🇨🇦 Canada · 2026 tax year
Canada tax calculator: Sole proprietor vs Corporation
Compare how much tax an online seller pays as a sole proprietor versus a corporation in Ontario, British Columbia or Alberta, using the CRA and provincial figures for the 2026 tax year.
Canada Seller Profit Tax Comparison (2026)
Sole proprietor (federal + provincial tax + CPP) vs corporation (small business rate)
Sales minus all business costs, before tax.
Canadian resident (basic personal amount + CPP)
Ontario, British Columbia and Alberta are included. Quebec has a separate tax system and is not covered.
Sole proprietor take-home
C$57,874
27.7% effective tax (C$22,126)
Corporation retained profit
C$70,643
11.7% effective tax (C$9,357)
Better structure at this profit
C$12,770
Corporation keeps C$12,770 more
Sole proprietor
Corporation
- Kept / retained
- Income / corporate tax
- CPP contributions
Tax bands that apply
Sole proprietor
- Federal tax (14%–33% brackets, after credits)C$8,698
- Ontario tax (5.05%–13.16%, incl. surtax)C$3,785
- Ontario Health PremiumC$750
- CPP 11.9% on C$71,100C$8,461
- CPP2 8% on C$5,400C$432
- Federal + Ontario tax
- C$13,234
- CPP contributions
- C$8,893
- Total tax (27.7% of profit)
- C$22,126
- Sole proprietor take-home
- C$57,874
Corporation (CCPC)
- Small business rate 11.696% on C$80,000C$9,357
- Corporate tax
- C$9,357
- Total tax (11.7% of profit)
- C$9,357
- Corporation retained profit
- C$70,643
Estimate only, not tax advice. It uses official Canada figures (2026 tax year) and the assumptions listed below this calculator. A client’s real bill depends on their full circumstances, so confirm with a qualified accountant in Canada before deciding.
Rates used (2026 tax year)
- Federal brackets
- 14% to $58,523 · 20.5% to $117,045 · 26% to $181,440 · 29% to $258,482 · 33% above
- Federal basic personal amount
- $16,452 (reduced to $14,829 above $181,440)
- CPP (self-employed)
- 11.9% on earnings $3,500–$74,600 + 8% CPP2 on $74,600–$85,000
- Small business corporate rate
- Federal 9% + Ontario 2.7% (3.2% cut to 2.2% on 1 July 2026) · BC 2% · Alberta 2%, on the first $500,000
- General corporate rate
- Federal 15% + Ontario 11.5% · BC 12% · Alberta 8%
- Non-eligible dividends
- 15% gross-up · federal credit 9.0301% · Ontario 2.9863% · BC 1.96% · Alberta 2.18%
- Dividends to a resident of Pakistan
- 15% withholding (treaty rate; 25% without a treaty)
How the estimate works
- Single person with only the basic personal amount and CPP credits. No RRSP, EI or other deductions.
- Ontario includes the surtax, the Ontario Health Premium and the low-income tax reduction (basic amount $300, which is 2025’s $294 indexed by 1.9%). BC includes the BC tax reduction credit.
- Corporation: a Canadian-controlled private corporation (CCPC) with a 31 December 2026 year end, paying the owner no salary. Profit is capped at $500,000 here so it all qualifies for the small business rate. "Profit paid out" treats all after-tax profit as non-eligible dividends.
- Non-resident: an individual taxed on Canadian business income with no permanent establishment in a province pays federal tax plus a 48% surtax and no CPP. Personal credits are not given (they need 90% of world income to be Canadian). A company controlled by non-residents is not a CCPC and pays the general rate.
- GST/HST and provincial sales tax on sales are not included in either route.
Official sources
Figures checked against these pages on 24 October 2026.
- CRA: Tax rates and income brackets for individuals (2026)
- CRA: Canada Pension Plan contribution rates, maximums and exemptions
- CRA: Corporation tax rates (incl. Ontario cut to 2.2% from 1 July 2026)
- Government of BC: Basic personal income tax credits (2026)
- Alberta: tax and levy rates (corporate 2% / 8%)
Estimate, not tax advice. This calculator gives a guide figure for comparing structures. It does not know a client’s full situation (other income, family, deductions, treaties, sales tax or VAT), and rates can change. Markify Ecommerce is an ecommerce agency, not a firm of accountants: please confirm any decision with a qualified tax adviser in Canada.
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