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Small Business Tax Credit

The general corporate income tax rate is 14%. However, for small businesses a lower tax rate applies. Effective July 1, 2014, the Provincial Government will decrease the small business corporate income tax rate from four to three percent. The reduced tax rate for small business is available to corporations that qualify for the federal Small Business Deduction (SBD). To qualify for the SBD, the taxpayer must be a Canadian controlled private corporation (CCPC) throughout the tax year, and have income from an active business carried on in Canada.

For the taxation years in 2002 and prior, small businesses were eligible for the 5% tax rate on the first $200,000 of active business income. However, beginning in 2003 the small business threshold increased as follows:

Year Small Business Deduction
2003 $225,000
2004 $250,000
2005 $300,000
2006 $300,000
2007 $400,000
2008 $400,000
2009 $500,000
2010 $500,000
2011 $500,000
2012 $500,000
2013 $500,000
2014 $500,000
2015 $500,000

Effective January 1, 2009, the corporate income tax small business threshold increased from $400,000 to $500,000.

This credit is administered on behalf of the province by Canada Revenue Agency.

This credit is provided under Section 40(3) of the Income Tax Act.

For more information about corporate income taxes in Newfoundland and Labrador, please contact the Taxation and Fiscal Policy Branch.

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