Taxation in Canada

Taxation in Canada funds public services and transfers at the federal, provincial/territorial, and municipal levels. The system combines personal and corporate income taxes, consumption taxes (GST/HST and provincial sales taxes), payroll contributions (CPP/QPP and EI), property and fuel taxes, and excise duties/levies. Most federal taxes and many benefits are administered by the Canada Revenue Agency (CRA).

At a glance — Taxation in Canada

Levels of tax	Federal • Provincial/territorial • Municipal
Main tax types	Personal & corporate income tax • GST/HST & provincial sales taxes • Payroll contributions (CPP/QPP, EI) • Property tax • Fuel/carbon & excise duties
Administrator (federal)	Canada Revenue Agency (CRA); Revenu Québec administers most Québec income and sales taxes
Key statutes (examples)	Income Tax Act • Excise Tax Act (GST/HST) • Excise Act/Excise Act, 2001 • CPP/QPP and EI legislation • Provincial sales tax acts

Structure and who taxes what

• Federal — personal & corporate income tax, GST, excise duties (alcohol/tobacco/cannabis/other), payroll laws (CPP and EI), fuel/carbon charges (where applicable).
• Provinces/territories — their own personal & corporate income taxes (with separate brackets/credits), either harmonized HST or separate PST/QST, fuel and other levies.
• Municipalities — property taxes and user fees (set locally; provinces enable municipal powers).

Québec administers its own personal income tax and the Québec Sales Tax (QST) and collects GST on behalf of the federal government for many filers. The rest of Canada generally files federal and provincial/territorial returns through the CRA.

Personal income tax (T1)

• Residence & scope — Canadian residents for tax purposes are generally taxed on worldwide income with credits for foreign taxes; non-residents are taxed on specified Canadian-source income and certain dispositions.
• Returns & deadlines — Individuals file annually (most by April 30; self-employment balance due the same date, with filing by June 15). Pay-as-you-earn withholding, instalments, and year-end reconciliation apply.
• Credits & deductions — Non-refundable and refundable credits reduce tax or pay benefits (e.g., basic personal amount, disability, tuition amounts, medical expenses); common deductions include RRSP contributions and allowable employment/self-employment expenses.
• Registered plans — RRSP (tax deferral), TFSA (tax-free investment growth), RESP (education), and RDSP (disability) have specific contribution and withdrawal rules.
• Benefits delivered through the tax system — Canada Child Benefit (CCB), GST/HST credit, climate or provincial/territorial credits (as legislated). Entitlement is income-tested and paid by the CRA.

Corporate income tax (T2)

• Rates & bases — Federal and provincial/territorial rates apply to taxable income, with lower small-business rates on qualifying active business income up to a limit.
• Integration — The system aims to reduce double taxation between corporate profits and shareholder dividends via dividend gross-up and credit mechanisms.
• Capital cost allowance (CCA) — Tax depreciation schedules by class for tangible/intangible property.
• Losses & incentives — Loss carryback/forward rules; incentives include SR&ED investment tax credits and sectoral measures (where legislated).
• Filing — Corporations generally file within six months of year-end; instalments and balance-due dates depend on size and method.

Consumption taxes

• GST/HST — A value-added tax administered by the CRA. In HST provinces, federal and provincial portions are combined; in PST provinces, a separate retail sales tax applies.
• PST/QST — Provincial retail sales taxes in some jurisdictions; QST administered by Revenu Québec with a value-added design similar to GST.
• Registration & filing — Businesses register for GST/HST (and QST where required), charge tax on taxable supplies, claim input tax credits (or input tax refunds), and file returns (monthly/quarterly/annual depending on revenue).

Payroll contributions

• CPP/QPP — Contributory pensions for workers; employers and employees contribute up to annual limits (QPP in Québec).
• Employment Insurance (EI) — Provides temporary income support; employers remit premiums for employees and their own share.
• Employers also withhold income tax, issue T4s, and file information returns through CRA accounts (RP).

Property, fuel, and excise

• Property tax — Municipal tax on assessed real property to fund local services (rates/assessments set locally).
• Fuel/carbon charges — Federal or provincial frameworks place charges on fuels and industrial emitters (design varies by province/territory).
• Excise duties/taxes — Alcohol, tobacco, vaping products, cannabis, and select goods/services.

International taxation

• Tax treaties reduce double taxation and define source/residence rules for cross-border income.
• Withholding taxes apply to non-resident payments (dividends, interest, royalties) subject to treaty reduction.
• Transfer pricing & anti-avoidance — Arm’s-length principle for related-party transactions; the General Anti-Avoidance Rule (GAAR) and specific rules address avoidance schemes.

Compliance, disputes, and relief

• Assessments & objections — CRA issues assessments; taxpayers may file a Notice of Objection to CRA Appeals, then appeal to the Tax Court of Canada.
• Audit & enforcement — Risk-based audits, collections, and criminal investigations for evasion.
• Taxpayer relief — CRA may waive/cancel penalties and interest in limited circumstances (extraordinary events, CRA error, financial hardship).

Digital services

• Individuals use My Account and NETFILE; businesses use My Business Account and electronic remittances. Representatives use Represent a Client. Direct deposit and online mail are encouraged.

See also

• Canada Revenue Agency • Economy of Canada • Statistics Canada • Payments Canada
• Service Canada • Employment and Social Development Canada • Bank of Canada

External links (official)

• CRA — Taxes: https://www.canada.ca/en/revenue-agency.html
• Revenu Québec — Taxes in Québec: https://www.revenuquebec.ca/