View source for Taxes in Canada

'''Taxes in Canada''' fund federal, provincial/territorial, and municipal public services, including healthcare, education, transportation, social benefits, courts and policing, and national defence. 

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<div style="font-weight:700; color:#b91c1c; margin-bottom:6px;">At a glance — Taxes in Canada</div>
{| style="width:100%;"
|-
! style="text-align:left; width:40%;" | Admin
| [[Canada Revenue Agency]] (CRA); [[Revenu Québec]] (QC)
|-
! Scope
| Federal, provincial/territorial, municipal
|-
! Main types
| Personal & corporate income tax; GST/HST; PST/QST/RST; payroll (CPP/QPP, EI, QPIP); property; excise & customs
|-
! Key dates
| T1: Apr 30 (self-employed file by Jun 15; balance due Apr 30). T2: 6 months after year-end (balances often due in 2–3 months).
|-
! Portals
| CRA My Account / My Business Account; Revenu Québec services (QC)
|}
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Canada uses a mixed system of income, consumption, payroll, property, and excise taxes. Most administration is handled by the [[Canada Revenue Agency]] (CRA) at the federal level and by provincial agencies where applicable (notably [[Revenu Québec]]).

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== Overview ==
Canada’s tax system is shared across three levels of government:
* '''Federal''' – personal and corporate income tax; the Goods and Services Tax (GST); excise duties; customs; payroll programs; benefits administration.
* '''Provincial/territorial''' – personal and corporate income tax (harmonized with federal rules in most jurisdictions); provincial sales taxes or harmonized sales tax; resource royalties; fees and levies.
* '''Municipal''' – property tax and user fees (set and collected locally).

; Who is taxed
* '''Residents''' of Canada are generally taxed on worldwide income and may claim credits/deductions under federal and provincial rules.
* '''Non-residents''' are taxed on certain Canadian-source income (e.g., employment, business carried on in Canada, taxable Canadian property) and may be subject to withholding on passive income (treaty relief may apply).

== Administration ==
* The [[Canada Revenue Agency]] (CRA) administers federal taxes and most provincial/territorial income taxes through a single return system.
* [[Revenu Québec]] separately administers Quebec income tax, Quebec Sales Tax (QST), and some payroll programs; Quebec residents typically file both federal and provincial returns.
* Taxpayers interact online via CRA '''My Account''' and '''My Business Account''' portals (filing, payments, instalments, and correspondence).

== Personal income tax ==
Canada uses a '''progressive''' personal income tax with federal brackets and additional provincial/territorial brackets. Rates and thresholds are indexed and can change annually.

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<div style="font-weight:700; color:#b91c1c; margin-bottom:6px;">Illustrative example (individual)</div>
''Example only — use current CRA/provincial rates.''
# Employment income: '''$60,000'''
# RRSP contribution: '''$5,000''' → net income now '''$55,000'''
# Eligible Canadian dividends: '''$500''' → apply gross-up & dividend tax credit
# Capital gain: '''$2,000''' → include the legislated fraction in income
# Subtotal taxable income → apply current federal & provincial brackets
# Subtract non-refundable credits (e.g., basic personal amount, CPP/EI, medical, etc.)
# Result: '''net federal + provincial tax payable'''
# Compare to source deductions → refund or balance due
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=== Taxable income and common inclusions ===
* Employment income (T4 slips), self-employment/business income (T2125), interest and other investment income (T5), dividends (gross-up and dividend tax credit system), and capital gains (only a legislated fraction of the gain is included in income).
* Certain benefits and credits are administered via the tax system (e.g., Canada Child Benefit (CCB), GST/HST credit, Canada Workers Benefit).

=== Deductions and adjustments (examples) ===
* Registered Retirement Savings Plan (RRSP) contributions (subject to annual limits).
* Union/professional dues; certain moving expenses (eligibility rules apply); child care expenses; carrying charges and interest for investment income (limitations apply).
* For the principal residence, a gain may be eligible for the principal residence exemption (reporting still required).

=== Non-refundable vs refundable credits ===
* '''Non-refundable credits''' (e.g., basic personal amount, age amount, disability amount, eligible medical expenses) reduce tax payable but not below zero.
* '''Refundable credits/benefits''' (e.g., GST/HST credit, CWB) may generate payments even if no tax is owed.

