What is the small business tax deduction?
The small business tax deduction (SBD) reduces the tax rate on the first $500,000 of active business income in Canadian companies. In 2019, it reduces the federal rate from 28% to 10.5%. The SBD is something a misnomer, as it is technically a tax credit, not a deductions.
How much can I save with the small business tax deduction (SBD)?
Your corporation first $500,000 of active business income will be eligible for the SBD provided the corporation has less than $10M in taxable capital per year and does not earn more than $50,000 in passive income. When the corporation earns more than $10M pr year and/or when passive income exceeds the $50,000 threshold, the cap begins to fall as capital and passive income rises, restricting the claimable value of the SBD. For more infomation on the SBTD, please click here.
