{"id":626,"date":"2025-11-29T19:09:54","date_gmt":"2025-11-29T19:09:54","guid":{"rendered":"https:\/\/canada.truenorthtaxes.ca\/?p=626"},"modified":"2025-11-29T19:09:54","modified_gmt":"2025-11-29T19:09:54","slug":"the-small-business-deduction-in-canada","status":"publish","type":"post","link":"https:\/\/truenorthbenefits.ca\/taxes\/the-small-business-deduction-in-canada\/","title":{"rendered":"Small Business Deduction"},"content":{"rendered":"\n<style>\n:root {\n    --primary-color: #4F46E5;\n    --secondary-color: #10B981;\n    --text-dark: #1F2937;\n    --text-light: #6B7280;\n    --bg-light: #F9FAFB;\n    --border-color: #E5E7EB;\n    --success-color: #059669;\n    --warning-color: #F59E0B;\n}\n\n.vftc-wrapper {\n    font-family: -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, 'Helvetica Neue', Arial, sans-serif;\n    max-width: 1200px;\n    margin: 0 auto;\n    padding: 20px;\n    color: var(--text-dark);\n}\n\n.vftc-hero {\n    text-align: center;\n    padding: 40px 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box-shadow: 0 2px 4px rgba(0, 0, 0, 0.05);\n}\n\n.vftc-faq-section h2 {\n    font-size: 2em;\n    margin: 0 0 30px 0;\n    color: var(--text-dark);\n    text-align: center;\n}\n\n.vftc-faq-item {\n    background: var(--bg-light);\n    padding: 24px;\n    border-radius: 12px;\n    margin-bottom: 16px;\n    cursor: pointer;\n    transition: all 0.3s;\n}\n\n.vftc-faq-item:hover {\n    background: #F3F4F6;\n}\n\n.vftc-faq-question {\n    font-weight: 600;\n    color: var(--text-dark);\n    display: flex;\n    justify-content: space-between;\n    align-items: center;\n    font-size: 1.1em;\n}\n\n.vftc-faq-toggle {\n    width: 32px;\n    height: 32px;\n    background: white;\n    border-radius: 50%;\n    display: flex;\n    align-items: center;\n    justify-content: center;\n    flex-shrink: 0;\n    transition: all 0.3s;\n}\n\n.vftc-faq-item.active .vftc-faq-toggle {\n    background: var(--primary-color);\n}\n\n.vftc-faq-toggle svg {\n    width: 20px;\n    height: 20px;\n    stroke: var(--text-dark);\n    transition: all 0.3s;\n}\n\n.vftc-faq-item.active .vftc-faq-toggle svg {\n    stroke: white;\n    transform: rotate(180deg);\n}\n\n.vftc-faq-answer {\n    margin-top: 16px;\n    color: var(--text-light);\n    line-height: 1.7;\n    display: none;\n}\n\n.vftc-faq-item.active .vftc-faq-answer {\n    display: block;\n}\n\n.vftc-cta-box {\n    background: linear-gradient(135deg, var(--primary-color) 0%, #7C3AED 100%);\n    padding: 32px;\n    border-radius: 12px;\n    text-align: center;\n    color: white;\n    margin: 30px 0;\n}\n\n.vftc-cta-box h3 {\n    margin: 0 0 16px 0;\n    color: white;\n}\n\n.vftc-cta-box p {\n    margin: 0 0 20px 0;\n    opacity: 0.95;\n    color: white;\n}\n\n.vftc-cta-button {\n    display: inline-block;\n    background: white;\n    color: var(--primary-color);\n    padding: 14px 32px;\n    border-radius: 8px;\n    text-decoration: none;\n    font-weight: 600;\n    transition: all 0.3s;\n}\n\n.vftc-cta-button:hover {\n    transform: translateY(-2px);\n    box-shadow: 0 4px 12px rgba(0, 0, 0, 0.2);\n}\n\n@media (max-width: 768px) {\n    .vftc-hero h1 {\n        font-size: 1.8em;\n    }\n    \n    .vftc-content {\n        padding: 24px;\n    }\n    \n    .vftc-features-grid {\n        grid-template-columns: 1fr;\n    }\n}\n<\/style>\n\n<div class=\"vftc-wrapper\">\n    <div class=\"vftc-hero\">\n        <h1>Small Business Deduction Canada 2026<\/h1>\n        <p>Slash your corporate tax rate by half \u2014 here&#8217;s how Canadian-controlled private corporations access this powerful tax break<\/p>\n    <\/div>\n\n    <div class=\"vftc-content\">\n        <p>Running a small business in Canada? Then you&#8217;re probably juggling spreadsheets, inventory, payroll, and wondering if there&#8217;s any way to keep more of what you earn. Good news \u2014 there absolutely is. The Small Business Deduction (SBD) is Ottawa&#8217;s way of giving Canadian entrepreneurs a fighting chance, slashing your federal corporate tax rate from 38% down to a sweet 9% on the first $500,000 of active business income. That&#8217;s not pocket change, eh?