Tax wiki
s. 123.4

PART I — Income Tax · DIVISION E — Computation of Tax · SUBDIVISION B — Rules Applicable to Corporations · Corporation Tax Reductions

Definitions

Not yet annotated · Text current to 2026-06-21 · section last amended 2024-06-20

Current text

(1)

The definitions in this subsection apply in this section.

CCPC rate reduction percentage[Repealed, 2003, c. 15, s. 78(1)]

full rate taxable income of a corporation for a taxation year is

(a)

if the corporation is not a corporation described in paragraph (b) or (c) for the year, the amount by which that portion of the corporation’s taxable income for the year (or, for greater certainty, if the corporation is non-resident, that portion of its taxable income earned in Canada for the year) that is subject to tax under subsection 123(1) exceeds the total of

(i)

if an amount is deducted under subsection 125.1(1) from the corporation’s tax otherwise payable under this Part for the year, the amount obtained by dividing the amount so deducted by the corporation’s general rate reduction percentage for the taxation year,

(ii)

if an amount is deducted under subsection 125.1(2) from the corporation’s tax otherwise payable under this Part for the year, the amount determined, in respect of the deduction, by the formula in that subsection,

(iii)

the corporation’s income for the year from a personal services business, and

(iv)

if the corporation is a credit union throughout the year and the corporation deducted an amount for the year under subsection 125(1) (because of the application of subsections 137(3) and (4)), the amount, if any, that is the product of the amount, if any, determined for B in subsection 137(3) multiplied by the amount determined for C in subsection 137(3) in respect of the corporation for the year;

(b)

if the corporation is a Canadian-controlled private corporation throughout the year or a substantive CCPC at any time in the year, the amount by which that portion of the corporation’s taxable income for the year that is subject to tax under subsection 123(1) exceeds the total of

(i)

the amounts that would, if paragraph (a) applied to the corporation, be determined under subparagraphs (a)(i) to (iv) in respect of the corporation for the year,

(ii)

the least of the amounts, if any, determined under paragraphs 125(1)(a) to (c) in respect of the corporation for the year, and

(iii)

except for a corporation that is, throughout the year, a cooperative corporation (within the meaning assigned by subsection 136(2)) or a credit union, the corporation’s aggregate investment income for the year, within the meaning assigned by subsection 129(4); and

(iv)

[Repealed, 2003, c. 15, s. 78(2)]

(c)

if the corporation is throughout the year an investment corporation, a mortgage investment corporation or a mutual fund corporation, nil. (revenu imposable au taux complet)

general rate reduction percentage of a corporation for a taxation year is the total of

(a)

that proportion of 7% that the number of days in the taxation year that are before 2008 is of the number of days in the taxation year,

(b)

that proportion of 8.5% that the number of days in the taxation year that are in 2008 is of the number of days in the taxation year,

(c)

that proportion of 9% that the number of days in the taxation year that are in 2009 is of the number of days in the taxation year,

(d)

that proportion of 10% that the number of days in the taxation year that are in 2010 is of the number of days in the taxation year,

(e)

that proportion of 11.5% that the number of days in the taxation year that are in 2011 is of the number of days in the taxation year, and

(f)

that proportion of 13% that the number of days in the taxation year that are after 2011 is of the number of days in the taxation year. (pourcentage de réduction du taux général)

General deduction from tax

(2)

There may be deducted from a corporation’s tax otherwise payable under this Part for a taxation year the product obtained by multiplying the corporation’s general rate reduction percentage for the year by the corporation’s full rate taxable income for the year.

(3)

[Repealed, 2003, c. 15, s. 78(5)]

Source: Justice Laws Website. Not an official version.

Historic text

Immediately preceding version, in force from 2013-12-12 to 2024-06-19:

