Knowing how the taxation system works, both across Canada and in the various provinces and territories, is an important part of settling in Canada successfully.
Because Canada is a federation, taxation in Canada is a shared responsibility between the federal government and the various provincial and territorial governments. Canadian provinces and territories have the facility to levy taxes on income, consumption and wealth, as does the federal government.
Federal taxes are collected by the Canada Revenue Agency (CRA). Under tax collection agreements, the CRA collects and remits to the provinces:
- Provincial personal income taxes on behalf of all provinces except Quebec, through a system of unified tax returns;
- Corporate taxes on behalf of all provinces except Quebec and Alberta; and
- That portion of the Harmonized Sales Tax (HST) that is in excess of the federal Goods and Services Tax (GST) rate, with respect to the provinces that have implemented it.
The Agence du Revenu du Québec collects the GST in Quebec on behalf of the federal government and remits it to the federal government.
Both the federal and provincial/territorial governments impose income taxes on individuals. The federal government charges the bulk of income taxes, with the provinces and territories charging a somewhat lower percentage, except in Quebec. Income taxes throughout Canada are typically progressive, with the high income residents paying a higher percentage than the low income residents.
Where income is earned in the form of a capital gain, only half of the gain is included in income for tax purposes. The other half is not taxed.
Federal income tax rates
Taxable Income* | Income tax rate(s) |
---|---|
The first $45,916 of taxable income | 15% |
PLUS | |
The next $45,915 of taxable income (on the portion of taxable income over $45,916 up to $$91,831) | 20.5% |
PLUS | |
The next $50,522 of taxable income (on the portion of taxable income over $91,831 up to $142,353) | 26% |
PLUS | |
The next $60,447 of taxable income (on the portion of taxable income over $142,353 up to $202 800) | 29% |
PLUS | |
All taxable income over $202,800 | 33% |
*Taxable income is generally described as gross income or adjusted gross income minus any deductions, exemptions or other adjustments that are allowable in that tax year.
Provincial/territorial tax rates for 2015
Province/Territory | Income tax rate(s) |
---|---|
Alberta |
|
British Columbia |
|
Manitoba |
|
New Brunswick |
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Newfoundland and Labrador |
|
Northwest Territories |
|
Nova Scotia |
|
Nunavut |
|
Ontario |
|
Prince Edward Island |
|
Quebec |
|
Saskatchewan |
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Yukon |
|
The above figures are subject to change.