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Toronto Tax Boutique

Small business tax, at rates worth structuring for

About 12.2% on your first $500,000 in Ontario, provided the structure is set up to capture it.
~12.2%combined Ontario CCPC rate on the first $500,000
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Federal CCPC rate
9%
Ontario small business rate
3.2%
Ontario general rate
11.5%

Small Business

What you need to know first

Canada's small business deduction is one of the most valuable provisions available to an owner-managed business. A Canadian-controlled private corporation pays roughly 9% federally and 3.2% in Ontario on active business income within the limit - against personal marginal rates that reach well past 40%.

The rate is only worth something if you can leave money in the business. That is the real planning question, and it is why the compliance work and the advice have to happen together.

What we claim for you

The credits and deductions that apply here

Specific to your situation, not a generic checklist.

8 claims we check for you

Small business deduction

The reduced rate on the first $500,000 of active business income, protected across associated corporations.

Salary versus dividends

Modelled on your numbers. Salary deducts and builds RRSP room; dividends are lighter in your hands.

Family income splitting

Where the TOSI rules permit it, structured properly from the start.

Retained earnings and deferral

Leaving profit in the corporation and drawing it in lower-income years.

Capital cost allowance

Equipment, vehicles and leaseholds claimed at the rate that suits this year and next.

Home office and vehicle

Where the business genuinely uses them, documented properly.

Owner loan account

Tracked so draws do not become an unexpected taxable benefit.

GST/HST alignment

Filed in step with the corporate year so both agree.

Before you message us

Have these ready

Not all of it is essential. Send what you have and we'll tell you what's missing.

  • Your fiscal year end
  • Bookkeeping file or bank statements for the year
  • Prior year T2 and notice of assessment, if not your first
  • Payroll records and T4s issued
  • Dividends paid and T5s issued
  • GST/HST filings for the period

Questions

Small Business: common questions

Straight answers to what people ask us most.

What is a CCPC and do I qualify?
A Canadian-controlled private corporation is a private corporation resident in Canada that is not controlled by non-residents or public companies. Most owner-managed Canadian small businesses qualify, and it is what gives access to the small business deduction.
What tax rate does my small business actually pay?
In Ontario, roughly 9% federal plus 3.2% provincial on active business income within the $500,000 small business limit. Above that limit the Ontario general rate of 11.5% applies on top of the higher federal rate.
Should I pay myself a salary or dividends?
It depends on your income needs, whether you want RRSP room and CPP credits, and what the business needs to retain. Salary is deductible to the corporation; dividends are taxed more lightly personally but come from already-taxed corporate income. We model both against your real numbers rather than applying a rule of thumb.
Do I still file if the business had no activity?
Yes. Every Canadian corporation files a T2 annually, including dormant ones. A nil return is inexpensive; the interest and penalties from not filing are not.

Services

What you'll likely need

Corporate Tax ReturnEvery corporation must file, including dormant ones and non-profits. We prepare the T2, the statements, and the plan behind them.IncorporationFederal or provincial registration, plus the advice on which one actually suits your business and how you'll be taxed after.Tax PlanningSalary versus dividends, family income splitting, RRSP timing and structure decisions - modelled on your actual numbers.

Let's get your taxes sorted

Message us on WhatsApp and one of our tax experts will walk you through exactly what we need. No obligation, no pressure.

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