canada • CAD

Business Net Income Calculator 2026

Calculate your Canadian business net income and estimate corporate taxes. Enter revenue, expenses, and province to see after‑tax profit. Free tool for small business owners, incorporated professionals, and entrepreneurs.

Last revised 23 August 2026

By Team GlobalCalqulate · About our editorial standards

Revenue

Annual Revenue

Financial Disclaimer: This result is an educational estimate produced by applying published rates and thresholds to the figures you entered. It is not a tax determination: your actual liability depends on circumstances this calculator does not collect. Confirm your position with the relevant tax authority or a qualified accountant before acting on it. Full disclaimer.

Sources & methodology

Formula:: See methodology below
Reference:: Canada Revenue Agency
Rates for:: 2026
Figures verified:: September 2026 — checked against the primary source above
Content last updated:: August 2026
Scheduled re-verification:: February 2027

Calculation type: Rule-based calculation. Uses 2026 rates and thresholds. Figures are taken from Canada Revenue Agency and TaxTips.ca — see sources below.

Reviewed by Team GlobalCalqulate — Verifies each figure against the issuing authority's published source · Checked 7 September 2026

Your entries stay on this device. This calculator runs entirely in your browser — the figures you type are not sent to us or to anyone else. The page itself uses cookies for analytics and advertising, described in the privacy policy.

Formula & methodology

Formula used

gross profit = revenue − COGS
net income before tax = gross profit − total operating expenses
corporate tax = net income before tax × your entered rate (if positive)
net income after tax = net income before tax − corporate tax

Step-by-step calculation

1. Gross profit
Revenue minus cost of goods sold.
2. Total operating expenses
Salaries, rent/utilities, marketing, insurance, professional fees, vehicle, interest, depreciation, and other expenses, summed.
3. Net income before tax
Gross profit minus total operating expenses.
4. Corporate tax
Applied only when net income before tax is positive, at the rate you enter — the calculator does not assume a rate for you.

Limitations

The corporate tax rate is a field you enter, not looked up automatically by province — you must know your applicable combined federal + provincial rate.
For a Canadian-controlled private corporation (CCPC) claiming the small business deduction, the federal rate is 9% on the first $500,000 of active business income; above that, 15%. Ontario's provincial small business rate changed mid-2026 (3.2% before July 1, 2.2% after), so the combined Ontario small-business rate is 11.2% for a fiscal year fully after that date, and prorated for one that straddles it.
Does not model capital cost allowance (CCA) schedules, associated-corporation rules that can restrict the small business limit, or provincial rates outside Ontario.

This page is educational. It applies published rates and thresholds to the figures you enter and shows the arithmetic behind the result. It is an estimate, not a tax determination: your actual liability depends on circumstances this calculator does not collect, and only the relevant tax authority — or an accountant who can see your full position — can confirm what you owe.

Sources & references

Ontario small business deduction — Canada Revenue Agency
Corporation tax rates — Canada Revenue Agency
2026 Corporate Income Tax Rates — TaxTips.ca

Help & FAQs

Frequently Asked Questions

Clear answers to common questions to help you use this calculator confidently.

What counts as a deductible business expense?

Tap to view the answer

Expenses incurred to earn business income are generally deductible: salaries and wages, rent and utilities, marketing, insurance, professional fees, vehicle expenses, interest on business loans, and depreciation (capital cost allowance). Keep receipts — the CRA can audit these.

What's the current small business corporate tax rate?

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For a CCPC, the federal rate is 9% on the first $500,000 of active business income. Ontario's provincial small business rate dropped from 3.2% to 2.2% on 2026-07-01, so the combined rate is 11.2% for a fiscal year starting on or after that date. Enter your own province's combined rate in the calculator — it isn't looked up automatically.

What's the difference between gross profit and net income?

Tap to view the answer

Gross profit is revenue minus the direct cost of goods sold. Net income (before tax) subtracts all operating expenses — salaries, rent, marketing, and the rest — from gross profit. Net income after tax subtracts your corporate tax on top of that.

Does the small business rate apply above $500,000 in income?

