[1] Additionally, each province or territory operates its own corporate tax system, with varying treatment for small businesses.
Corporate taxes in Newfoundland and Labrador corporate tax rates span from 3 per cent at the lowest rate to 15 per cent at highest rate; in Nova Scotia from 3% to 16%, in New Brunswick from 2.5% to 14%, in Prince Edward Island from 3%to 16%, in Ontario from 3.2% to 11.5%, in Manitoba 12% in Saskatchewan, from 2% to 12%, in British Columbia from 2% to 12%, in Nunavut from 3% to 12%, in the Northwest Territories, from 4% to 11.5%, Alberta 8% and in Yukon from 2% to 12%.
[3] According to a June 1, 2020 report, there are two or occasionally three levels of corporate taxes in the provinces and territories—the first includes small businesses, with income generally up to $500,000, that are eligible for the "small-business deduction" (SBD); the second (where it exists) includes businesses engaged in manufacturing and processing (M&P) with income greater than $500,000 that are not eligible for federal SBD (%); and the third includes general income businesses, with non-M&P income, that are not eligible for SBD (%).
A small business in Canada is defined as a Canadian-based corporation (i.e. one incorporated under the federal Canada Business Corporations Act or similar provincial legislation) with fewer than 100 employees and under CA$500,000 in annual income.
[5] Small businesses are allowed to claim a "small business deduction" under the Income Tax Act;[6] the deduction enumerated in that Act is deducted from the 28% general tax rate, and means the net small business tax rate is as follows: Passive income investment is income from "fixed income investments", "dividend-paying stocks", interest, capital gain, rent, royalties and other earnings that are not directly related to the corporation's active main business income.