How much funding can be received?

Funds up to 83% of admissible expenses.

What is the deadline to apply?

The deadline to apply is not specified.

Who are the financial supporters of the Ontario small business deduction (SBD)?

Ontario small business deduction (SBD) is funded by Ontario Ministry of Finance, Government of Ontario

What are Ontario small business deduction (SBD)'s eligibility criterias?

Must be a Canadian-controlled private corporation (CCPC) throughout the tax year Taxable capital employed in Canada must not exceed $50 million in the previous tax year

Ontario small business deduction (SBD)

Last Update: April 27, 2025

ON, Canada

Reduces income tax for eligible Ontario small businesses

Ontario small business deduction (SBD) at a glance

Eligible Funding

Up to 83% of project cost

Timeline

Continuous Intakes

Financing Type

Tax Credits

Eligible Industries

All industries

Grant Providers

Ontario Ministry of Finance
Government of Ontario

Status

Open

Overview of the Ontario small business deduction (SBD) program

The Ontario Small Business Deduction allows eligible Canadian-controlled private corporations (CCPCs) to reduce their Ontario basic income tax by applying a deduction rate of 8.3%, resulting in a lower effective tax rate of 3.2% on small business income. The program is designed to support small businesses by reducing their tax burden, with eligibility phased out for corporations with taxable capital in Canada over $50 million.

Financing terms and conditions

The deduction allows for a reduction of the Ontario basic income tax by applying a small business deduction rate of 8.3% to eligible Ontario small business income.
The resulting effective Ontario corporate tax rate for eligible small business income is 3.2%.
The deduction amount is phased out for corporations with taxable capital employed in Canada exceeding $10 million in the previous tax year, and is eliminated if this amount reaches $50 million or more.

Eligibility criteria of the Ontario small business deduction (SBD) program

The applicant must be a Canadian-controlled private corporation (CCPC) throughout the tax year.
The applicant's taxable capital employed in Canada in the previous tax year must not exceed $50 million (phased out over $10 million, completely eliminated at $50 million).
The deduction applies to income classified as Ontario small business income.

Who is eligible?

Canadian-controlled private corporations (CCPCs) operating in Ontario

Who is not eligible

Corporations that are not Canadian-controlled private corporations (CCPCs) throughout the tax year.
CCPCs (including associated corporations) with taxable capital employed in Canada of $50 million or more in the previous tax year.

Eligible geographic areas

Ontario

How to apply to the Ontario small business deduction (SBD) program

Step 1: Calculate Ontario Small Business DeductionUse Part 2 of Schedule 500, Ontario Corporation Tax Calculation, as a worksheet to determine your corporation's Ontario small business deduction amount.
Step 2: Enter Deduction InformationOn line 402 of Schedule 5, Tax Calculation Supplementary – Corporations, enter the calculated Ontario small business deduction amount.
Step 3: File Required Forms with T2 ReturnComplete the T2 Corporation Income Tax Return.
Include Schedule 5 with your T2 return when you file with the Canada Revenue Agency.

Additional information

The Ontario small business deduction is calculated using the corporation's Ontario small business income and the small business deduction rate for the year.
The reduction and elimination of the deduction are based on the taxable capital employed in Canada during the previous tax year.
Ontario small business income is capped by the corporation's Ontario taxable income and is determined using the Ontario domestic factor.
Schedule 500 is used as a worksheet for calculation and does not need to be filed with the corporate tax return.