Tap to view the answer

No. Once active business income exceeds the $500,000 small business limit, the excess is taxed at the general corporate rate (15% federal, plus your province's general rate), not the reduced small business rate.

Is this calculator accurate for filing my corporate tax return?

Tap to view the answer

No — treat it as a planning estimate. It doesn't model capital cost allowance schedules, associated-corporation rules that can restrict your small business limit, or credits and adjustments a full corporate return would include. Confirm your actual liability with a CPA or the CRA.

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How to Use This Calculator

Enter Your Business Revenue & Expenses

Fill in your annual gross revenue, cost of goods sold, and all operating expense categories. The calculator will automatically compute your gross and net profit.

Set Your Tax Preferences

Choose your province of operation and decide whether to include a corporate tax estimate. You can accept the default small‑business rate or enter a custom rate.

Review Your Net Income

Instantly see your net income before and after taxes. Adjust any number to model different scenarios and optimise your bottom line.

Understanding Your Results

Corporate Tax Estimate
The calculator applies your chosen provincial small‑business rate to net income before tax, giving an accurate estimate of after‑tax profit—critical for Canadian CCPCs.
Expense Efficiency
Even a 1% improvement in operating expenses can boost net income by thousands. Use this tool to model cost‑cutting scenarios instantly.

Key Tips

✓
Keep personal and business expenses completely separate for accurate net income tracking.
✓
Review your expense categories quarterly – small recurring costs add up quickly.
✓
Use the small business deduction: ensure your corporation qualifies for the reduced 9% federal rate.
✓
Set aside 25‑30% of net income for taxes if you don’t remit instalments.
✓
Depreciation (CCA) is a non‑cash expense – it still reduces taxable income but preserves cash flow.
✓
If your business earns over $500,000, model the higher general corporate rate in the calculator.
✓
Compare your net profit margin to industry averages (e.g., retail 3‑5%, professional services 15‑20%).
✓
Re‑run the calculator whenever you plan a large purchase or hire.

Understanding Business Net Income and Corporate Tax in Canada

From revenue to net income

Revenue is everything your business bills. Net income is what remains after the costs of earning it, and it is the figure tax is calculated on.

Subtract cost of goods sold from revenue to get gross profit, then subtract operating expenses — salaries, rent, utilities, marketing, insurance, professional fees, vehicle costs, interest and depreciation — to reach net income before tax. A business with $250,000 of revenue, $75,000 of direct costs and $88,500 of operating expenses has $86,500 of net income before tax. Understanding which line a cost belongs on matters, because gross margin and operating margin tell you very different things about the business.

The small business deduction

Canadian-controlled private corporations pay a substantially reduced rate on their first $500,000 of active business income. Federally this brings the rate down from 15% to 9%, and each province adds its own reduced rate on top.

In Ontario the provincial small business rate gives a combined rate of about 11.2%. Above the $500,000 threshold, income is taxed at the general rate — considerably higher. The deduction is also reduced where a corporation holds substantial passive investment income, phasing out as passive income rises between $50,000 and $150,000. Associated corporations must share a single $500,000 limit, which prevents splitting a business into several companies to multiply the benefit.

Incorporating, and whether it is worth it

A sole proprietor's business income is taxed at personal rates, which can exceed 50% at the top. A corporation pays about 11% on the first $500,000, so incorporating appears to save enormously — but only while the money stays in the company.

Taking it out as salary or dividends triggers personal tax, and the system is designed so that the combined corporate and personal tax roughly equals what you would have paid personally. The real benefit is deferral: profits you do not need can stay in the corporation and be invested, or be drawn in a later low-income year. If you spend everything you earn, incorporation adds cost and paperwork for little gain.

Salary or dividends

An owner-manager can take salary, dividends, or both. Salary is deductible to the corporation, creates RRSP contribution room, counts as pensionable earnings for CPP, and is subject to payroll withholding.

Dividends are paid from after-tax corporate profit, are not deductible to the company, create no RRSP room and no CPP — which saves the contribution but also builds no pension. Because dividends avoid CPP, they can look cheaper in the short term while costing retirement benefits later. Many owner-managers pay enough salary to maximise RRSP room and then take dividends beyond that. The right mix depends on age, retirement plans and whether the corporation needs to retain cash.

