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Running a business in Canada means staying compliant with both federal and provincial tax laws. For 2025, the corporate tax landscape remains stable, but understanding how much your business owes—especially if you’re a small business owner in Toronto—requires knowing the difference between general corporate rates, small business deductions, and how taxes apply federally and provincially.
At Apex Accounting and Tax Consulting Inc., we work with entrepreneurs every day to clarify tax obligations and optimize financial outcomes. Here’s what you need to know about business taxes in Canada for 2025.
Federal Corporate Tax Rates (2025)
All incorporated businesses in Canada must pay federal corporate tax. The rate varies depending on whether you’re a general corporation or a Canadian-Controlled Private Corporation (CCPC).
General Corporate Rate: 15%
Small Business Rate (CCPC): 9% on the first $500,000 of active business income
The small business rate is available to private companies controlled by Canadian residents and is intended to help smaller companies reinvest and grow.
Provincial Corporate Tax Rates in Ontario (2025)
Since most of our clients are Ontario-based, here’s a breakdown of Ontario’s corporate tax rates:
General Corporate Rate: 11.5%
Small Business Rate: 3.2% on the first $500,000 of income (for eligible CCPCs)
These rates are added to the federal rates to form the total corporate tax your business pays.
Combined Federal and Ontario Tax Rates
Business Type Federal Rate Ontario Rate Combined Rate
General Corporation 15% 11.5% 26.5%
CCPC (Small Business) 9% 3.2% 12.2% (on first $500,000 of active income)
So, if you’re operating a small incorporated business in Toronto, and your net income is under $500,000, you’ll benefit from one of the lowest tax rates in the country.
What About Investment Income?
If your corporation earns passive investment income (e.g., dividends, interest, capital gains), it’s taxed at much higher rates to discourage tax deferral.
Combined Federal + Ontario Rate on Investment Income: ~50.17%
This means if you hold significant investment income inside your corporation, it’s wise to work with a qualified small business accountant in Toronto to manage tax exposure.
Example Scenarios for 2025
Scenario 1: Small Business Earning $200,000
Type: CCPC
Income: $200,000
Eligible for Small Business Deduction
Total Tax Payable: $200,000 × 12.2% = $24,400
Scenario 2: Corporation Earning $800,000
First $500,000 taxed at 12.2% = $61,000
Remaining $300,000 taxed at 26.5% = $79,500
Total Tax Payable: $61,000 + $79,500 = $140,500
Running a business in Canada means staying compliant with both federal and provincial tax laws. For 2025, the corporate tax landscape remains stable, but understanding how much your business owes—especially if you’re a small business owner in Toronto—requires knowing the difference between general corporate rates, small business deductions, and how taxes apply federally and provincially.
At Apex Accounting and Tax Consulting Inc., we work with entrepreneurs every day to clarify tax obligations and optimize financial outcomes. Here’s what you need to know about business taxes in Canada for 2025.
Federal Corporate Tax Rates (2025)
All incorporated businesses in Canada must pay federal corporate tax. The rate varies depending on whether you’re a general corporation or a Canadian-Controlled Private Corporation (CCPC).
General Corporate Rate: 15%
Small Business Rate (CCPC): 9% on the first $500,000 of active business income
The small business rate is available to private companies controlled by Canadian residents and is intended to help smaller companies reinvest and grow.
Provincial Corporate Tax Rates in Ontario (2025)
Since most of our clients are Ontario-based, here’s a breakdown of Ontario’s corporate tax rates:
General Corporate Rate: 11.5%
Small Business Rate: 3.2% on the first $500,000 of income (for eligible CCPCs)
These rates are added to the federal rates to form the total corporate tax your business pays.
Combined Federal and Ontario Tax Rates
Business Type Federal Rate Ontario Rate Combined Rate
General Corporation 15% 11.5% 26.5%
CCPC (Small Business) 9% 3.2% 12.2% (on first $500,000 of active income)
So, if you’re operating a small incorporated business in Toronto, and your net income is under $500,000, you’ll benefit from one of the lowest tax rates in the country.
What About Investment Income?
If your corporation earns passive investment income (e.g., dividends, interest, capital gains), it’s taxed at much higher rates to discourage tax deferral.
Combined Federal + Ontario Rate on Investment Income: ~50.17%
This means if you hold significant investment income inside your corporation, it’s wise to work with a qualified small business accountant in Toronto to manage tax exposure.
Example Scenarios for 2025
Scenario 1: Small Business Earning $200,000
Type: CCPC
Income: $200,000
Eligible for Small Business Deduction
Total Tax Payable: $200,000 × 12.2% = $24,400
Scenario 2: Corporation Earning $800,000
First $500,000 taxed at 12.2% = $61,000
Remaining $300,000 taxed at 26.5% = $79,500
Total Tax Payable: $61,000 + $79,500 = $140,500
Additional Considerations
Payroll Taxes: If your business has employees, you’re also responsible for CPP, EI, and other payroll deductions.
GST/HST Filing: Depending on your revenue, you’ll need to collect and remit HST.
Tax Filing Deadlines: Corporate tax returns are due six months after your fiscal year-end. Taxes owed are due two or three months after year-end, depending on your size and type.
How Apex Accounting Can Help
At Apex Accounting and Tax Consulting Inc., we help Toronto-based small businesses:
Maximize the small business deduction
Navigate GST/HST obligations
Optimize their corporate structure to minimize taxes
Plan for investment income strategies
Meet all federal and Ontario compliance deadlines
Whether you’re just starting out or managing a growing operation, our team offers comprehensive small business bookkeeping in Toronto, payroll services, and tax preparation.
Final Thoughts
Understanding your business’s tax obligations in 2025 is crucial for budgeting, growth, and compliance. With a combined federal and provincial rate of 12.2% for small businesses and 26.5% for general corporations, it’s clear that how your business is structured and managed can make a big difference.
💼 Need help figuring out your tax obligations or restructuring for tax efficiency?
Contact Apex Accounting and Tax Consulting Inc. 📞 647 979 7728 today for a consultation with a trusted small business accountant in Toronto.