Finance - Small Business Tax Credit

Small Business Tax Credit

The general corporate income tax rate is 14%. However, small businesses are taxed at a reduced rate of 5%. 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 is increased as follows:

Year	Small Business Deduction
2003	$225,000
2004	$250,000
2005	$300,000
2006	$300,000
2007	$400,000

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.

Income Tax Act
Canada Revenue Agency

For additional information about this credit please contact :

Department of Finance
Taxation and Fiscal Policy Branch
P.O. Box 8700
St. John's, Newfoundland
A1B 4J6
Telephone: (709) 729-3166
Fax: (709) 729-2070
E mail: Taxpolicy@mail.gov.nl.ca

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