Archived - Tax Expenditures and Evaluations 2013

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Chart 1
Statutory Tax Rates Applicable to Small CCPCs in Canada and Federal Business Limit, 2000–2014
Year Federal rate (%) Weighted average provincial rate (%) Federal business limit ($'000)
2000 13,1 6,9 200
2001 13,1 6,5 200
2002 13,1 6,2 200
2003 13,1 5,9 225
2004 13,1 5,6 250
2005 13,1 5,5 300
2006 13,1 5,2 300
2007 13,1 5,1 400
2008 11,0 4,7 400
2009 11,0 4,8 500
2010 11,0 4,5 500
2011 11,0 4,3 500
2012 11,0 4,3 500
2013 11,0 4,3 500
2014 11,0 4,3 500
Notes: Rates and limit as of December 31 of the reference year, except for 2014, which are based on information available as of January 1, 2014. Rates shown are those applicable to a CCPC’s income from an active business carried on in Canada and eligible for the small business deduction at the federal level and the equivalent deduction or low tax rate at the provincial level. The provincial average rate is weighted by federal taxable income allocated to each province.
Source: Department of Finance Canada.

 

Chart 2
Provincial Statutory General Tax Rates and Small Business Tax Rates, 2014
Province General tax rate (%) Small business tax rate (%)
Newfoundland and Labrador 14 4
Prince Edward Island 16 5
Nova Scotia 16 3
New Brunswick 12 5
Quebec 12 8
Ontario 12 5
Manitoba 12 0
Saskatchewan 12 2
Alberta 10 3
British Columbia 11 3
Yukon 15 4
Northwest Territories 12 4
Nunavut 12 4
Note: Based on information available as of January 1, 2014.
Source: Department of Finance Canada.

 

Chart 3
Marginal Statutory Tax Rates Applicable to CCPCs in Canada, 2000 and 2014
Taxable capital of CCPC Marginal statutory tax rate in 2000 (%) Marginal statutory tax rate in 2014 (%)
$0 to $2 million 20 15
$2 million to $3.5 million 45 15
$3.5 million to $5 million 45 16
$5 million to $10 million 43 26
$10 million to $15 million 51 35
$15 million or more 43 26
Notes: This chart shows the combined federal-provincial marginal statutory corporate income tax rates applicable to a CCPC’s income from an active business carried on in Canada at different levels of taxable capital, assuming a 10% pre-tax rate of return on taxable capital. It is also assumed that the CCPC is not part of a group of associated corporations. Marginal statutory tax rates do not include the impact of tax measures such as the Scientific Research and Experimental Development tax incentive program or the Atlantic Investment Tax Credit. The rates for 2000 include the impact of the federal corporate surtax (which no longer applies in 2014), but ignore federal and provincial general capital taxes. Lower rates for manufacturing and processing activities that are available in some provinces and that could apply when a corporation earns income above the business limit are also not reflected in this chart.
Source: Department of Finance Canada.

 

Chart 4
Number of Small CCPCs Claiming the Federal Small Business Deduction, 2000 to 2011
Year Number of small CCPCs ('000)
2000 374
2001 393
2002 409
2003 422
2004 445
2005 472
2006 503
2007 529
2008 551
2009 555
2010 582
2011 622
Source: Department of Finance Canada.

Chart 5

Number of Small CCPCs Claiming the Federal Small Business Deduction,
by Taxable Income, 2000, 2007 and 2011

This chart shows the number of small CCPCs claiming the federal small business deduction by taxable income for 2000, 2007 and 2011. A similar pattern is observed for all three years (the same pattern is observed for years not shown on the chart): the number of small CCPCs observed at low levels of taxable income is high (e.g., some 90,000 CCPCs in 2000 and close to 110,000 CCPCs in both 2007 and 2011 have less than $10,000 in taxable income), but declines at an exponential rate at progressively-higher levels of taxable income. A small concentration of CCPCs is observed in all three years at levels of taxable income at or just below the applicable business limit for these years ($200,000 in 2000, $400,000 in 2007 and $500,000 in 2011).

Notes: This chart shows the number of small CCPCs claiming the federal small business deduction by taxable income (in thousands of dollars, in classes of $10,000). Labels on the horizontal axis indicate the upper end-point of each taxable income class. Small CCPCs that are part of an associated group of corporations are shown in this chart based on the group’s total taxable income. 

Source: Department of Finance Canada.