Show the text in force 2013-12-12 to 2024-06-19

Definitions

123.4 (1) The definitions in this subsection apply in this section.
CCPC rate reduction percentage
CCPC rate reduction percentage[Repealed, 2003, c. 15, s. 78(1)]
full rate taxable income
full rate taxable income of a corporation for a taxation year is
- (a) if the corporation is not a corporation described in paragraph (b) or (c) for the year, the amount by which that portion of the corporation’s taxable income for the year (or, for greater certainty, if the corporation is non-resident, that portion of its taxable income earned in Canada for the year) that is subject to tax under subsection 123(1) exceeds the total of
  - (i) if an amount is deducted under subsection 125.1(1) from the corporation’s tax otherwise payable under this Part for the year, the amount obtained by dividing the amount so deducted by the corporation’s general rate reduction percentage for the taxation year,
  - (ii) if an amount is deducted under subsection 125.1(2) from the corporation’s tax otherwise payable under this Part for the year, the amount determined, in respect of the deduction, by the formula in that subsection,
  - (iii) the corporation’s income for the year from a personal services business, and
  - (iv) if the corporation is a credit union throughout the year and the corporation deducted an amount for the year under subsection 125(1) (because of the application of subsections 137(3) and (4)), the amount, if any, that is the product of the amount, if any, determined for B in subsection 137(3) multiplied by the amount determined for C in subsection 137(3) in respect of the corporation for the year;
- (b) if the corporation is a Canadian-controlled private corporation throughout the year, the amount by which that portion of the corporation’s taxable income for the year that is subject to tax under subsection 123(1) exceeds the total of
  - (i) the amounts that would, if paragraph (a) applied to the corporation, be determined under subparagraphs (a)(i) to (iv) in respect of the corporation for the year,
  - (ii) the least of the amounts, if any, determined under paragraphs 125(1)(a) to (c) in respect of the corporation for the year, and
  - (iii) except for a corporation that is, throughout the year, a cooperative corporation (within the meaning assigned by subsection 136(2)) or a credit union, the corporation’s aggregate investment income for the year, within the meaning assigned by subsection 129(4); and
  - (iv) [Repealed, 2003, c. 15, s. 78(2)]
- (c) if the corporation is throughout the year an investment corporation, a mortgage investment corporation or a mutual fund corporation, nil. (revenu imposable au taux complet)
general rate reduction percentage
general rate reduction percentage of a corporation for a taxation year is the total of
- (a) that proportion of 7% that the number of days in the taxation year that are before 2008 is of the number of days in the taxation year,
- (b) that proportion of 8.5% that the number of days in the taxation year that are in 2008 is of the number of days in the taxation year,
- (c) that proportion of 9% that the number of days in the taxation year that are in 2009 is of the number of days in the taxation year,
- (d) that proportion of 10% that the number of days in the taxation year that are in 2010 is of the number of days in the taxation year,
- (e) that proportion of 11.5% that the number of days in the taxation year that are in 2011 is of the number of days in the taxation year, and
- (f) that proportion of 13% that the number of days in the taxation year that are after 2011 is of the number of days in the taxation year. (pourcentage de réduction du taux général)
General deduction from tax
(2) There may be deducted from a corporation’s tax otherwise payable under this Part for a taxation year the product obtained by multiplying the corporation’s general rate reduction percentage for the year by the corporation’s full rate taxable income for the year.
(3) [Repealed, 2003, c. 15, s. 78(5)]

[NOTE: Application provisions are not included in the consolidated text
see relevant amending Acts and regulations.]
2001, c. 17, s. 112
2003, c. 15, s. 78, c. 28, s. 12
2006, c. 4, s. 73
2007, c. 2, s. 32, c. 29, s. 14, c. 35, s. 181
2013, c. 33, s. 12, c. 34, s. 261, c. 40, s. 54

This version on Justice Laws

Earlier versions: Justice Laws point-in-time versions of the Act (from 31 August 2004), and CanLII (under “Versions”). On Justice Laws, each version of section 123.4 links to the one before it.

Enacting and amending legislation

2001, c. 17, s. 112; 2003, c. 15, s. 78, c. 28, s. 12; 2006, c. 4, s. 73; 2007, c. 2, s. 32, c. 29, s. 14, c. 35, s. 181; 2013, c. 33, s. 12, c. 34, s. 261, c. 40, s. 54
2024, c. 15, s. 32

Text before 2004 is found in the annual Statutes of Canada cited above. Application and coming-into-force provisions are not part of the consolidation; see the amending Acts.

Cross-references

This section refers to

s. 123 s. 125 s. 125.1 s. 129 s. 136 s. 137

Referred to in

s. 18.2 s. 89 s. 125 s. 125.1 s. 126 s. 136 s. 211.6 s. 248

References are generated from the statutory text and list other sections of the Act only.

Citation

Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), s. 123.4.