T2 Corporation – Income Tax Guide – Chapter 5: Page 5 of the T2 return

General tax reduction

A general tax reduction of 13% is available on qualifying income.

Corporations benefit from the general tax reduction only on taxable income that is subject to a rate of 38%.

The reduction does not apply to income that benefits from preferential corporate tax treatment, such as:

  • income eligible for the small business deduction and Canadian manufacturing and processing income
  • income eligible for the deduction for the generation of electrical energy for sale or the production of steam for sale
  • income eligible for the additional deduction for credit unions
  • investment income subject to the refundable tax provisions

Note

The additional deduction for credit unions is cancelled. The last year for which you can claim it is 2016. For details, see Line 628 – Additional deductions – credit unions.

The reduction also does not apply to income earned from a personal services business or to a corporation that was, throughout the year, an investment corporation, a mortgage investment corporation, or a mutual fund corporation.

Reference
Subsection 123.4(1)

General tax reduction for Canadian-controlled private corporations (CCPCs)

If you are a CCPC throughout the tax year, complete this area of page 5 to calculate the reduction. Enter the resulting amount on line 638 on page 8.

Note

If you are a corporation that is, throughout the year, a cooperative corporation (within the meaning assigned by subsection 136(2)) or a credit union, enter zero at amount G.

Reference
Subsection 123.4(2)

General tax reduction

Do not complete this area if you are a CCPC, an investment corporation, a mortgage investment corporation, a mutual fund corporation, or a corporation that has income not subject to the corporation tax rate of 38%.

All other corporations complete this area of page 5 to calculate the reduction. Enter the general tax reduction on line 639 on page 8.

Reference
Subsection 123.4(2)

Report a problem or mistake on this page
Please select all that apply:

Thank you for your help!

You will not receive a reply. For enquiries, contact us.

Date modified: