Overview: Corporate Tax Rate in Canada
In Canada, corporations are subjected to federal and provincial/territorial taxes. The basic federal tax rate is 38% charged on a corporation’s yearly income. However, there are deductions and credits that are usually applied by corporations to reduce the final effective tax rate. These deductions include:
- Federal tax abatement reduces taxable income by 10% effectively lowering the federal corporation tax rate to 28%. This deduction is applicable to Canada-sourced income.
- General tax reductions and small business deductions (for Canadian-controlled private corporations) lower taxes further. As a result, the net federal government tax rate for corporations can go as low as 9%.
Provincial/Territorial Tax Rates in Saskatchewan
Provincial governments and territories in Canada tend to have their own corporate income tax rates. What’s more, there are two corporate income tax rate: a higher rate and a lower rate. The lower rate applies to all income eligible for a federal small business deduction based on components like the business limit. The higher rate is applicable to all other income.
- Lower Rate of Saskatchewan Corporation Tax
In Saskatchewan, the lower rate is 1% effective 1st July 2023 (for a $600,000 small business limit). In case the effective rate changes during a tax year, corporations should base their calculations on the days in the year the rate is effective.
- Higher Rate of Saskatchewan Corporation Tax
The higher rate is 12% and is applicable to all income that isn’t eligible for the lower tax rate.
Calculating and Reporting Corporate Tax in Saskatchewan
Corporations need to use a special worksheet (T2SCH411 form) to report Saskatchewan Corporation Tax. The sheet must be downloaded and filled accurately.
A corporation’s taxable income is required, meaning the income is subject to tax after allowable expenses have been deducted. The federal tax payable should also be determined and added to the Saskatchewan basic rate to establish the total payable tax.
The sheet also requires a corporation’s capital tax liability i.e., tax on paid-up capital. Reporting corporate tax in Saskatchewan can be a complicated process. There are also deadlines that must be met, filing by the due date for filing a corporation’s income tax return.
While you can use income tax calculators, it can be a daunting task if you aren’t an accountant. To avoid corporate tax rate errors and reporting delays, it is advisable to seek the services of trusted Saskatchewan accountants like us Murray, Sen & Associates.
Claiming Tax Credits in Saskatchewan
Saskatchewan has several different tax credits that corporations can claim. The range from foreign tax credit applicable for corporations that pay taxes to another country/countries for foreign income (non-business).
Other applicable tax credits include manufacturing and processing investment tax credit/profit tax reduction, political contribution tax credit, environmental trust tax credit, and R&D (research and development) tax credit.
Corporations need seasoned Saskatoon accountants to be able to claim all credits applicable. Murray, Sen & Associates are trusted Saskatchewan accountants offering tax planning accounting services.
When Are Corporate Taxes Due in Canada?
We’ve discussed corporate tax rates in Saskatchewan and how to calculate taxes. We’ve also discussed application of credits for corporations. But when is the due date for corporate taxes?
In Canada (including all provinces), the due date for corporations to file income tax returns is dependent on when the fiscal year ends for the corporation in question. Notable general rules on filing and payment include;
- Filing deadline: This is usually 6-months after the end of a corporation’s fiscal year.
- Corporate tax payment deadline: After calculating tax using the applicable corporate tax rate and processing deductions, a corporation should pay corporate tax two months after the end of a fiscal year. However, this can vary. For instance, corporations, CPCs, or Canadian Controlled Private Corporations that qualify for small business deductions are supposed to pay corporate tax three months after the end of a fiscal year.
For instance, if the fiscal year of a corporation ends on March 31st, they should file by 30th September and pay by 30th June.
Important: It’s worth noting that business corporation tax deadlines that fall on a holiday or weekend are usually extended to the preceding business day. There may also be additional rules or taxable income exemptions depending on unique circumstances affecting a corporation. For this reason, it’s advisable to consult qualified tax professionals.
Trusted Corporate Tax Planning Accountant Services: Murray, Sen & Associates
As mentioned above, the corporate tax rate in Saskatchewan is 38%. However, it can be lowered when deductions, tax credits,, and tax refunds are applied. For the most accurate calculations, assessments, and up-to-date information on business tax rate. tax policies and related subjects in Saskatchewan, consult your trusted and local corporate tax accountants.
Get access to proven tax experts at Murray, Sen & Associates. Fill out the online contact form or call: 306-653-7800. Visit in person (Google Maps). Besides enjoying a reduced rate, you can get related accounting services such as accounting advisory on forensic auditing, provincial sales tax,Set up and more from chartered professional accountants in Canada with over 24 years of experience (since 2001).
Set up your business for success with Murray, Sen & Associates, an accounting firm renowned for deep expertise in finance matters and a comprehensive approach that incorporates cutting-edge technology and highly custom advisory services.