<\/p>\n\n        <div class=\"vftc-highlight-box\">\n            <h3>Quick Answer<\/h3>\n            <p><strong>The Small Business Deduction reduces the federal corporate tax rate from 38% to 9% on the first $500,000 of active business income<\/strong> for Canadian-Controlled Private Corporations (CCPCs). Combined with provincial credits, your effective tax rate drops to roughly 11-13% depending on your province. To qualify, your corporation must be CCPC-status, earn active business income (not investment income), and stay within the business limit thresholds.<\/p>\n        <\/div>\n\n        <h2>\n            <div class=\"vftc-icon\">\n                <svg fill=\"none\" stroke=\"currentColor\" viewBox=\"0 0 24 24\">\n                    <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M9 12l2 2 4-4m6 2a9 9 0 11-18 0 9 9 0 0118 0z\"><\/path>\n                <\/svg>\n            <\/div>\n            What Exactly Is the Small Business Deduction?\n        <\/h2>\n        \n        <p>Think of the SBD as the CRA&#8217;s acknowledgment that small businesses are the backbone of the Canadian economy. Without it, you&#8217;d pay the general corporate tax rate on every dollar of profit \u2014 currently 38% federally before provincial taxes kick in. With the SBD, that rate plummets to just 9% on your first $500,000 of qualifying income.<\/p>\n\n        <p>Here&#8217;s where it gets interesting: <strong>provinces and territories add their own small business rates on top<\/strong>, which typically range from 0% to 4%. Combined federal and provincial rates hover between 10-13%, depending where you operate. Compare that to the combined general rate of 26-31%, and you&#8217;re looking at serious savings that compound year after year.<\/p>\n\n        <h2>\n            <div class=\"vftc-icon\">\n                <svg fill=\"none\" stroke=\"currentColor\" viewBox=\"0 0 24 24\">\n                    <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M12 8c-1.657 0-3 .895-3 2s1.343 2 3 2 3 .895 3 2-1.343 2-3 2m0-8c1.11 0 2.08.402 2.599 1M12 8V7m0 1v8m0 0v1m0-1c-1.11 0-2.08-.402-2.599-1M21 12a9 9 0 11-18 0 9 9 0 0118 0z\"><\/path>\n                <\/svg>\n            <\/div>\n            Who Qualifies for the Small Business Deduction?\n        <\/h2>\n\n        <div class=\"vftc-features-grid\">\n            <div class=\"vftc-feature-card\">\n                <div class=\"vftc-feature-icon\">\n                    <svg fill=\"none\" stroke=\"currentColor\" viewBox=\"0 0 24 24\">\n                        <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M3 21v-4m0 0V5a2 2 0 012-2h6.5l1 1H21l-3 6 3 6h-8.5l-1-1H5a2 2 0 00-2 2zm9-13.5V9\"><\/path>\n                    <\/svg>\n                <\/div>\n                <h4>CCPC Status Required<\/h4>\n                <p>Your corporation must be Canadian-Controlled Private Corporation \u2014 essentially, controlled by Canadian residents and not publicly traded. Foreign ownership restrictions apply.<\/p>\n            <\/div>\n\n            <div class=\"vftc-feature-card\">\n                <div class=\"vftc-feature-icon\">\n                    <svg fill=\"none\" stroke=\"currentColor\" viewBox=\"0 0 24 24\">\n                        <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M13 7h8m0 0v8m0-8l-8 8-4-4-6 6\"><\/path>\n                    <\/svg>\n                <\/div>\n                <h4>Active Business Income<\/h4>\n                <p>The income must come from active business operations \u2014 manufacturing, services, retail. Passive investment income and specified investment business income don&#8217;t qualify.