=== Capital gains and dividends (concepts) ===
* A prescribed '''inclusion rate''' determines what portion of a capital gain is taxable; rates are set by law and can vary by taxpayer type or thresholds. See current CRA guidance on inclusion rules.
* '''Dividends''' from Canadian corporations are “grossed up” with an associated dividend tax credit; enhanced rates apply to eligible dividends.

=== Self-employment and instalments ===
* Self-employed individuals may need to remit '''quarterly instalments''' if net tax exceeds thresholds.
* They are responsible for their own CPP contributions (or QPP in Quebec) on self-employment earnings and, where applicable, for registering/charging GST/HST or QST once they exceed the '''small supplier threshold''' (commonly $30,000 in taxable supplies over 12 months; special rules may apply).

=== Filing and deadlines ===
* Standard personal return (T1) due '''April 30''' of the year following the tax year.
* Self-employed individuals (and their spouse/common-law partner) have until '''June 15''' to file, but any balance owing is due '''April 30'''.
* RRSP contributions made in the first 60 days of the year can generally be applied to the prior tax year.

== Payroll contributions ==
Employers withhold and remit income tax and contributions to social programs:
* '''CPP/QPP''' – Canada Pension Plan (outside Quebec) or Quebec Pension Plan (Quebec).
* '''EI''' – Employment Insurance (with Quebec Parental Insurance Plan (QPIP) providing parental benefits in Quebec).
* Employer remittances are due on schedules based on size and compliance history. Employers also issue annual slips (e.g., T4, RL-1 in Quebec).

{| class="wikitable"
! Program !! Applies where !! Notes
|-
| CPP || All provinces/territories except Quebec || Employee and employer contributions up to an annual pensionable earnings limit.
|-
| QPP || Quebec || Administered by Retraite Québec; similar structure to CPP with Quebec-specific rates/lids.
|-
| EI || Nationwide || Employee and employer contributions; reduced rates may apply for certain plans.
|-
| QPIP || Quebec || Separate employee/employer contributions for parental benefits.
|}

== Consumption taxes: GST/HST and PST/QST ==
Canada levies a federal '''Goods and Services Tax (GST)''' at 5%. Some provinces combine their sales tax with the GST into a single '''Harmonized Sales Tax (HST)'''. Others maintain separate provincial sales taxes (PST/QST/RST). Small suppliers may be exempt from registration until they exceed thresholds; voluntary registration may offer input tax credit advantages.

=== GST/HST/PST by province/territory (overview) ===
''(Rates can change. Confirm with the CRA or provincial authorities.)''

{| class="wikitable sortable"
! Province/Territory !! Sales tax type !! Total typical rate (overview)
|-
| Newfoundland and Labrador || HST || 15%
|-
| Nova Scotia || HST || 15%
|-
| New Brunswick || HST || 15%
|-
| Prince Edward Island || HST || 15%
|-
| Ontario || HST || 13%
|-
| Quebec || GST 5% + QST || Combined application; QST administered by Revenu Québec
|-
| British Columbia || GST 5% + PST || Provincial PST rules and exemptions apply
|-
| Saskatchewan || GST 5% + PST || Provincial PST rules apply
|-
| Manitoba || GST 5% + RST || Provincial RST rules apply
|-
| Alberta || GST only || No provincial sales tax
|-
| Yukon || GST only || No territorial sales tax
|-
| Northwest Territories || GST only || No territorial sales tax
|-
| Nunavut || GST only || No territorial sales tax
|}

== Corporate income tax ==
* Corporations pay federal and provincial/territorial income taxes. Rates depend on whether a corporation is a '''Canadian-controlled private corporation (CCPC)''' and whether it claims the '''small business deduction''' (on active business income up to the small business limit).
* Investment income in CCPCs may be subject to additional refundable taxes and a '''refundable dividend tax on hand (RDTOH)''' mechanism.
* Scientific Research and Experimental Development (SR&ED) incentives and other credits may reduce tax.
* Corporations file a T2 return, typically within six months of year-end; balances are often due two or three months after year-end, with monthly or quarterly instalments for larger taxpayers.