Chart 6

Number of Small CCPCs Claiming the Federal Small Business Deduction, by Taxable Capital, 2000, 2007 and 2011

This chart shows the number of small CCPCs claiming the federal small business deduction by taxable capital for 2000, 2007 and 2011, starting at $3 million in taxable capital (the vast majority of small CCPCs claiming the federal small business deduction are under this level). The pattern shown on this chart is similar that the one shown on chart 5, that is, the number of small CCPCs declines at progressively higher levels of taxable capital. For instance, some 700, 1,400 and 1,800 small CCPCs have between $3 million and $3,100,000 in taxable capital in 2000, 2007 and 2011 respectively; these numbers drop to 350, 750 and 1,050 respectively at levels of taxable capital between $4 million and $4,100,000. No concentration of CCPCs is observed at the levels of taxable capital at which the small business tax rate is phased out ($10 miillion) and eliminated ($15 million).

Notes: This chart shows the number of small CCPCs claiming the federal small business deduction by taxable capital (in millions of dollars, in classes of $100,000). Only CCPCs with taxable capital between $3 million and $15 million are shown to facilitate the presentation. Labels on the horizontal axis indicate the mid-point of each taxable capital class. Small CCPCs that are part of an associated group of corporations are shown in this chart based on the group’s total taxable capital. The vertical lines indicate the beginning and end of the range of taxable capital over which the business limit is phased out. Corporations with taxable capital in excess of $10 million must report their taxable capital for corporate income tax purposes. Taxable capital is based on information reported by taxpayers or, when not available, is estimated based on balance sheet information from the General Index of Financial Information statement that is filed with a corporation’s T2 tax return.

Source: Department of Finance Canada.

Chart 7
Capital Investment and Wages and Salaries, Small CCPCs Claiming the Federal Small Business Deduction and Other Corporations, 2000 to 2011
Year Capital investment
($ billions)
Wages and salaries
($ billions)
Small CCPCs Other corporations Small CCPCs Other corporations
2000 16 402 133 149 89 729 266 737
2001 16 616 126 358 98 419 277 593
2002 16 949 113 953 102 500 282 041
2003 17 505 109 262 103 875 285 647
2004 18 575 113 515 110 159 297 652
2005 20 137 128 861 118 324 336 381
2006 21 350 137 046 126 412 357 808
2007 21 672 147 157 133 657 377 450
2008 21 734 141 810 135 578 382 047
2009 19 799 132 317 132 216 370 572
2010 20 795 120 999 136 720 382 932
2011 23 838 130 943 147 571 406 979
Notes: Capital investment corresponds to the cost of acquisition of depreciable capital assets as reported on Schedule 8 of the T2 Corporation Income Tax Return. Wages and salaries correspond to the amount reported by corporations on Schedule 5 of the T2 return, the T4 Summary return or the General Index of Financial Information statement.
Source: Department of Finance Canada.

 

Chart 8
Shares of Capital Investment Made and Wages and Salaries Paid by Small CCPCs Claiming the Federal Small Business Deduction, by Total Assets of Small CCPCs, 2000 to 2011
Share of Capital Investment by Small CCPCs (%) Share of Wages and Salaries Paid by Small CCPCs (%)
Total assets $0 - $30,000 $30,000 - $100,000 $100,000 - $500,000 $500,000 - $1 million $1 million or more Total $0 - $30,000 $30,000 - $100,000 $100,000 - $500,000 $500,000 - $1 million $1 million or more Total
2000 2 3 16 14 65 100 3 4 18 14 62 100
2001 1 3 16 14 66 100 2 4 19 13 62 100
2002 1 3 17 14 65 100 2 4 18 14 63 100
2003 1 3 17 15 65 100 2 4 18 14 63 100
2004 1 3 16 14 66 100 1 4 19 14 62 100
2005 1 3 15 14 68 100 1 4 18 13 63 100
2006 1 3 15 13 68 100 1 4 18 13 64 100
2007 1 3 15 14 68 100 1 4 18 13 63 100
2008 1 3 15 13 69 100 1 4 18 13 63 100
2009 1 3 14 13 69 100 1 4 18 14 62 100
2010 1 3 14 13 69 100 1 4 19 14 62 100
2011 1 3 13 12 71 100 1 4 19 14 62 100
Notes: Total assets as reported by corporations on the General Index of Financial Information statement. See also notes to Chart 7.
Source: Department of Finance Canada.