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; and
  • investment income subject to the refundable tax provisions.


The additional deduction for credit unions will be phased out. For details, see Line 628 – Additional deductions – credit unions.

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

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.


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 on line G.

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.

Subsection 123.4(2)

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