Canada: Legislation enacted, small business tax rate temporarily reduced (Saskatchewan)

Canada: Small business tax rate temporarily reduced

Bill 2, which temporarily reduces Saskatchewan’s small business income tax rate to 0% (from 2%), is now law. The small business income tax rate will gradually return to 2% beginning 1 July 2023.

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Bill 2 reduces the province’s small business income tax rate for the next three years, according to the following schedule:

  • Reduce the small business income tax rate to 0% (from 2%) beginning 1 October 2020
  • Increase the small business income tax rate to 1% (from 0%) beginning 1 July 2022
  • Increase the small business income tax rate back to its current rate of 2% (from 1%) beginning 1 July 2023.

Non-eligible dividend tax credit: As a result of the small business rate changes, Bill 2 also adjusts the dividend tax credit for non-eligible dividends beginning in 2021, resulting in a top marginal tax rate for noneligible dividends as follows:

Non-eligible dividends – Top marginal federal and Saskatchewan tax rate*
2020 2021 2022 2023 2024
40.37% 42.29% 41.82% 40.86% 40.37%

*Assumes no further changes to the federal or Saskatchewan tax rates.


Read a December 2020 report [PDF 263 KB] prepared by the KPMG member firm in Canada

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