<\/p>\n            <\/div>\n\n            <div class=\"vftc-feature-card\">\n                <div class=\"vftc-feature-icon\">\n                    <svg fill=\"none\" stroke=\"currentColor\" viewBox=\"0 0 24 24\">\n                        <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M9 7h6m0 10v-3m-3 3h.01M9 17h.01M9 14h.01M12 14h.01M15 11h.01M12 11h.01M9 11h.01M7 21h10a2 2 0 002-2V5a2 2 0 00-2-2H7a2 2 0 00-2 2v14a2 2 0 002 2z\"><\/path>\n                    <\/svg>\n                <\/div>\n                <h4>Business Limit Threshold<\/h4>\n                <p>The $500,000 business limit starts reducing if your corporation&#8217;s taxable capital exceeds $10 million, and phases out completely at $15 million. Associated corporations share the limit.<\/p>\n            <\/div>\n        <\/div>\n\n        <p>The &#8220;active business income&#8221; requirement trips people up. Rental income from a few properties? Generally doesn&#8217;t qualify unless it&#8217;s part of a substantial business operation with employees. Investment portfolio income? Nope. Consulting services you actively provide to clients? Absolutely qualifies.<\/p>\n\n        <h2>\n            <div class=\"vftc-icon\">\n                <svg fill=\"none\" stroke=\"currentColor\" viewBox=\"0 0 24 24\">\n                    <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M12 9v2m0 4h.01m-6.938 4h13.856c1.54 0 2.502-1.667 1.732-2.5L13.732 4c-.77-.833-1.964-.833-2.732 0L3.732 16.5c-.77.833.192 2.5 1.732 2.5z\"><\/path>\n                <\/svg>\n            <\/div>\n            The Associated Corporation Rules\n        <\/h2>\n\n        <p>Here&#8217;s where things get complex \u2014 and why tax planning matters. If you own multiple corporations, or you&#8217;re in business with family members who also own corporations, the CRA considers them &#8220;associated.&#8221; Associated corporations must share the $500,000 business limit, which can significantly impact your tax bill.<\/p>\n\n        <p>Associations happen through control relationships \u2014 owning shares in multiple companies, family ownership structures, or agreements that effectively control corporations. The rules are intricate enough that you&#8217;ll want professional advice if you&#8217;re structuring multiple entities. One badly planned share structure could cost you tens of thousands annually.<\/p>\n\n        <div class=\"vftc-cta-box\">\n            <h3>Understanding Your Corporate Tax Rate?<\/h3>\n            <p>See how the small business deduction fits into your overall corporate tax picture<\/p>\n            <a href=\"https:\/\/truenorthbenefits.ca\/taxes\/corporation-tax-rates-canada\/\" class=\"vftc-cta-button\">View Corporate Tax Rates<\/a>\n        <\/div>\n\n        <h2>\n            <div class=\"vftc-icon\">\n                <svg fill=\"none\" stroke=\"currentColor\" viewBox=\"0 0 24 24\">\n                    <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M9 19v-6a2 2 0 00-2-2H5a2 2 0 00-2 2v6a2 2 0 002 2h2a2 2 0 002-2zm0 0V9a2 2 0 012-2h2a2 2 0 012 2v10m-6 0a2 2 0 002 2h2a2 2 0 002-2m0 0V5a2 2 0 012-2h2a2 2 0 012 2v14a2 2 0 01-2 2h-2a2 2 0 01-2-2z\"><\/path>\n                <\/svg>\n            <\/div>\n            How Much Can You Actually Save?\n        <\/h2>\n\n        <p>Let&#8217;s run the numbers with a real example. Say your Ontario corporation earns $300,000 in active business income. Without the SBD, you&#8217;d pay roughly $78,000 in combined federal and provincial corporate tax (26% rate). With the SBD? About $36,000 (12% combined rate). That&#8217;s $42,000 staying in your corporation to reinvest, pay dividends, or build reserves.<\/p>\n\n        <p>Scale that up to the full $500,000 business limit, and the annual tax savings jump to approximately $70,000 compared to general corporate rates. Year after year, those savings compound into serious wealth-building potential \u2014 money that funds expansion, hires employees, or provides the cushion every business needs.