

Related posts

• Small Business Tax Deductions