Computation of Tax: Corporations
Author | Vern Krishna |
Profession | Professor of Common Law, University of Ottawa Barrister at Law |
Pages | 385-388 |
385
CHAPTER 14
COMPUTATION OF TAX:
COR P OR AT IONS
The rules that deal w ith the computation of tax payable by corporations
are more detailed and complex than the rules that apply to individuals.
This is because corporate taxation depends upon numerous variables:
(1) type and size of the corporation; (2) ownership structure; (3) type
and source of income; and (4) amount of income earned in a year.
A. GENERAL TAX R ATE
The general basic rate of federal tax payable by a corporation is 38 p ercent
(2011).1 A general rate reduction reduces the federal tax.2 The general
rate reduction does not apply to the income upon which a Canadian-
controlled private corporation (CCPC) claims the small business deduc-
tion.3 In 2011, the general rate reduction was 11.5 percent. By 2012, the
net federal tax is expected to drop to 15 percent.
1 Income Tax Act, RSC 1985, c 1 (5th Supp) [ITA], para 123(1)(a).
2 Ibid, s 123.4(1).
3 Ibid, subs 123.4(2).
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