<\/p>\n\n        <p>Want to see exactly how business income affects your personal taxes when you take dividends or salary? Our <a href=\"https:\/\/truenorthbenefits.ca\/taxes\/income-tax-calculator\/\" style=\"color: var(--primary-color); text-decoration: none; font-weight: 600;\">income tax calculator<\/a> shows the complete picture across all provinces and income levels.<\/p>\n\n        <h2>\n            <div class=\"vftc-icon\">\n                <svg fill=\"none\" stroke=\"currentColor\" viewBox=\"0 0 24 24\">\n                    <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M13 10V3L4 14h7v7l9-11h-7z\"><\/path>\n                <\/svg>\n            <\/div>\n            Common Traps That Cost You the Deduction\n        <\/h2>\n\n        <ul class=\"vftc-list\">\n            <li><strong>Misclassifying passive income as active:<\/strong> Rental properties with minimal involvement, investment portfolios, and certain service businesses can be deemed specified investment businesses that don&#8217;t qualify.<\/li>\n            <li><strong>Exceeding capital thresholds:<\/strong> Once your taxable capital hits $10 million, your business limit starts grinding down $10 for every dollar over until it disappears at $15 million.<\/li>\n            <li><strong>Ignoring association rules:<\/strong> Family business structures often trigger associations without proper planning, forcing you to share the $500,000 limit when you could have had separate limits.<\/li>\n            <li><strong>Accumulating excess passive income:<\/strong> Investment income above $50,000 annually reduces your business limit by $5 for every dollar of aggregate investment income, potentially eliminating the deduction entirely.<\/li>\n            <li><strong>Missing the active business test:<\/strong> Personal services businesses \u2014 where you&#8217;re essentially an employee incorporated \u2014 generally don&#8217;t qualify for the SBD.<\/li>\n        <\/ul>\n\n        <p>These rules exist to prevent abuse, but they also create legitimate planning opportunities. Proper structuring, income splitting strategies within CRA rules, and managing your passive investment income can preserve your full deduction.<\/p>\n\n        <h2>\n            <div class=\"vftc-icon\">\n                <svg fill=\"none\" stroke=\"currentColor\" viewBox=\"0 0 24 24\">\n                    <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M9 12h6m-6 4h6m2 5H7a2 2 0 01-2-2V5a2 2 0 012-2h5.586a1 1 0 01.707.293l5.414 5.414a1 1 0 01.293.707V19a2 2 0 01-2 2z\"><\/path>\n                <\/svg>\n            <\/div>\n            Maximizing Your Small Business Deduction\n        <\/h2>\n\n        <p>Smart tax planning means structuring your affairs to legitimately access the full deduction. Keep passive investments in personal accounts or holding companies separate from your operating company. Track your active hours and employee involvement if you&#8217;re near borderline classifications. Document business activities meticulously, especially for rental operations or consulting work.<\/p>\n\n        <p>Consider timing strategies for large income years \u2014 deferring revenue or accelerating <a href=\"https:\/\/truenorthbenefits.ca\/taxes\/business-expenses-tax-deductible-canada\/\" style=\"color: var(--primary-color); text-decoration: none; font-weight: 600;\">deductible business expenses<\/a> to keep within the $500,000 sweet spot. If you&#8217;re approaching the capital threshold, asset management and corporate reorganizations might preserve your deduction.<\/p>\n\n        <p>Don&#8217;t forget about GST\/HST planning either \u2014 proper management of input tax credits and registration timing can significantly impact your bottom line. Our <a href=\"https:\/\/truenorthbenefits.ca\/taxes\/hst-gst-guide-small-business\/\" style=\"color: var(--primary-color); text-decoration: none; font-weight: 600;\">complete HST\/GST guide<\/a> covers strategies that complement your SBD planning.