How much funding can be received?

There is no informations about how much funding can be received.

What is the deadline to apply?

The deadline to apply is not specified.

Who are the financial supporters of the Small Business Deduction (SBD)?

Small Business Deduction (SBD) is funded by Canada Revenue Agency (CRA), Government of Canada

What are Small Business Deduction (SBD)'s eligibility criterias?

The corporation must be a Canadian-controlled private corporation (CCPC). The corporation's taxable capital employed in Canada must not exceed $15 million.

Small Business Deduction (SBD)

Last Update: June 26, 2025

Canada

Small business tax credit

Small Business Deduction (SBD) at a glance

Eligible Funding

No Condition

Timeline

Open Date : November 14, 2019

Financing Type

Tax Credits

Eligible Industries

All industries

Grant Providers

Canada Revenue Agency (CRA)
Government of Canada

Status

Open

Overview of the Small Business Deduction (SBD) program

You can get a reduced tax rate on your first $500, 000 in revenues if you own a Canadian-controlled small business corporation.

Financing terms and conditions

The small business deduction (SBD) reduces corporate income tax for Canadian-controlled private corporations (CCPCs) up to a business limit of $500,000 per year.
This $500,000 business limit is reduced if the combined taxable capital employed in Canada of the corporation and associated corporations is between $10 million and $15 million.
The $500,000 business limit is also reduced if adjusted aggregate investment income (passive income) of the corporation and associated corporations is between $50,000 and $150,000.

Eligible projects & activities

Examples of admissible projects:

$ 25,000

Creating a financial literacy program for young adults in underserved communities

$ 35,000

Launching a mobile app to connect service providers with local customers

$ 15,000

Establishing a community garden to provide fresh produce and educational programs

$ 30,000

Providing renewable energy solutions to rural areas through solar panel installations

$ 40,000

Launching an e-commerce platform for artisanal products made in Canada

$ 50,000

Developing a comprehensive financial software platform for local businesses

Eligibility criteria of the Small Business Deduction (SBD) program

The applicant must be a Canadian-controlled private corporation (CCPC) throughout the taxation year.
The corporation must have income from an active business carried on in Canada.
The corporation's business limit applies, which may be reduced based on factors such as taxable capital and adjusted aggregate investment income.

Who is eligible?

Canadian-controlled private corporations (CCPCs)

Eligibility criteria of the Small Business Deduction (SBD) program

There are evaluation and selection criteria for this grant. The evaluation and selection criteria include:

Calculation of the adjusted aggregate investment income of the corporation and any associated corporations
Calculation of the passive income business limit reduction for the corporation
Demonstration that passive investments were not transferred to related corporations to avoid the passive income business limit reduction
Evidence of active assets and their use in the corporation's active business
Avoidance of transactions aimed at deferring the application of the SBD rule changes

How to apply to the Small Business Deduction (SBD) program

Step 1: Calculate Your SBD and Business Limit
- Determine your status as a Canadian-controlled private corporation (CCPC).
- Calculate your income from active business in Canada, taxable income, and business limit for the year.
- Apply the phase-out rules if your adjusted aggregate investment income or taxable capital employed in Canada is above prescribed thresholds.
Step 2: Prepare Relevant Documentation
- Gather supporting documents including financial statements, details of active business income, records of adjusted aggregate investment income, and information on associated corporations.
- Maintain documentation on any asset disposals, transfers of property, and any changes to fiscal year end, as required.
Step 3: Complete Your Corporate Tax Return
- Accurately complete your T2 Corporation Income Tax Return, applying the Small Business Deduction in the relevant schedules.
- Include all required schedules detailing business limits, income calculations, and associated corporations, as applicable.
Step 4: Submit the Tax Return to the CRA
- File your completed and signed T2 Corporation Income Tax Return, including all supporting schedules, with the Canada Revenue Agency (CRA) by the applicable deadline.
Step 5: Respond to CRA Notices or Requests
- Monitor for any follow-up communications from the CRA regarding your SBD claim.
- Provide additional information or documentation if requested by the CRA for verification.

Additional information

Allocation of the business limit must be shared among associated corporations within the same taxation year.
Anti-avoidance rules are in place to prevent reduction of the passive income business limit through transfers or loans to related corporations that are not otherwise associated.
Corporations must maintain detailed documentation to substantiate the purpose and timing of relevant transactions, particularly regarding transfers of investments or changes in fiscal year.
For changes in fiscal year end, corporations must receive approval from the Canada Revenue Agency (CRA) by submitting a formal request with supporting details.