A one-stop area for all your tax needs, checklists, and links, including corporate, payroll, and personal categories.

Back to List

Follow us on

Small Business Active Income up to $500,000:

Footnotes:

* The small business limit was $400,000 for these earlier years. Also note that the Alberta limit was not always the same as the federal.

Until the new rules outlining “Eligible Dividends”, it was a common strategy to “bonus down” the corporation’s taxable income to the small business limit.  However, in 2005, the CRA introduced new legislation which levelled the playing field for small businesses and large businesses, paying the higher tax rates.  Effectively, the higher rate of tax levied is tracked and offers the ability to pay Eligible Dividends to the shareholders.  These Eligible Dividends offer a preferential tax credit on the individual’s personal tax return.