Administered by Government of Canada · Last verified: July 2026
Incorporated Canadian businesses pay a reduced federal tax rate of 9% on the first $500,000 of active business income, instead of the standard 15% corporate rate. That's a 6% savings on every dollar of profit up to $500K.
You claim this on your tax return, so the money comes back as a lower tax bill or a refund after you file. If you missed it in a past year, you can often still recover it by adjusting a prior return.
Take the 3-minute quiz to find out, and see every other Canadian program you qualify for at the same time.
Check my eligibilitySmall Business Deduction (SBD) is generally open to incorporated businesses, in any province or territory. Confirm the full criteria on the official program page before applying.
The estimated value is Up to $30,000 per year in tax savings. The actual amount depends on your eligible costs, the program's budget, and approval.
Claimed on a return, so a missed year can usually be recovered by amending. How far back depends on whether you file personally or as a corporation; confirm the eligible years with your accountant.
1. Confirm CCPC status with your accountant 2. File T2 return claiming the SBD 3. Ensure taxable capital is below $15M 4. Review passive income rules if applicable
Annual: file with your T2 return.