<\/p>\n\n        <div class=\"vftc-cta-box\">\n            <h3>See How Tax Brackets Affect Your Business Income<\/h3>\n            <p>Understand the interplay between corporate and personal tax rates<\/p>\n            <a href=\"https:\/\/truenorthbenefits.ca\/taxes\/tax-brackets-canada\/\" class=\"vftc-cta-button\">View 2026 Tax Brackets<\/a>\n        <\/div>\n    <\/div>\n\n    <div class=\"vftc-faq-section\">\n        <h2>Frequently Asked Questions<\/h2>\n\n        <div class=\"vftc-faq-item\">\n            <div class=\"vftc-faq-question\">\n                What&#8217;s the actual tax rate with the small business deduction in 2026?\n                <div class=\"vftc-faq-toggle\">\n                    <svg fill=\"none\" stroke=\"currentColor\" viewBox=\"0 0 24 24\">\n                        <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M19 9l-7 7-7-7\"><\/path>\n                    <\/svg>\n                <\/div>\n            <\/div>\n            <div class=\"vftc-faq-answer\">\n                The federal rate is 9% on qualifying active business income up to $500,000. Adding provincial rates, you&#8217;ll pay combined rates of approximately 10-13% depending on your province. Ontario sits around 12%, Alberta around 11%, while BC is closer to 11%. This compares to general corporate rates of 26-31% without the deduction.\n            <\/div>\n        <\/div>\n\n        <div class=\"vftc-faq-item\">\n            <div class=\"vftc-faq-question\">\n                Do sole proprietors and partnerships qualify for the small business deduction?\n                <div class=\"vftc-faq-toggle\">\n                    <svg fill=\"none\" stroke=\"currentColor\" viewBox=\"0 0 24 24\">\n                        <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M19 9l-7 7-7-7\"><\/path>\n                    <\/svg>\n                <\/div>\n            <\/div>\n            <div class=\"vftc-faq-answer\">\n                No, the small business deduction is exclusively for Canadian-Controlled Private Corporations. Sole proprietors and partnerships pay personal income tax rates on business income. However, incorporating might make sense if you&#8217;re earning significant profits and want access to the lower corporate tax rates.\n            <\/div>\n        <\/div>\n\n        <div class=\"vftc-faq-item\">\n            <div class=\"vftc-faq-question\">\n                How does passive investment income affect my business limit?\n                <div class=\"vftc-faq-toggle\">\n                    <svg fill=\"none\" stroke=\"currentColor\" viewBox=\"0 0 24 24\">\n                        <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M19 9l-7 7-7-7\"><\/path>\n                    <\/svg>\n                <\/div>\n            <\/div>\n            <div class=\"vftc-faq-answer\">\n                Once your aggregate investment income exceeds $50,000 annually, your business limit reduces by $5 for every dollar over that threshold. At $150,000 of investment income, your business limit drops to zero and you lose the deduction entirely. This encourages keeping passive investments outside your operating corporation.\n            <\/div>\n        <\/div>\n\n        <div class=\"vftc-faq-item\">\n            <div class=\"vftc-faq-question\">\n                What happens if I own multiple corporations?\n                <div class=\"vftc-faq-toggle\">\n                    <svg fill=\"none\" stroke=\"currentColor\" viewBox=\"0 0 24 24\">\n                        <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M19 9l-7 7-7-7\"><\/path>\n                    <\/svg>\n                <\/div>\n            <\/div>\n            <div class=\"vftc-faq-answer\">\n                If your corporations are associated (controlled by the same person or group), you must share the $500,000 business limit among all associated companies. You&#8217;ll need to file Form T2 Schedule 23 to allocate the business limit. Proper structuring with professional advice can sometimes avoid association in legitimate business arrangements.