Deductible expenses, and the limits

An expense is deductible if it was incurred to earn business income. Home office costs are deductible in proportion to the space used, vehicle costs in proportion to business kilometres — which means keeping a logbook.

Several categories have specific limits. Business meals and entertainment are 50% deductible. Capital assets are not expensed immediately but depreciated through Capital Cost Allowance at prescribed rates by class. Personal expenses are not deductible regardless of how they are paid, and running personal costs through a company creates a taxable shareholder benefit. Keeping business and personal accounts genuinely separate is the simplest protection at audit.

Filing obligations and deadlines

A corporate T2 return is due six months after the fiscal year end, but any tax owing is due two or three months after year end depending on whether the small business deduction applies — so the payment deadline arrives before the filing deadline.

Corporations owing more than $3,000 generally pay monthly or quarterly instalments. Registration for GST/HST is required once taxable revenue exceeds $30,000 over four consecutive quarters, and payroll accounts are needed before paying any salary. Late filing penalties are 5% of the unpaid tax plus 1% per month, and interest compounds daily. A corporation must file even in a year with no activity or no income.

Formula & methodology

Formula used

gross profit = revenue − COGS
net income before tax = gross profit − total operating expenses
corporate tax = net income before tax × your entered rate (if positive)
net income after tax = net income before tax − corporate tax

Step-by-step calculation

1. Gross profit
Revenue minus cost of goods sold.
2. Total operating expenses
Salaries, rent/utilities, marketing, insurance, professional fees, vehicle, interest, depreciation, and other expenses, summed.
3. Net income before tax
Gross profit minus total operating expenses.
4. Corporate tax
Applied only when net income before tax is positive, at the rate you enter — the calculator does not assume a rate for you.

Limitations

The corporate tax rate is a field you enter, not looked up automatically by province — you must know your applicable combined federal + provincial rate.
For a Canadian-controlled private corporation (CCPC) claiming the small business deduction, the federal rate is 9% on the first $500,000 of active business income; above that, 15%. Ontario's provincial small business rate changed mid-2026 (3.2% before July 1, 2.2% after), so the combined Ontario small-business rate is 11.2% for a fiscal year fully after that date, and prorated for one that straddles it.
Does not model capital cost allowance (CCA) schedules, associated-corporation rules that can restrict the small business limit, or provincial rates outside Ontario.

Understanding Business Net Income and Corporate Tax in Canada

From revenue to net income

Revenue is everything your business bills. Net income is what remains after the costs of earning it, and it is the figure tax is calculated on.

Calculator inputs

Revenue

Cost of Sales1 option

Operating Expenses9 options

Tax Settings3 options

Your results

Sources & methodology

Formula & methodology

Formula used

Step-by-step calculation

Limitations

Sources & references

What counts as a deductible business expense?

What's the current small business corporate tax rate?

What's the difference between gross profit and net income?

Does the small business rate apply above $500,000 in income?

Is this calculator accurate for filing my corporate tax return?

Related calculators

More Canada calculators

Calculator inputs

Revenue

Cost of Sales1 option

Operating Expenses9 options

Tax Settings3 options

Your results

Sources & methodology

How to Use This Calculator

Example Net Income Calculation (Ontario Small Business)

Understanding Your Results

Key Tips

Understanding Business Net Income and Corporate Tax in Canada

From revenue to net income

The small business deduction

Incorporating, and whether it is worth it

Salary or dividends

Deductible expenses, and the limits

Filing obligations and deadlines

Formula & methodology

Formula used

Step-by-step calculation

Limitations

Sources & references

How to Use This Calculator

Example Net Income Calculation (Ontario Small Business)

Understanding Your Results

Key Tips

Understanding Business Net Income and Corporate Tax in Canada

From revenue to net income

The small business deduction

Incorporating, and whether it is worth it

Salary or dividends

Deductible expenses, and the limits

Filing obligations and deadlines