Passive Income And Small Business Deduction

These changes will apply where a corporation earns passive investment income and also earns income from active business that is taxed at the small business rate or small business income.
Passive income and small business deduction. Passive income reduces the small business deduction. Had the full corporate tax rate of 26 5 been applied the tax obligation would have been 265 000 26 5 of 1m. The federal government put forward a consultation paper in july 2017 that it was looking to prevent companies deferring excess income in the corporation to use it to earn passive investment income after paying small business tax rates. The budget proposes to phase out a ccpc s business limit on a straight line basis if the total of the adjusted aggregate investment income of the ccpc and any other corporation with which it is associated is between 50 000 and 150 000 the passive income business limit reduction.