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Small Business Tax Credit

The general corporate income tax rate is 15%. However, for small businesses a lower tax rate of 3% applies.

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 reduced 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
2007 $400,000
2009 $500,000

This credit is administered on behalf of the province by Canada Revenue Agency and is provided under Section 40(3) of the Income Tax Act, 2000.

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

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