Free resources / Canadian business owners
Compare your federal business limit and estimated federal tax on eligible business income, with and without the passive-income reduction.
Use the worksheet ↓01 / Your figures
Example figures are prefilled. Replace them with your own; all amounts are Canadian dollars.
Enter AAII from Schedule 7, not retained earnings or business profit. Use the associated group's preceding-calendar-year total if applicable; group tax allocation is not modeled.
Estimated income from your Canadian active business before corporate tax. Exclude investment income and personal-services business income.
Taxable income: $500,000. Taxable capital: $0. Adjust these if your accountant has different figures.
02 / Your illustration
The increase shown is federal tax on active business income, not tax on your investments. It does not prove this tax can be avoided. Above $50,000 of AAII, the limit falls gradually; it reaches zero at $150,000.
Find your specialist ↗Keep a copy for your accountant ↓2026 model · Reviewed September 22, 2026
Illustration only. Figures rounded to the nearest dollar.
Understand the calculation
Full-year, standalone CCPC illustration using the full $500,000 limit. The greater of the passive-income and taxable-capital reductions applies. The baseline keeps the same capital reduction, isolating the passive-income effect. Modeled eligible income is the lesser of active business income and taxable income available for the deduction. Uses 9% and 15% federal rates. Excludes provincial tax, tax on investment income itself, personal tax, group allocation, short years, credits, assignments and special industry rates. For associated corporations, the limit is a group illustration, not each corporation's entitlement. This is not a full tax return or proof of avoidable tax.
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Find your specialistYour report includes your inputs, the calculation, assumptions and questions to discuss.
PRESERVE WEALTH GROUP What could passive investment income cost your corporation? Illustrative worksheet · CAD · model reviewed September 22, 2026 YOUR INPUTS Prior-year adjusted passive investment income (CAD): 75,000 Eligible active business income this year (CAD): 500,000 Taxable income available for the deduction (CAD): 500,000 Prior-year taxable capital employed in Canada (CAD): 0 RESULTS (rounded to nearest dollar) Estimated extra federal tax from the passive-income reduction: $7,500 Remaining federal business limit: $375,000 Business limit without the passive-income reduction: $500,000 Active income moved from 9% to 15% federal tax: $125,000 Federal tax on modeled active income — baseline: $45,000 Federal tax on modeled active income — your scenario: $52,500 The increase shown is federal tax on active business income, not tax on your investments. It does not prove this tax can be avoided. Above $50,000 of AAII, the limit falls gradually; it reaches zero at $150,000. ASSUMPTIONS AND LIMITS Full-year, standalone CCPC illustration using the full $500,000 limit. The greater of the passive-income and taxable-capital reductions applies. The baseline keeps the same capital reduction, isolating the passive-income effect. Modeled eligible income is the lesser of active business income and taxable income available for the deduction. Uses 9% and 15% federal rates. Excludes provincial tax, tax on investment income itself, personal tax, group allocation, short years, credits, assignments and special industry rates. For associated corporations, the limit is a group illustration, not each corporation's entitlement. This is not a full tax return or proof of avoidable tax. QUESTIONS FOR YOUR ACCOUNTANT • What is our verified AAII and which corporations are associated? • How much business income will actually exceed the reduced limit? • How do our province, taxable capital and group allocation change the result? SOURCES CRA: provincial and territorial rates: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/corporations/corporation-tax-rates.html CRA: federal business limit: https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4012/t2-corporation-income-tax-guide-chapter-4-page-4-t2-return.html CRA: refundable portion of corporate tax: https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4012/t2-corporation-income-tax-guide-chapter-6-pages-6-7-t2-return.html CRA: investment tax and dividend refunds: https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4012/t2-corporation-income-tax-guide-chapter-7-page-8-t2-return.html Alberta: corporate tax rates: https://www.alberta.ca/about-tax-levy-rates-prescribed-interest-rates Quebec: general corporate tax rate: https://www.revenuquebec.ca/fr/entreprises/impots/impot-des-societes/ Find your specialist: https://preservewealthgroup.com/apply Educational estimate, not personalized financial or tax advice.
Go deeper / Beyond The Bottom Line
These worksheets do not compare product returns or establish that any strategy is suitable for you.
Reviewed September 22, 2026. Rates and rules can change. Your accountant should confirm the rules applicable to your tax year.
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