\n            <\/div>\n        <\/div>\n\n        <div class=\"vftc-faq-item\">\n            <div class=\"vftc-faq-question\">\n                Can a professional corporation claim the small business deduction?\n                <div class=\"vftc-faq-toggle\">\n                    <svg fill=\"none\" stroke=\"currentColor\" viewBox=\"0 0 24 24\">\n                        <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M19 9l-7 7-7-7\"><\/path>\n                    <\/svg>\n                <\/div>\n            <\/div>\n            <div class=\"vftc-faq-answer\">\n                Generally yes, if the professional corporation meets all CCPC requirements and earns active business income. Doctors, lawyers, accountants, and other professionals operating through corporations typically qualify. However, personal services businesses \u2014 where you&#8217;re essentially an incorporated employee \u2014 may be denied the deduction.\n            <\/div>\n        <\/div>\n\n        <div class=\"vftc-faq-item\">\n            <div class=\"vftc-faq-question\">\n                What&#8217;s the difference between active and passive business income?\n                <div class=\"vftc-faq-toggle\">\n                    <svg fill=\"none\" stroke=\"currentColor\" viewBox=\"0 0 24 24\">\n                        <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M19 9l-7 7-7-7\"><\/path>\n                    <\/svg>\n                <\/div>\n            <\/div>\n            <div class=\"vftc-faq-answer\">\n                Active business income comes from day-to-day business operations \u2014 manufacturing, retail, consulting, services you provide. Passive income includes investment earnings, interest, dividends, rental income from properties without substantial involvement, and capital gains. Only active business income qualifies for the small business deduction.\n            <\/div>\n        <\/div>\n\n        <div class=\"vftc-faq-item\">\n            <div class=\"vftc-faq-question\">\n                How does the $15 million taxable capital limit work?\n                <div class=\"vftc-faq-toggle\">\n                    <svg fill=\"none\" stroke=\"currentColor\" viewBox=\"0 0 24 24\">\n                        <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M19 9l-7 7-7-7\"><\/path>\n                    <\/svg>\n                <\/div>\n            <\/div>\n            <div class=\"vftc-faq-answer\">\n                Taxable capital includes equity, retained earnings, and certain debts. Once it exceeds $10 million, your business limit starts reducing \u2014 losing $10 of business limit for every dollar of capital over $10 million. At $15 million in taxable capital, the business limit reaches zero and you pay general corporate rates on all income.\n            <\/div>\n        <\/div>\n\n        <div class=\"vftc-faq-item\">\n            <div class=\"vftc-faq-question\">\n                Should I incorporate to access the small business deduction?\n                <div class=\"vftc-faq-toggle\">\n                    <svg fill=\"none\" stroke=\"currentColor\" viewBox=\"0 0 24 24\">\n                        <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M19 9l-7 7-7-7\"><\/path>\n                    <\/svg>\n                <\/div>\n            <\/div>\n            <div class=\"vftc-faq-answer\">\n                It depends on your income level and plans for the money. If you&#8217;re earning significant profits and don&#8217;t need all the cash personally, the tax deferral advantage is substantial. However, incorporation has costs \u2014 legal fees, accounting fees, additional complexity. Generally worthwhile above $50,000-$75,000 in annual profit, but get professional advice for your specific situation.\n            <\/div>\n        <\/div>\n\n        <div class=\"vftc-faq-item\">\n            <div class=\"vftc-faq-question\">\n                Does the small business deduction apply to capital gains?