Corporate Tax Model

Get the report
Corporate Tax model.pdf

Summary

The Parliamentary Budget Officer (PBO) has developed a microsimulation model to produce cost estimates for federal corporate income tax measures.  The model replicates tax filings for over two million Canadian firms under the baseline tax code and alternative policies.

This new tool enables PBO to produce costing and analysis on the following corporate tax topics:

1.       general and small business income tax rates and eligibility;

2.       tax incentives for capital investment, research and development activities and resource development; and,

3.       the impact of federal corporate tax measures on industries.

This report describes the technical properties of the model and will serve as a reference for PBO work in this area. 

Model simulation results for major corporate tax changes are included in section 5 of the report. They are available on the PBO website through the interactive Ready Reckoner tax tool. These mechanical simulations are intended to showcase model properties and may differ from a cost estimate of a specific policy.

Related posts

  • 10 May 2016

    In response to a request by a Member of Parliament, PBO has prepared estimates of the fiscal and economic impacts of the Budget 2016 decision to maintain the small business tax rate and corresponding effective dividend tax rate at 10.5 per cent.  The rate had been legislated to gradually decrease to 9 per cent under Budget 2015.