Dual tax rates – Example 1
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Dual tax rates – Example 1
Income earned in one province or territory
Example
Corp X earned all of its income in 2016 from its permanent establishment in Saskatchewan. Corp X claimed the small business deduction when it calculated its federal tax payable. The income from active business carried on in Canada was $78,000.
The Saskatchewan lower rate of tax is 2%. The higher rate of tax is 12%.
Corp X calculates its Saskatchewan rate tax payable as follows:
Taxable income
$90,000
Minus: Amount taxed at lower rate (least of lines 400, 405, 410, and 427 from the T2 return in the small business deduction calculation)
− 78,000
Amount taxed at higher rate
= $12,000
Calculation of Saskatchewan tax payable:
Taxes payable at the lower rate: $78,000 × 2%
$1,560
Plus: Taxes payable at the higher rate: $12,000 × 12%
+ 1,440
Saskatchewan tax payable
= $3,000
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- Date modified:
- 2017-04-20