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Moving to Canada? Here’s what you need to know about Tax

Taxes in Canada are levied at federal and provincial level.  As a new resident in Canada, you’ll be issued with a social insurance number (SIN) which you will retain for life.  This number will be used by your employer and by the health services.

It’s important to remember that Canadian residents must declare their worldwide income, not just their Canadian income. This doesn’t necessarily mean that you have to pay tax in two or more countries, as Canada has double taxation agreement with many countries around the globe.  If you live and work in Canada for more than 183 days in a tax year, then you are considered a resident and need to fill in a tax return.

Personal Income Tax
The Canadian tax year runs from January to December.  Tax returns must be filed by April 30th.  Self-employed individuals have until June 15th to file their returns but tax payments should be made by 30th April to avoid penalties.

Each individual can earn $11,635 per annum before having to pay federal tax, after that tax is applied as follows:

$11,635 – $45,916      –   15.00%
$45,916 – $91,831      –   20.50%
$91,831 – $142,353    –   26.00%
$142,353 – $202,800  –   29.00%
Over $202,800            –    33.00%

Provincial or territorial tax varies from province/territory to province/territory.  The federal government collects all the provincial and territorial taxes for each province except Québec.  The government then returns the money to each province where the provincial/territorial governments will use it to fund the infrastructure necessary to keep the province/territory running smoothly.

Goods and Service Tax (GST) and Harmonised Sales Tax (HST)
All provinces have government sales tax and most provinces have provincial sales tax which is added to the price of goods and services.  GST is 5% across the whole of Canada but provincial sales tax (PST) varies from province to province, with Alberta, Northwest Territories, Yukon and Nunavut having no PST.   New Brunswick, Newfoundland and Labrador, Nova Scotia and Ontario have amalgamated their provincial tax with GST, where it’s called HST.  Total sales tax varies from 5% to 15%, depending on the province.

Capital Gains Tax
Capital gains tax is payable on any profit made from the sale of a property, other than your principal property, and on profit from investments.  The rate is 50% less than the standard rate of tax and it follows the same tax bands as personal income tax. 

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July 2017

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