== Property tax and land transfer taxes ==
* Municipalities fund local services primarily through '''property tax''' based on assessed values and local mill rates.
* Some provinces levy '''land transfer tax''' (or deed transfer tax) on real estate purchases; additional municipal surcharges may apply in select cities.

== Excise duties and customs ==
* Federal '''excise duties''' apply to products such as alcohol, tobacco, fuel, and cannabis; special stamps, licensing, or reporting may be required.
* '''Customs duties''' may apply to imported goods under the Customs Tariff; trade agreements can reduce or eliminate duties.

== International tax, treaties, and anti-avoidance ==
* Canada maintains an extensive network of '''tax treaties''' to reduce double taxation and withholding.
* The '''General Anti-Avoidance Rule (GAAR)''' addresses abusive tax avoidance transactions.
* Non-residents are subject to Part XIII withholding on certain passive income (commonly 25% absent a treaty reduction) and Part I tax on Canadian-source business/employment income. Special elections may apply to rental and timber income.

== Compliance, audits, and disputes ==
* CRA issues Notices of Assessment/Reassessment. Taxpayers may file a '''Notice of Objection''' within prescribed timelines; appeals proceed to the [[Tax Court of Canada]] if unresolved.
* Interest and penalties may apply to late filing, late payment, failures to remit, or gross negligence.
* Taxpayers can request adjustments to prior returns and may use the '''Voluntary Disclosures Program''' to correct past non-compliance.

== Key filing dates (summary) ==
{| class="wikitable"
! Taxpayer/group !! Return due date !! Balance due date !! Notes
|-
| Individuals (T1) || April 30 || April 30 || Standard filers
|-
| Self-employed (T1) || June 15 || April 30 || Spouse/CLP of self-employed also gets June 15 filing deadline
|-
| Corporations (T2) || 6 months after year-end || Typically 2–3 months after year-end || Instalments may apply
|-
| T4/T5 slips (employers/payers) || End of February || — || Information returns to CRA and recipients
|}

== See also ==
* [[Canada Revenue Agency]] • [[Government of Canada]]
* [[Economy of Canada]] • [[Provinces of Canada]] • [[Parliament of Canada]]
* [[Small business in Canada]] • [[Employment in Canada]]

== External links ==
* CRA — Personal income tax: https://www.canada.ca/en/services/taxes/income-tax/personal-income-tax.html
* CRA — Business and professional income: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics.html
* CRA — GST/HST for businesses: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses.html
* Revenu Québec — Individuals: https://www.revenuquebec.ca/en/citizens/
* CRA — Payroll (CPP/EI) and deductions: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll.html
* Tax Court of Canada: https://www.tcc-cci.gc.ca/en/home.html

== FAQs ==
; Do I need to file a return if I had little or no income?
You may still wish to file to receive refundable credits/benefits and to establish RRSP room. Filing may also be required to report certain income or recover withholding.

; How are capital gains taxed?
Only a legislated fraction of a capital gain is included in income (the '''inclusion rate'''); check CRA for current rules and thresholds that may apply.

; What is the difference between RRSP and TFSA for tax?
RRSP contributions may be deductible and withdrawals are taxable; TFSA contributions are not deductible and withdrawals are generally tax-free. Both have annual limits.

; When must a freelancer register for GST/HST?
Once your worldwide taxable supplies exceed the '''small supplier threshold''' in a 12-month period (most commonly $30,000), registration and charging GST/HST usually become mandatory (some activities have special rules).

; I live in Quebec—do I file twice?
Typically yes: a federal T1 with CRA and a provincial TP-1 with Revenu Québec. Quebec also administers QST, QPP, and QPIP.

; What if I disagree with my assessment?
File a Notice of Objection with CRA within the time limit. If unresolved, you may appeal to the [[Tax Court of Canada]].

; What counts as tax evasion versus avoidance?
'''Tax evasion''' is illegal (e.g., hiding income); '''tax avoidance''' uses legal provisions to minimize tax. Transactions that abuse the object/spirit of the law may be challenged under the GAAR.