Canadian Small Business Tax Rates – A Simple 2023 Guide

October 3, 2023 Andrew AdolphAudits

Taxes are a significant consideration for your business, and it is only natural to want to minimize taxes. Each province in Canada has its own unique small business tax rate. In this blog post, we will explore and compare which provinces boast the lowest and highest Canadian small business tax rates for small businesses.

Which Province Has the Lowest Corporate Tax Rate?

For this analysis, we will focus on corporations with net profits of up to $500,000. For information on personal income tax rates, please see here.

For corporations, the tax rate across Canada is 9.0%, and then each province or territory adds on an extra few percent. Here we show the combined Federal and provincial rates in declining order.

Ontario: 12.2%

Ontario, Canada’s most populous province, offers a large and diverse market for businesses. It has a strong financial sector, advanced manufacturing, and technology hubs. While the small business tax rate is slightly higher than in some provinces, the opportunities in Ontario are vast.

Quebec: 12.2%

Being the second largest population in Canada by population, Quebec has a very diverse economy. With a well-educated workforce, a strong cultural scene, and access to markets in both Canada and the U.S. its relatively high small business tax rate is offset by various government incentives and support programs for businesses. Quebec also has the highest sales tax rates.

Newfoundland and Labrador: 12%

The people are the nicest on the planet, and they gifted humanity two great dog breeds. This province is known for its natural resources, including oil and gas. Businesses in these sectors might find opportunities here. The living is pretty harsh, though.

Nunavut: 12%

Canada’s most northern territory offers unique opportunities but also various challenges for small businesses. Not only does it have a relatively high Canadian small business tax rate, but it also has a small population and limited infrastructure. However, businesses in resource-based industries might be able to find opportunities here.

Nova Scotia & New Brunswick: 11.5%

Nova Scotia has a diverse economy, with strengths in sectors like ocean technology, seafood, and manufacturing. It offers a good quality of life and proximity to international markets through its ports. 

New Brunswick is known for its forestry and manufacturing industries. The province offers a skilled labor force and competitive costs of doing business. The moderate Canadian small business tax rate can make it an attractive place to start or expand a business.

Alberta: 11%

Alberta has a strong economy driven by the energy sector, agriculture, and technology. The low small business tax rate, coupled with a business-friendly environment, can be appealing to entrepreneurs and businesses looking for growth opportunities. Alberta also has the lowest sales taxes in Canada. 

British Columbia: 11%

British Columbia is known for its natural beauty, the technology industry, and film production. It offers access to international markets through ports and proximity to the U.S. West Coast. The moderate small business tax rate is balanced by economic opportunities. 

Northwest Territories: 11%

Like Nunavut, The Northwest Territories also has a tiny population. The high Canadian small business tax rate might scare off some, but if you’re in the mining and energy sector, there is opportunity. However, the cost of doing business can be higher because of the remote location.

Prince Edward Island: 10%

PEI is Canada’s smallest province, known for its picturesque landscapes and agriculture. Starting a business here might appeal to those interested in the tourism, agriculture, or seafood industries. The low population can be a challenge for market size, but can also create a close-knit business community.

Saskatchewan: 9.5%

Saskatchewan is rich in natural resources, including agriculture, mining, and energy. The province has a relatively low Canadian small business tax rate and offers opportunities for businesses in these sectors. It’s known for its agricultural production. 

Manitoba: 9%

Manitoba offers a range of economic opportunities, including agriculture, manufacturing, and aerospace. The province has a unique advantage with a 0% Canadian small business tax rate on the first $500,000 of income, making it appealing for small businesses.

Yukon Territory: 9%

The Yukon Territory in Canada is rich in mineral resources, fostering a strong mining industry. The government’s funding and support initiatives, like the Economic Development Fund, are designed to boost business growth. Finally, Yukon’s cultural heritage creates unique prospects in the tourism sector.

Canadian Small Business Tax Rate: The Bottom Line

While the Canadian small business tax rate for each province is important, it should not be the sole determining factor when choosing where to establish a business. Other considerations, including small business tax deductions, access to loans, and various tax credits, also play significant roles in a business’s success.

If you’d like to explore more details about the Canadian small business tax rate or have specific questions, please don’t hesitate to reach out. You can contact me via email, schedule a free consultation using the link below, visit my blog, or connect with me on LinkedIn.

Andrew Adolph

Andrew Adolph is a CPA and former CRA auditor with 25 Years of experience. He helps businesses to not par any more in sales taxs than the law says they must and acts as an advocate for you if you are being audited, so you can fous on your business.