Accelerated Increase in the Small Business Deduction Limit 

Currently, the maximum annual amount of Canadian active business income earned by Canadian-controlled private corporations (CCPCs) that

qualifies for the reduced 12% rate is $250,000 (based on a December 31, 2004 year-end) and is shared by associated corporations. The 2003 budget implemented a phase-in of an the increase to this small business deduction limit to $275,000 for 2005 and $300,000 for 2006 and subsequent years. The 2004 budget proposes to accelerate this increase so that the $300,000 small business limit applies for 2005 and subsequent years. This provision helps CCPCs retain more of their after-tax earnings for reinvestment and expansion.