Policy Statement : The first $100,000 of annual net income earned by small businesses will be exempt from federal taxation.
To qualify, businesses must:
- Provide proof of eligibility, including employee count and financial records, during tax filings.
- Use CRA’s updated filing forms for small business exemptions.
Businesses found misreporting eligibility criteria will face penalties, including audits, fines, and possible suspension of future tax benefits.
- PurposeThis policy supports the growth and sustainability of small businesses by reducing their federal tax burden. The policy aims to foster entrepreneurship and job creation in local communities.
- ScopeApplies to Canadian small businesses employing 2–5 workers and earning annual revenues up to $100,000. Businesses in all industries, except those explicitly excluded by CRA, are eligible.
- Definitions
- Small Business: An independently owned company with limited employees and annual revenue.
- Tax Exemption: Income excluded from federal taxation.