RSM424H1 Chapter Notes - Chapter 13: Privately Held Company, Double Taxation, Investment
22 Feb 2017
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Also subject to a special federal tax rate of 33% (normal rate of 28% + an additional 5%) and is not entitled to the 13% general tax reduction. It exists to prevent the abuse of the small business deduction; because of the inherent restrictions, most corporations avoid carrying on activities of this nature. It is important to recognize that this category does not include income from any type of service where an employee/employer relationship does not exist. Dividends: taxable canadian dividends received by ccpcs are subject to special tax treatment. This special treatment depends on the degree of ownership that the corporation has in the corporation paying the dividend. When a ccpc owns > 10% of the voting shares and more than 10% of the fmv of all the classes of issued shares of another corporation, the two corporations are said to be connected.
