Small Business Deduction

Plain meaning

A corporate tax deduction that can reduce the tax rate on eligible active business income of Canadian-controlled private corporations.

Also called

Key points

• Small Business Deduction affects how a business reports, pays, remits, finances, or documents tax-related activity.
• The rules can depend on business structure, registration status, income type, payroll obligations, or the nature of supplies and expenses.
• Good records matter because CRA reviews often focus on invoices, slips, contracts, payroll records, and the reasonableness of claims.
• Changes can affect cash flow, pricing, owner-manager planning, audit exposure, and the timing of remittances or deductions.

Why it comes up

Changes to the small business deduction affect private corporations, owner-managers, and business investment decisions. It can affect business cash flow, compliance work, pricing, payroll, remittances, deductions, or audit exposure.