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Canada: Tax rate reductions for small business, aviation fuel (Ontario)

Canada: Tax rate reductions for small business

Ontario's Bill 138 received Royal Assent on 10 December 2019.


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The legislation reduces the small business corporate income tax rate to 3.2% (down from 3.5%). This measure applies to the first $500,000* of qualifying active business income of a Canadian-controlled private corporation. The tax rate reduction is prorated for tax years straddling 1 January 2020.

The legislation also includes other measures that:

  • Increase the non-eligible dividend tax rate for individuals
  • Reduce the tax rate on aviation fuel for certain northern regions

All measures are effective 1 January 2020.

Read a December 2019 report prepared by the KPMG member firm in Canada

*$=Canadian dollar

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