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Canada is a dream location for many and residents who live in Canada must pay income tax. If you are staying in Canada for over 183 days you are considered a resident and will have had to sort out a particular visa for your stay. Expats who are residents will have to pay tax on money that is earned anywhere in the world. Those who aren’t residence will only have to pay income tax on money that has been earned in the country. On this page we will discuss the key features you need to know about taxes in Canada.
The rate for income tax in Canada is shown in the table below. The Canadian currency CAD $ is different to dollars in America. Canadian income tax returns must be submitted for each tax year by the end of April. It’s important to remember that taxes in Canada are levied at the federal and provincial levels. So it varies depending on your location.
| Income of individual | Tax rate |
|---|---|
| $45,282 and less | 15% |
| $45,282 to $90,563 | 20.5% |
| 90,563 to $140,388 | 26% |
| 140,388 to $200,000 | 29% |
| More than $200,000 | 33% |
Sales taxes are levied by the federal government (goods and service tax at 5%) and by each province (the Provincial Sales Tax which ranges from 2% to 12%). These two taxes often combine to a harmonised sales tax (HST). The main difference with sales taxes in comparison to the UK is that the display of items are without the sales tax figure. This can be a shock when you get to the checkout counter and have to incur a price which is 7-18% higher. Below you can find a table with the provincial sales taxes.
| Province | Provincial rate |
|---|---|
| Alberta | 0% |
| British Columbia (BC) | 7% |
| Manitoba | 8% |
| New-Brunswick | 10% |
| Newfoundland and Labrador | 10% |
| Northwest Territories | 0% |
| Nova Scotia | 10% |
| Nunavut | 0% |
| Ontario | 8% |
| Prince Edward Island (PEI) | 10% |
| Quebec | 9.975% |
| Saskatchwan | 5% |
| Yukon | 0% |
In most cases Canadian individual tax returns should be complete at the latest April 30th of the following year. There are several way to request tax returns in Canada and they are as followed:
The Canada Revenue Agency (CRA) can usually process paper tax return application in four to six weeks. To process income tax returns faster, individuals can complete the forms electronically. Realistically you cannot expect to receive a tax return before March. Even if you apply for it early because CRA don’t start processing income tax returns until mid-February.
Are you thinking about living in Canada? Visit our pages Working in Canada and Visas in Canada. Here you can find more information about considerations that should occur when applying for residence permits.
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