OTTAWA - Small business owners across the country had their corporate taxes cut by two per cent on January 1, 2002. The latest cuts, part of the Five Year Tax Reduction Plan which began in 2000, will bring the current tax rate to 25 per cent.

The new rates, which apply to businesses with incomes between $200,000 and $300,000, are expected to create a faster corporate rate reduction, tax free rollover for small business investments, and lower the inclusion rate for capital gains.

"A competitive business tax regime is key to fostering greater investment in Canada," said Minister Martin. "In this regard, it is important to note that federal corporate tax cuts, combined with similar actions by some of the provinces, will reduce the average Canadian general corporate tax rate to 5 percentage points below that of the U.S. by 2005."

By the end of the plan the corporate tax rate will sit at 21 per cent. Manufacturing, processing, and resource income do not fall under these cuts because they are subject to a different tax rate.

 

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