Small Business Deduction Canada Accountant Mississauga Oakville
- Author Allan Madan
- Published February 9, 2011
- Word count 404
Small Business Deduction Canada
How does the small business deduction help business owners in Canada save taxes?
If you are a business owner then it’s very important that you read this article, because I’ll show you how you can utilize the small business deduction to save a ton in taxes.
What is the Small Business Deduction in Canada?
The small business deduction is a tax credit available to corporations in Canada on active business income that reduces the general corporate tax rate for corporations from 32% to only 16.5%.
The first $500,000 in profit (that is, revenue minus expenses) is allowable for the small business deduction.
Types of Corporations That Qualify - Small Business Deduction Canada
Which types of businesses qualify for the small business deduction in Canada?
In order for a business to qualify for the small business deduction it must be a Canadian Controlled Private Corporation (CCPC). A CCPC has the following characteristics:
-
Incorporated in Canada;
-
More than 50% of the voting share capital of the corporation must be owned by Canadian residents; and
-
Is not listed on a stock exchange.
Types of Income that Qualify - Small Business Deduction Canada
What types of income qualify for the small business deduction in Canada?
The income earned your by your CCPC must be Active Business Income in order to receive the small business deduction in Canada. Active Business Income simply means income earned from a business. It excludes investment income and capital gains.
How do I Take Advantage of the Small Business Deduction in Canada?
Now that you know what types of corporations and income that qualify for the small business deduction in Canada, how do you take advantage of it?
To take advantage of the small business deduction, your accountant must prepare a Corporate Income Tax Return and claim the small business deduction on the return. For corporations that earn both investment and active business income, a separate calculation must be performed on Federal Schedule 7 of the Corporate Income Tax Return to calculate the small business deduction.
If your corporation has profits in excess of $500,000, then the excess profit will be taxed at a rate of 32%. Therefore, it’s better for your corporation to declare a bonus payable to you to reduce the profit of your corporation to $500,000. For the bonus to be tax deductible, it must be paid within 180 days of your corporation’s year end.
About the Author – Allan Madan – Accountant Mississauga
Allan Madan is a Chartered Accountant and a Tax Expert in the Toronto, Oakville and Mississauga regions of Ontario, Canada.
If you found this article useful, Allan Madan encourages you to visit his website http://madanca.com for additional tax tips and more information on this topic. You can also call Allan Madan at 905-268-0150.
Watch the video at http://madanca.com/blog/small-business-deduction-canada/
Article source: https://articlebiz.comRate article
Article comments
There are no posted comments.
Related articles
- Commercial Cleaning Services in Auckland: A Deep Dive into Angel Cleaning
- Can AI Replace Writers? An In-Depth Look for Marketers in the Digital Age
- How Anyone Can Start an Online Business Selling Digital Products
- Introduction to Commercial Cleaning Services in Auckland and North Shore
- The Value of a Startup Coach: Guiding Entrepreneurs Toward Success
- Can I Do Affiliate Marketing Without Showing My Face? A Complete Guide for the Camera-Shy Marketer
- How to Merge Images: A Step-by-Step Guide for Online Marketers
- Steady Slope Marketing: Launching Your Small Business with Google My Business and Digital Marketing
- Why Aqueous Ozone Disinfecting is Revolutionizing Restaurant Hygiene
- Top 5 Ways To Generate Low Cost Website Traffic
- 5 WAYS TO EARN MONEY ONLINE FROM CONTENT WRITING
- Our Journey: The Story Behind All Seasons Cleaning Services
- All Seasons Cleaning Services: A Commitment to Excellence in Exterior Maintenance
- All Seasons Cleaning Services: Your Trusted Partner for Roof Cleaning in Vancouver WA and Portland OR
- Energy Efficiency Considerations for Sliding Glass Doors
- The 7 Best Ways To Make Money Online From Home
- 8 Compelling Reasons to Hire the Best Interior Design Firm in Dhaka
- The Ultimate Guide to Selling Your Land in Lee County
- The Process to Make Cannabis Oil
- How to Choose a Profitable Online Course Niche in 2024: A Complete Guide
- Sustainable Comfort: Exploring Heat Pump Replacement Services in Milwaukee
- From Dog Bite to Bath Bliss: The Tale of Bayside Soapworks
- Keeping Your Milwaukee Home Cool and Comfortable: A Guide to Home Air Conditioning Services
- Mastering the Art of the Hustle: Golden Rules for Success
- The Advantages of Toca Boca: Engaging, Educational, and Entertaining
- ac repair somerset
- How to Get the Money to Start Your Business: 3 Simple Steps – No Credit Needed
- How to start making passive income through affiliate marketing.
- How to Start Your Supermarket Business in Dubai?
- The Art of Stain Removal: Proven Techniques for Tackling Tough Spots