While the small business deduction reduces the amount of income tax payable for many corporations, the myriad of rules and regulations and recent changes has significantly expanded the complexity. These changes have substantially increased challenges for accessing the small business deduction, rendering it one of the more complex provisions in the Income Tax Act (“ITA”) that is commonly used by most practitioners.

This course covers the unique taxation issues that apply to groups of privately held companies and their access to the small business deduction. It will outline a detailed review of the association rules, reductions of the small business deduction limit, specified partnership income, specified corporate income rules for income streams, basic considerations for intercorporate dividends, and the impact of trusts in the corporate group. Mini cases and review questions will be used to highlight these concepts.

This course includes a thorough and detailed discussion of association issues from basic to advanced issues.

This course does not include a review of Section 55, Safe Income or GST/HST as additional courses on these topics are available. 

This course includes a significant time spent on in class exercises and cases.

Topics Include:

• The small business deduction – requirements and basic rules
• Small business deduction limit reductions – taxable capital and passive income grinds
• Basic related, association and affiliated rules and their impacts, including deemed association
• The impact of partnerships in the group, including specified partnership income rules
• Specified corporate income rules
• Part IV tax between private corporations
• Use of trusts in a corporate group

NOTE: This course description has been revised and reflects updates for 2025. If you have any questions, please contact pdevents@cpaontario.ca.

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By the end of this course, participants will be able to:

• Describe the basic types of relationships between corporations in the ITA.
• Apply the related and associated corporation rules in the ITA to private corporate group structures.
• Identify situations where the specified partnership income and specified corporate income rules will apply.
• Evaluate the impact of taxable capital and investment income on the available small business deduction.