Verified Facts
The tax rates in Canada range from 15% to 33% for personal income tax, with a corporate tax rate of 15% and a goods and services tax (GST) of 5%, and expats need to understand the country's tax residency rules and how they apply to their specific situation.
Tax laws change frequently. Always consult a qualified tax professional for advice specific to your situation. This is a general guide only.
Quick Facts
Tax System Overview
Canada has a territorial taxation system, which means that individuals are taxed on their worldwide income if they are considered residents of Canada for tax purposes. Residency rules for tax purposes are based on factors such as the number of days spent in Canada, ownership of a home, and family ties. Generally, individuals who spend more than 183 days in Canada in a calendar year are considered residents for tax purposes.
The Canadian tax system is administered by the Canada Revenue Agency (CRA), which is responsible for collecting taxes, processing tax returns, and enforcing tax laws. Canada also has a network of tax treaties with other countries to prevent double taxation and fiscal evasion. These treaties can provide relief from taxation in both countries for individuals and businesses with international income.
Personal Income Tax
| Income Bracket (CAD) | Tax Rate |
|---|---|
| 0 - 50,197 | 15% |
| 50,198 - 100,392 | 20.5% |
| 100,393 - 155,625 | 26% |
| 155,626 - 221,708 | 29% |
| 221,709 and over | 33% |
| Individuals in Canada are entitled to various deductions and allowances, such as the basic personal amount, spousal amount, and child fitness tax credit. Tax returns must be filed by April 30th of each year, and individuals can file their returns online or by mail. It is also important to note that individuals may be required to make installment payments throughout the year if their tax liability exceeds a certain threshold. |
Corporate & Business Tax
- The corporate tax rate in Canada is 15% for small businesses with taxable income up to $500,000, and 26.63% for general corporate income.
- Small business incentives are available, such as the small business deduction, which reduces the corporate tax rate for eligible businesses.
- Canada has free trade zones, such as the Vancouver Free Trade Zone, which offer tax exemptions and other benefits to businesses that operate within these zones.
- Businesses must register with the CRA and obtain a business number to file tax returns and access other government services.
- Provincial and territorial taxes may also apply, with rates ranging from 10% to 16%.
VAT / Sales Tax
- The goods and services tax (GST) is a federal tax of 5% that applies to most goods and services in Canada.
- Provincial sales taxes may also apply, with rates ranging from 0% to 10%, and some provinces have harmonized sales taxes (HST) that combine the GST and provincial sales tax.
- Certain goods and services, such as basic groceries and prescription drugs, are exempt from GST.
- Tourist refund schemes are available, which allow international visitors to claim a refund of GST paid on certain purchases.
For Expats & Foreign Workers
- Tax residency rules apply to expats and foreign workers, who may be considered residents of Canada for tax purposes if they spend more than 183 days in the country.
- Canada has a network of double taxation treaties with other countries to prevent double taxation and fiscal evasion.
- Social security agreements are in place with some countries to coordinate social security benefits for workers who have contributed to both systems.
- Remittance rules apply to foreign workers who earn income in Canada and remit it to their home country.
- Expats and foreign workers may be required to file a tax return in Canada, even if they do not have Canadian income.
- International tax credits may be available to expats and foreign workers who have paid tax in another country on income earned in Canada.
Crypto & Investment Income
- Investment income, such as dividends and interest, is subject to tax in Canada.
- Capital gains are taxed at 50% of the gain, and are included in an individual's income for tax purposes.
- Cryptocurrency is considered a commodity in Canada, and gains from the sale of cryptocurrency are subject to tax as capital gains.
- Tax-loss harvesting may be available to investors who have incurred losses on their investments, which can be used to offset gains from other investments.