Damon Mcknight
The small business tax rate in New Brunswick, Canada, depends on the business's income and taxable capital. The small business rate applies to active business income of Canadian-controlled private corporations (CCPCs) with taxable capital below $10 million. The benefit is reduced for CCPCs with taxable capital between $10 million and $50 million and does not apply if taxable capital exceeds $50 million. New Brunswick's corporate income tax has a lower rate of 2.5% and a higher rate of 14%. The tax rate for individuals in New Brunswick also depends on their income, with marginal tax rates ranging from 9.40% to 19.50% for the 2023 tax year.
| Characteristics | Values |
|---|---|
| Small business rate | Applies to active business income of Canadian-controlled private corporations (CCPCs) up to the threshold amount of active business income |
| Benefit of small business rate | Reduced for CCPCs with taxable capital of more than $10 million and is not applicable to CCPCs with more than $50 million in taxable capital |
| New Brunswick business limit | $500,000 |
| Lower rate of New Brunswick corporation income tax | 2.5% |
| Higher rate of New Brunswick corporation income tax | 14% |
| Tax rate on the first $47,715 of income | 9.40% |
| Tax rate on the next $47,716 | 14.00% |
| Tax rate on the next $81,325 | 16.00% |
| Tax rate on the amount over $176,756 | 19.50% |
What You'll Learn
New Brunswick's corporate income tax rates
The lower rate of New Brunswick's corporate income tax is 2.5%, with the higher rate being 14%. The higher rate applies to all income that is not eligible for the lower rate. For tax years starting after April 6, 2022, the Government of Canada extended the range over which the business limit is reduced based on taxable capital employed in Canada. The new range is $10 million to $50 million in taxable capital, previously being $10 million to $15 million.
The tax rate charged in New Brunswick on the first $47,715 of taxable income is 9.40%. A 14.00% tax rate is charged on the next $47,716, with a 16.00% tax rate charged on the following $81,325. A 19.50% tax rate is then applied to any amount over $176,756.
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Small business rate eligibility
The small business rate in New Brunswick applies to the active business income of Canadian-controlled private corporations (CCPCs) up to a threshold amount of active business income. The benefit of the small business rate is reduced for CCPCs with over $10 million in taxable capital and is not applicable to CCPCs with more than $50 million in taxable capital. The general corporate income tax rate is applied to all other corporate income.
The lower rate of New Brunswick corporation income tax is 2.5%. The New Brunswick business limit is $500,000, and eligible small businesses can access this lower rate regardless of their passive income. The higher rate of 14% applies to all income that is not eligible for the lower rate.
To be eligible for small business grants in New Brunswick, businesses must meet certain criteria. Firstly, while grants are available for sole proprietorships and partnerships, most funding programs require a business to be incorporated. Secondly, many grant programs prefer established businesses with a track record of at least two years, as they are more likely to qualify for monetary programs. Lastly, some grants require businesses to have established revenue, as grant providers want to see a track record before offering non-repayable funds.
There are also specific grants for certain groups, such as Indigenous, women, and Black entrepreneurs, who are underrepresented in small businesses. Startups in New Brunswick are also eligible for grants.
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New Brunswick's business limit
The New Brunswick business limit is $500,000. This is the threshold of income eligible for the lower rate of New Brunswick corporation tax, which is 2.5%. The higher rate of 14% is applied to all income above this threshold.
The New Brunswick business limit is not subject to the federal passive income business limit reduction. This means that eligible New Brunswick small businesses can benefit from the lower rate of tax, regardless of the amount of passive income they have earned.
The small business rate applies to active business income of Canadian-controlled private corporations (CCPCs) up to the threshold amount of active business income. The benefit of the small business rate is reduced for CCPCs with a taxable capital of more than $10 million and does not apply to CCPCs with over $50 million in taxable capital.
The New Brunswick tax rate increases as taxable income increases. For example, the tax rate on the first $47,715 of income is 9.40%, then 14.00% is charged on the next $47,716.
New Brunswick also offers different tax credits, such as the research and development tax credit, and the small business investor tax credit.
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New Brunswick's tax credits
New Brunswick offers a range of tax credits to its residents, which complement similar credits at the federal level. These credits are designed to provide tax relief and benefit to eligible individuals and businesses. Here is a detailed overview of some of the notable tax credits offered in New Brunswick:
Low-Income Tax Reduction
The Low-Income Tax Reduction is a non-refundable tax credit available to NB residents with low incomes. This credit helps reduce the provincial tax payable for those who qualify. The eligibility criteria are based on income levels, and interested individuals can refer to the CRA website for more information.
