Dual tax rates – Example 2
Income earned in more than one province or territory
When you allocate taxable income to more than one province or territory, you also have to allocate proportionally any income eligible for the small business deduction.
Corp Y has permanent establishments in both Newfoundland and Labrador and the Yukon. Its tax year runs from July 1, 2018, to June 30, 2019.
Corp Y claimed the small business deduction when it calculated its federal tax payable.
The lower rate of tax for Newfoundland and Labrador is 3%, and the higher rate of tax is 15%.
To calculate its Newfoundland and Labrador income tax, Corp Y does the following calculations:
To calculate its Yukon income tax payable, Corp Y would repeat the same steps, using the rates that apply.
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