Corporate tax calculator

This depends on the province or territory, as the tax consists of both a federal and a provincial component. A CCPC eligible for the SME deduction benefits from a reduced rate on the first portion of active income, up to $500,000 at the federal level, and then the general rate on amounts above that. The combined SME tax rate is approximately 12.2% in Quebec and Ontario in 2026, with the provincial portion decreasing from 3.2% to 2.2% in 2026 depending on the fiscal year start date. The calculator applies the exact 2026 rates for the selected province.

Active income is derived from normal business operations (sales, services) and often qualifies for a reduced tax rate (SBD). Passive investment income (interest, rent, royalties, dividends) is generally taxed at a higher rate. In Canada, a portion of this tax on passive income is refundable upon the payment of dividends, which achieves tax integration. The calculator applies the rules of the selected province.

This is a tax benefit that lowers the corporate tax rate on the first portion of active income for small businesses. In Canada, this is known as the small business deduction (SBD), which is available to eligible CCPCs and applies to up to $500,000 in active income at the federal level. The conditions and thresholds, including the provincial cap, vary by province or territory.

Federal and provincial rates are applied to taxable income, taking into account the SME deduction (SBD) and applicable reductions. In Canada, federal tax combines a base rate, a provincial credit, and reductions (general rate or SME rate); to which the provincial portion is added. The combined SME rate is approximately 12.2% in Quebec and Ontario in 2026. The calculator performs this calculation for you based on the selected province.

In Canada, corporate tax returns are filed within 6 months of the end of the fiscal year: Form T2 at the federal level and, in Quebec, Form CO-17. Taxes are generally due within 2 to 3 months of the end of the fiscal year, and estimated tax payments may be required during the year. A vetted accountant can confirm the dates that apply to your specific situation.

For active income, the tax rate changes from the reduced rate (SBD) to the general rate once the first $500,000 federal income threshold is exceeded. The provincial threshold may vary by province or territory. Significant passive investment income, exceeding $50,000 per year, also gradually reduces the amount eligible for the reduced rate. The calculator applies the 2026 thresholds for the selected province.

In Canada, high passive investment income gradually reduces the portion of active income eligible for the reduced rate (SBD), until it is eliminated. The reduction takes effect when passive income exceeds $50,000 per year. Rules may vary by province or territory: the calculator takes this into account for the selected jurisdiction.

Bankeo connects company shareholders and executives with vetted accountants specializing in corporate tax and planning. The service is free for entrepreneurs. We understand your type of business and match you with accountants who can handle your tax returns and annual strategy.