Canadian corporation based on its income statement. For simplicity, we’ll use fictional numbers and assume the corporation is subject to the federal corporate income tax rate and relevant provincial tax rates.
Here’s a sample income statement for our fictional corporation:
Revenue: $1,000,000
Cost of Goods Sold (COGS): $400,000
Gross Profit: $600,000
Operating Expenses: $300,000
Operating Income including $200,000 of payroll: $300,000
Other Income: $20,000
Interest Expense: $10,000
Net Income Before Taxes: $310,000
Income Tax Expense (Federal and Provincial): 15%
Now, let’s calculate the taxes and contributions:
Federal Corporate Income Tax:
Federal corporate income tax is calculated based on the corporation’s taxable income before deducting any provincial taxes.
Taxable Income Before Taxes: $310,000
Federal Corporate Income Tax Rate: Let’s assume 10%
Federal Tax Payable: $310,000 * 10% = $31,000
Provincial Corporate Income Tax:
Provincial corporate income tax rates vary by province. For this example, let’s assume a provincial tax rate of 5%.
Provincial Taxable Income: $310,000
Provincial Corporate Income Tax Rate: 5%
Provincial Tax Payable: $310,000 * 5% = $15,500
Total Corporate Income Tax:
Total Corporate Income Tax = Federal Tax Payable + Provincial Tax Payable
