Learn About the Tax Benefits of Incorporating as a Canadian Controlled Private Corporation (CCPC).

CCPc tax benefits
  • by admin
  • March 4, 2023

Advantages of Incorporating as a Canadian Controlled Private Corporation (CCPC) – Lower Tax Rate


A Canadian Controlled Private Corporation (CCPC) is a type of private corporation that is incorporated in Canada and meets certain criteria set by the Canada Revenue Agency (CRA). To qualify as a CCPC, the corporation must meet the following criteria:

  1. It must be incorporated in Canada.
  2. At least 50% of the corporation’s shares must be owned by Canadian residents.
  3. The corporation must not be a public corporation.
  4. The corporation must not be controlled by one or more public corporations.

CCPCs are entitled to certain tax advantages, such as the small business deduction, which allows eligible CCPCs to pay a lower tax rate on their active business income. Additionally, CCPCs are eligible for other tax incentives, such as the scientific research and experimental development tax credit and the capital gains exemption for qualified small business corporation shares. These tax advantages are intended to encourage entrepreneurship and the growth of small businesses in Canada.


What is a small business deduction?

The Small Business Deduction (SBD) is a tax deduction available to eligible Canadian Controlled Private Corporations (CCPCs) on their active business income. The SBD allows qualifying CCPCs to pay a lower corporate income tax rate on their first $500,000 of active business income earned in Canada.

The SBD is currently set at a rate of 9% (as of the knowledge cutoff date of 2021-09), which is lower than the general corporate income tax rate in Canada. This means that eligible CCPCs can pay a lower tax rate on their first $500,000 of active business income, which can provide significant tax savings for small businesses.


To be eligible for the SBD, a CCPC must meet certain criteria, including:

  1. Being a Canadian-controlled private corporation
  2. Having an active business carried on in Canada
  3. Having a taxable capital employed in Canada of less than $15 million
  4. Meeting certain restrictions on passive investment income.

It is important to note that the SBD is subject to change and the eligibility criteria may vary depending on the tax laws in force at any given time. It is always a good idea for small business owners to consult with a tax professional to ensure they are taking full advantage of any available tax deductions and incentives.


RKB Accounting has expertise in cross-border taxation and has been providing accounting and taxation services for the last fifteen years in Canada and USA. RKB services include incorporating a business on both sides of the border, bookkeeping, sales tax, payroll, and corporate and personal income tax. RKB’s expertise includes cross-border tax planning, long-term tax planning, helping business start-ups, business structure planning, and resolving complex tax matters.


Disclaimer: Information in the blog/post/article has been presented for a broad and simple understanding. This is not legal advice. RKB Accounting & Tax Services does not accept any liability for its application in any real situations. You need to contact your accountant or us for further information.

Blogs Canada  |  Blogs USA

error: Content is protected !!