According to Industry Canada, a small business is one that has 5 to 100 employees.
For CRA purposes in order to meet the small business deduction (SBD) and be eligible for the lower tax rate of 15.5% (combined Federal + Ontario), the business must meet the Canadian-controlled private corporation (CCPC) criteria and have active business income up to $500,000.
For a corporation to be considered a CCPC, it must meet all of the following criteria:
- it is a corporation that is resident in Canada.
- it is not controlled directly or indirectly by one or more non-resident persons.
- it is not controlled directly or indirectly by one or more public corporations.
- it is not controlled by a Canadian resident corporation that lists its shares on a designated stock exchange outside of Canada.
- it is not controlled directly or indirectly by any combination of persons described in the three previous conditions.
- no class of its shares of capital stock is listed on a designated stock exchange.
