Passive Income Rules Cra

As of 2018 the small business tax rate is 9 while the corporate tax rate is 15.

Passive income rules cra. While rental income is considered taxable income in canada passive income from a rental property allows taxpayers to deduct many expenses associated with the earning of the rental income. Under the new rules the active income a business is allowed to claim at the small business amount is tied to the business passive income. Passive income canada rental properties. These new cra passive income changes will first apply to fiscal years that start in 2019 and will reduce the maximum small business deduction available to a ccpc or associated group of ccpcs by 5 for every 1 of passive investment income earned in.

The 2018 federal budget saw the introduction of a set of new passive income rules in canada to restrict the small business deduction for ccpcs that alone or as part of an associated group earn more than 50 000 of passive investment income. Income earned through the leasing of a rental property is another prevalent method of generating passive income.