Seniors' Home Renovation Tax Credit
This credit is designed to assist seniors aged 65 or older in New Brunswick, or their family members, with the costs of renovating their homes to enhance safety and accessibility. Eligible residents can claim up to $10,000 worth of qualified home improvements on their tax returns and receive a refund of 10% of the claimed expenses.
Residential Property Tax Credit
The Residential Property Tax Credit is available to individuals who own and occupy their principal residence in New Brunswick. This credit is applied against the provincial portion of the property tax, while the municipal property tax remains payable. The good news is that this credit only needs to be applied for once, and it will continue to be received as long as the individual owns and lives in the property.
Property Tax Allowance
The Property Tax Allowance is another form of tax relief aimed at low-income property owners in New Brunswick. To qualify, individuals must own their property, have it as their principal residence, and already be receiving the Residential Property Tax Credit. The rebate amount varies depending on the combined taxable income of the applicant and their spouse.
New Brunswick Child Tax Benefit and Working Income Supplement
Eligible low-income families with dependent children may receive these benefits, depending on their income level. These benefits provide additional support to families in need.
Other Non-Refundable Tax Credits
New Brunswick also offers various non-refundable tax credits, including the Basic Personal Amount, Spouse or Common Law Amount, Amount for Eligible Dependants, Disability Supplement Amount, Interest Paid on Student Loans, Tuition and Education Amounts, and more. These credits help reduce the tax burden for individuals and families in the province.
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Calculating New Brunswick tax
The process of calculating your tax liability in New Brunswick involves several steps, including determining taxable income, withholding applicable taxes, and making necessary deductions. Here is a detailed guide to help you understand and calculate your tax obligations in New Brunswick, Canada.
Determining Taxable Income
To begin, you must calculate your gross income, which includes all types of income earned during the year, such as employment income, self-employment income, tips, commissions, and investments. Once you have the total gross income, you can identify eligible tax deductions to reduce your taxable income. These deductions may include contributions to certain benefits or expenses that can be subtracted from your gross income.
Withholding Taxes
Your employer typically withholds taxes from your salary and remits them directly to the Canada Revenue Agency (CRA). If you are self-employed, you are responsible for reporting your income on tax returns, as taxes are not automatically withheld from your earnings. It's important to note that if federal and provincial taxes are withheld from your paycheck, you should also report them on your tax returns.
Understanding Tax Brackets and Rates
The tax rates in New Brunswick are progressive, which means they increase as your taxable income rises. The current tax brackets and corresponding rates in New Brunswick are as follows:
- 9.40% on the first $47,715 of taxable income
- 14.00% on the next $47,716
- 16.00% on the next $81,325
- 19.50% on income over $176,756
Corporate Income Tax
For small businesses, the tax rate applies to the active business income of Canadian-controlled private corporations (CCPCs) up to a threshold. The benefit of the small business rate is reduced for CCPCs with taxable capital exceeding $10 million and is not applicable to CCPCs with over $50 million in taxable capital. The general corporate income tax rate is applied to all other corporate income.
New Brunswick Corporation Tax
New Brunswick has a dual tax rate system for corporations. The lower rate is 2.5%, and the higher rate is 14%. The lower rate applies to income up to the New Brunswick business limit of $500,000, while the higher rate applies to all income above this threshold. You can use Schedule 366, New Brunswick Corporation Tax Calculation, to help calculate the tax before applying any credits.
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Frequently asked questions
The small business tax rate in New Brunswick, Canada, is 2.5% for the first $500,000 of income. The rate then increases to 14% for income above that threshold.
The small business rate applies to active business income from Canadian-controlled private corporations (CCPCs) up to a threshold of $10 million in taxable capital. The benefit is reduced for CCPCs with taxable capital above this amount and does not apply to those with over $50 million in taxable capital.
Small businesses in New Brunswick must file their tax returns by June 15 if self-employed, or by April 30 if employed. You can calculate your taxes using an NB tax calculator or manually using Federal and Provincial tax rates.
Yes, New Brunswick offers various tax credits for small businesses, including the Research and Development Tax Credit and the Small Business Investor Tax Credit.