\n                <div class=\"vftc-faq-toggle\">\n                    <svg fill=\"none\" stroke=\"currentColor\" viewBox=\"0 0 24 24\">\n                        <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M19 9l-7 7-7-7\"><\/path>\n                    <\/svg>\n                <\/div>\n            <\/div>\n            <div class=\"vftc-faq-answer\">\n                No, capital gains are not active business income and don&#8217;t qualify for the small business deduction. They&#8217;re taxed at the general corporate rate. However, certain capital gains might qualify for other tax incentives like the lifetime capital gains exemption when selling qualified small business corporation shares.\n            <\/div>\n        <\/div>\n\n        <div class=\"vftc-faq-item\">\n            <div class=\"vftc-faq-question\">\n                Can I claim the small business deduction if some shareholders aren&#8217;t Canadian?\n                <div class=\"vftc-faq-toggle\">\n                    <svg fill=\"none\" stroke=\"currentColor\" viewBox=\"0 0 24 24\">\n                        <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M19 9l-7 7-7-7\"><\/path>\n                    <\/svg>\n                <\/div>\n            <\/div>\n            <div class=\"vftc-faq-answer\">\n                CCPC status requires Canadian residents to control the corporation. Some non-resident ownership is permitted, but if non-residents control voting shares or have significant influence over management, you&#8217;ll lose CCPC status and the small business deduction. The specific rules are complex and require professional review of your shareholder structure.\n            <\/div>\n        <\/div>\n    <\/div>\n<\/div>\n\n<script>\ndocument.addEventListener('DOMContentLoaded', function() {\n    const faqItems = document.querySelectorAll('.vftc-faq-item');\n    \n    faqItems.forEach(item => {\n        item.addEventListener('click', function() {\n            const isActive = this.classList.contains('active');\n            \n            faqItems.forEach(i => i.classList.remove('active'));\n            \n            if (!isActive) {\n                this.classList.add('active');\n            }\n        });\n    });\n});\n<\/script>\n","protected":false},"excerpt":{"rendered":"<p>Small Business Deduction Canada 2026 Slash your corporate tax rate by half \u2014 here&#8217;s how Canadian-controlled private corporations access this powerful tax break Running a small business in Canada? Then you&#8217;re probably juggling spreadsheets, inventory, payroll, and wondering if there&#8217;s any way to keep more of what you earn. Good news \u2014 there absolutely is. [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-626","post","type-post","status-publish","format-standard","hentry","category-business-taxes"],"blocksy_meta":{"styles_descriptor":{"styles":{"desktop":"","tablet":"","mobile":""},"google_fonts":[],"version":8}},"_links":{"self":[{"href":"https:\/\/truenorthbenefits.ca\/taxes\/wp-json\/wp\/v2\/posts\/626","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/truenorthbenefits.ca\/taxes\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/truenorthbenefits.ca\/taxes\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/truenorthbenefits.ca\/taxes\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/truenorthbenefits.ca\/taxes\/wp-json\/wp\/v2\/comments?post=626"}],"version-history":[{"count":0,"href":"https:\/\/truenorthbenefits.ca\/taxes\/wp-json\/wp\/v2\/posts\/626\/revisions"}],"wp:attachment":[{"href":"https:\/\/truenorthbenefits.ca\/taxes\/wp-json\/wp\/v2\/media?parent=626"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/truenorthbenefits.ca\/taxes\/wp-json\/wp\/v2\/categories?post=626"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/truenorthbenefits.ca\/taxes\/wp-json\/wp\/v2\/tags?post=626"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}