Associated Corporations SBD Allocation Optimizer

Associated corporations share one $500,000 small business deduction limit, split it evenly without thinking, and it's easy to waste room on a corporation that can't use it.

Reading This Tool

How To Use This Calculator

Enter the active business income of each associated corporation, and your small business versus general corporate tax rates.

An equal three-way split sounds fair, but if one corporation earns less than its share, that unused room is gone, it can't roll over to a corporation that actually needed it. This compares an equal split against the allocation that wastes none of it.

Your Inputs

Corporation A, Active Business Income $80,000

Corporation B, Active Business Income $250,000

Corporation C, Active Business Income $400,000

Combined Small Business Tax Rate 9.0%

Combined General Corporate Tax Rate 27.0%

Assumes all three corporations operate in the same province. The $500,000 federal limit is shared across the associated group either way, but provincial small business limits and rates can differ if they're not all in the same jurisdiction.

Tax Cost Of Getting This Wrong

Total Tax, Equal Three-Way Split

Total Tax, No-Waste Allocation

Avoidable Tax Cost Of An Equal Split

SBD Room Allocated, Equal Split vs. No-Waste

Equal Split No-Waste Allocation

The allocation must be filed using Schedule 23 and agreed to by all associated corporations, an allocation that doesn't sum to exactly $500,000 across the group can itself trigger a CRA reassessment. This models federal small business deduction allocation only.

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