Small Business Tax Rate On Passive Income

The combined federal and provincial small business tax rate in 2019 will be 11 percent.

Small business tax rate on passive income. Aggregation to work out your aggregated turnover. The 2018 federal budget saw the introduction of a set of new passive income rules in canada to restrict the small business. Law companion ruling lcr 2019 5 base rate entities and base rate entity passive income company tax rates. Businesses with less than 50 000 in annual passive income can claim the full 500 000 at the 9 small business rate.

You need to be a small business entity to be eligible for the lower company tax rate in the 2015 16 and 2016 17 income years. The combined general corporate income tax rate will be 27 percent 15 percent federal tax plus 12 percent alberta tax. 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. For 2019 the small business deduction can reduce the tax rate on the first 500 000 of active business income for a corporation resident in bc from 27 to 11 a corporate tax saving of 16 worth a maximum of 80 000.