Corporate taxes are based on the business net income and not the sales. The Federal small business corporate tax rate is 11% for up to $500,000 in net income. The General rate is 16.5% for net taxable income above $500,000.
In addition, each Province has its own tax rates which vary from Province to province as per the table below:
| 2011 Corporate Income Tax Rates | |||
| General | Small Business | Business Limit | |
| Federal | 16.5% | 11% | $500,000 |
| Alberta | 10% | 3% | $500,000 |
| BC | 10% | 2.5% | $500,000 |
| Manitoba | 12% | 0% | $400,000 |
| New Brunswick | 11% / 10% | 5% | $500,000 |
| Newfoundland & Labrador | 14% | 4% | $500,000 |
| Nova Scotia | 16% | 5% | $400,000 |
| Northwest Territories | 11.5% | 4% | $500,000 |
| Nunavut | 12% | 4% | $500,000 |
| Ontario | 12%/11.5% | 4.5% | $500,000 |
| Prince Edward Island | 16% | 1% | $500,000 |
| Québec | 11.9% | 8% | $500,000 |
| Saskatchewan | 12% | 4.5% | $500,000 |
| Yukon | 15% | 4% | $400,000 |
Personal income tax needs to be paid on the money you withdraw from your corporation. You can withdraw money in the form of a salary or a dividend. Salary, an expense to your business, is tax deductible for your corporate tax. Dividends are paid out of your company’s after tax net earnings.
Both salaries and dividends are taxed at different rates on a personal level.
