What is the criteria for a small business in Canada?

According to Industry Canada, a small business is one that has 5 to 100 employees.

For CRA purposes in order to meet the small business deduction (SBD) and be eligible for the lower tax rate of 15.5% (combined Federal + Ontario),  the business must meet the Canadian-controlled private corporation (CCPC) criteria and have active business income up to $500,000.

For a corporation to be considered a CCPC, it must meet all of the following criteria:

• it is a corporation that is resident in Canada.
• it is not controlled directly or indirectly by one or more non-resident persons.
• it is not controlled directly or indirectly by one or more public corporations.
• it is not controlled by a Canadian resident corporation that lists its shares on a designated stock exchange outside of Canada.
• it is not controlled directly or indirectly by any combination of persons described in the three previous conditions.
• no class of its shares of capital stock is listed on a designated stock exchange.

ABOUT THE AUTHOR

ALLAN MADAN

CA.CPA.CGA

Allan Madan is a CPA, CA and the founder of Madan Chartered Accountant Professional Corporation. Allan provides valuable tax planning, accounting and income tax preparation services in the Greater Toronto Area.

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