For integration to work properly for a CCPC whose income qualifies for the small business deduction, the combined federal/provincial tax rate on corporations must be equal to 13.04 percent, while the combined federal/provincial dividend tax credit must be equal to 9/13 of the gross up.

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Integration aims to ensure that the total tax paid on income earned through a corporation and then distributed as dividends is roughly the same as if the income were earned directly by an individual. The specific rates (13.04% for corporate tax and 9/13 of the gross-up for the dividend tax credit) do not universally apply and can vary by jurisdiction and over time. The principle of integration does not depend on these specific values but on the mechanism that aligns the total tax burden.

For Integration to Work Properly for a CCPC Whose Income