taxes in Canada

Canada has a federal-provincial tax system. This means that taxes are levied both federally (by the Government of Canada) and provincially or territorially. Taxes are levied on the income of individuals, businesses and other entities, and are used to finance public services such as education, health and infrastructure.

Federal income tax

The personal income tax system is progressive, which means that the higher your income, the higher your tax rate. In Canada, federal taxes are levied on total income, after allowable deductions and tax credits.

Here are the key elements:

• Tax rates: Federal income tax rates vary by income bracket, with rates ranging from 15% to 33% for incomes above a certain threshold.
• Tax credits: There are basic tax credits that reduce the amount of tax owed, such as the income tax credit, the disability credit, the medical expense credit, and so on.

Salary (CAD amount)	Federal tax (as % of salary)
Up to CAD 53,359	15%
Between 53,359 and 106,717 CAD	20,5%
Between 106,717 and 165,430 CAD	26%
Between 165.430 and 235.675 CAD	29%
Income above 235,675 CAD	33%

Provincial and territorial taxes

Canada’s provinces and territories have their own personal and corporate income tax systems. This means that, in addition to federal taxes, you must also pay provincial or territorial taxes.

Each province has its own tax brackets and rates. For example:

• Quebec: Quebec has a progressive tax system similar to the federal one, but with different rates ranging from 15% to 25.75% for incomes above a certain threshold.
• Ontario: Ontario imposes a rate of 5.05% on the first CAD 47,630 of income, with brackets up to 13.16% for higher incomes.
• British Columbia: Tax brackets range from 5.06% to 20.5% for incomes over CAD 228,000.

Provincial sales tax

Some provinces, like Quebec, British Columbia and Manitoba, have a separate provincial sales tax (PST), while others, like Ontario, combine a federal and provincial tax (HST).

Conclusion

The Canadian tax system is relatively complex, combining federal and provincial taxes, with progressive rates based on income. Canadians can take advantage of various tax credits and deductions to reduce their tax burden. For information specific to your situation, we recommend you consult the Canada Revenue Agency (CRA ) or your provincial tax authority.