General tax reduction

General tax reduction

A general tax reduction of 13% is available on qualifying income.

Corporations benefit from the general tax reduction only on taxable income that is subject to a rate of 38%.

The reduction does not apply to income that benefits from preferential corporate tax treatment, such as:

• income eligible for the small business deduction and Canadian manufacturing and processing profits

• income eligible for the deduction for the generation of electrical energy for sale or the production of steam for sale

• investment income subject to the refundable tax provisions

The reduction also does not apply to income earned from a personal services business or to a corporation that was, throughout the year, an investment corporation, a mortgage investment corporation, or a mutual fund corporation.

Reference
Subsection 123.4(1)

General tax reduction for Canadian-controlled private corporations (CCPCs)

If you are a CCPC throughout the tax year, complete this area of page 5 to calculate the reduction. Enter the resulting amount on line 638 on page 8.

Reference
Subsection 123.4(2)

General tax reduction

Do not complete this area if you are a CCPC, an investment corporation, a mortgage investment corporation, a mutual fund corporation, or a corporation that has income not subject to the corporation tax rate of 38%.

All other corporations complete this area of page 5 to calculate the reduction. Enter the general tax reduction on line 639 on page 8.

Reference
Subsection 123.4(2)

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