Page 71

(5) British Columbia’s general corporate tax rate increased to 11% (from 10%) effective

April 1, 2013.

(6) Quebec decreased the small business tax rate applicable to Quebec manufacturing small

and medium sized enterprises (SMEs) by creating an additional reduction of the rate
applicable to manufacturing SMEs on their first $500,000 of income (or on a lower amount
for corporations with paid-up capital between $10 million and $15 million). The additional
deduction applies to CCPCs with paid-up capital of $15 million or less where at least 25%
of their activities consist of manufacturing and processing. For taxation years ending
after June 4, 2014, the Quebec tax rate for Quebec manufacturing SME's is determined
formulaically and can be reduced by up to 2% resulting in a possible tax rate of 6% (from
8%). This rate can be further reduced up to 4% (up to another 2%) for taxation years
ending after March 31, 2015. The additional deduction rate is prorated where the taxation
year includes June 4, 2014 or March 31, 2015.

(7) New Brunswick's general corporate tax rate increased to 12% (from 10%) effective

July 1, 2013.

(8) Nova Scotia’s small business rate decreased to 3.5% (from 4%) effective January 1, 2013

and decreased to 3% effective January 1, 2014. The small business income threshold also

decreased to $350,000 (from $400,000) effective January 1, 2014.

(9) Prince Edward Island's small business rate increased to 4.5% (from 1%) effective

April 1, 2013.

(10) Newfoundland and Labrador's small business tax rate decreased to 3.0% (from 4.0%)

effective July 1, 2014.

(11) Corporations that derive at least 10% of their gross revenue for the year from

manufacturing or processing goods in Canada for sale or lease can claim the

manufacturing and processing (M&P) deduction against their M&P income. The M&P

calculation is based on income that is not eligible for the small business deduction.

CCPCs that earn income from M&P activities are subject to the same rates as those that

apply to general corporations.

(12) The federal and provincial tax rates shown in this table apply to investment income earned

by a CCPC other than capital gains and dividends received from Canadian corporations.

The rates that apply to capital gains are one-half of the rates shown in the table. Dividends

received from Canadian corporations are deductible in computing regular Part I tax, but

may be subject to Part IV tax, calculated at a rate of 33

Substantively Enacted Income Tax Rates for Income Earned by a CCPC

/ 63

Current as of December 31, 2014