Business Limits

Effective January 1, 2005, the British Columbia "business limit" to which the Small Business Rate (lower rate) of corporation income tax may be applied was increased to $400,000 from $300,000. Please see the Rates page for the Small Business Rate.

A Canadian-controlled private corporation (CCPC) is eligible for the Small Business Rate of corporation income tax on the least of its:

• active business income for the year
• taxable income for the year (subject to certain adjustments)
• business limit for the year

Active business income includes income from a partnership of which the corporation is a member. The increase in the B.C. business limit to $400,000 applies to corporate partnerships.

When a corporation is associated with one or more other CCPCs, the business limit of $400,000 must be allocated among the CCPCs in the same proportion as the federal business limit.

Corporations with tax years that start before January 1, 2005 and end after December 31, 2004 will be required to prorate the new B.C. business limit based on the number of days in the tax year before and after January 1, 2005.